Kors plunges 23% as revenue growth slows

Tale of two retailers: TIF vs. KORS

Michael Kors Holdings on Wednesday reported its slowest quarterly revenue growth since it went public in December 2011 as demand for its handbags and accessories weakened in North America.

Shares of the company, which also forecast full-year sales and profit below analysts' expectations, fell more than 23 percent in midday trading.

Michael Kors' revenue rose 17.8 percent in the fourth quarter, slowing sharply from the growth of 29.9-74.4 percent it posted for the past 13 quarters.

Same-store sales in North America fell 6.7 percent. Analysts on average had expected a rise of 4.4 percent, according to research firm Consensus Metrix.

Michael Kors' margins fell to 58.4 percent in the quarter from 59.9 percent, a year earlier, as the company aggressively offered discounts to attract shoppers.

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In contrast, rivals Coach and Kate Spade have been cutting back on promotions to boost their profits.

Michael Kors has been expanding heavily, opening stores and distributing to retailers such as Macy's, which has led to brand fatigue among shoppers, analysts say.

The handbag space is becoming much more crowded than it was when Coach pioneered the market in 2004, but Kors is feeling more pain than others, said Ike Boruchow, senior research analyst at Sterne Agee.

"I think a lot of this is Kors specific—margins very high, wholesale distribution very over-distributed in the U.S.—and I think the 40 percent decline in stock the last nine or 12 months has kind of been anticipating this event," he said on CNBC's "Squawk Box."

Michael Kors may be a victim of its own success

The rapid deceleration in margins in particular is a concern for a high-margin fashion product, he added.

The designer forecast revenue of $4.7 billion-$4.8 billion and a profit of $4.40-$4.50 per share for the year ending March 2016.

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Analysts were expecting revenue of $5.05 billion and earnings of $4.70 per share, according to Thomson Reuters.

The company's net income rose to $182.6 million, or 90 cents per share, in the quarter ended March 28 from $161 million, or 78 cents per share, a year earlier.

Revenue rose to $1.08 billion from $917.5 million.

CNBC's Tom DiChristopher contributed to this story.