Michael Kors  (KORS) stock was plunging about 14% to $35.58 on heavy trading volume Tuesday morning after reporting lower-than-expected revenue for the fiscal 2017 third quarter and issuing downbeat guidance.

The London-based luxury retailer will no longer participate in the steep discounts that have plagued the handbag market, even though market share and revenue are expected to consequently suffer. 

The decision to stop offering big sales will "take a significant amount of revenue away from the company, but I think create a much better value for us long term as a brand with the consumer," executives said on the company's earnings call this morning. 

Before the market open, Michael Kors reported a 3.2% decline in revenue year-over-year to $1.35 billion, missing analysts' estimates of $1.36 billion. Same-store sales fell 6.9%, while analysts were modeling a decrease of 5.2%.

Diluted earnings per share climbed to $1.64 from $1.59 a year ago, slightly above analysts' estimates of $1.63 per share.

Michael Kors expects to lose market share to its more promotional peers as the company reduces wholesale shipments and cuts back on discounting. 

By focusing less on the number of units sold and more on the premium value of these products, Michael Kors hopes to eventually increase average unit retail by 10%, executives said on this morning's call.

"We're trying to make sure [the customer] sees the Michael Kors brand as an elevated brand -- not something that's on promotion on a regular basis," the executives said.

For the current quarter, Michael Kors anticipates earnings between 68 cents and 72 cents a share on revenue between $1.035 billion and $1.055 billion. The FactSet consensus is for earnings of 92 cents a share on $1.11 billion in revenue.

Michael Kors is modeling a same-store sales decline in the low teens for the period, while analysts are projecting a decline of 4.1%.

The company guided for fiscal 2017 earnings between $4.15 and $4.19 a share on revenue of $4.48 billion. FactSet analysts are looking for earnings of $4.37 a share on $4.55 billion in revenue.

Michael Kors anticipates same-store sales to be down in the high-single digits for the year, while the FactSet consensus is for a decrease of 5.4%.

"Despite the stock's discounted valuation, we believe the reduced earnings outlook will impact the stock until we see signs of stabilization," Mizuho analysts said in a note today, reiterating a "neutral" rating on the stock.

Michael Kors trades at 5.6 times enterprise value to Ebitda, well below the industry average of 8.8 times EV/Ebitda, according to FactSet data.

Almost 11 million shares already have been traded this morning, well above the stock's average trading volume of roughly 2 million shares a day.