Greenberg: Why Kors Is Red-Flagged

(A full report on Michael Kors was published April 15 on Reality Check, subscription required.)

SAN DIEGO (TheStreet) -- When Michael Kors (KORS) reports earnings Wednesday morning, it could be a blowout. Or at least better than expected -- that is if a steady stream of analyst recommendations and reiterations, on the eve of earnings, is any indication.

Typical is an analyst at Piper Jaffray, who just last week encouraged investors to buy the shares ahead of earnings.

Investor enthusiasm is understandable. In the fourth quarter Kors was the outlier, outperforming its peers even as big customers, like Macy's (M), were posting slower traffic. In the first quarter Macy's traffic was slow, too, but not to worry: It's Kors we're talking about and (sarcasm alert) it transcends everything else going on in retail and, especially, at its wholesale customers.

But there's a flipside to the story. And while it may be early, it would be foolhardy for investors -- caught up in what a great investment Kors has been -- to dismiss out of hand.

Barclays, one of the few firms to veer from the bullish pack, wrote a report earlier this year aptly headlined, "Running Low on Jet Fuel." From the report:

An impressive multi-year track record has led the brand to a point of maturity earlier than anticipated...

Kors itself has been saying for quarters that its growth streak isn't likely to continue. Typical were CFO Joe Parson's comments on the November earnings call, when he said:

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