* Third-quarter earnings/share $1.11 vs est $0.86
* Revenue jumps 59 pct to $1.01 bln vs est $859.9 mln
* Raises 2014 sales view to $3.18 bln-$3.19 bln vs est $3.03 bln
* Raises 2014 earnings/share view to $3.07-$3.09 vs est $2.83
* Shares rise as much as 21 pct (Adds comment from Esplanade Capital, closing share price)
By Maria Ajit Thomas
Feb 4 (Reuters) - Michael Kors Holdings Ltd raised its profit forecast for the year after its trendy handbags and watches proved a hit with holiday shoppers, sending the company's shares up as much as 21 percent to a record high.
The company, founded by fashion designer Michael Kors, has grabbed market share from rivals such as Coach Inc by recording sales growth of 40 percent or more every quarter since going public in December 2011.
Shunning the discounts offered by many of its competitors, Michael Kors prolonged this run in the holiday shopping season, reporting a 59 percent jump in revenue for the quarter ended Dec. 28.
"Once upon a time, Coach was the go-to brand in accessible luxury, a superlative KORS now holds," Randal Konik, analyst at brokerage Jefferies & Co, wrote in a note.
Michael Kors' bag collection ranges from clutches and wristlets with a price tag of around $100 to snakeskin handbags costing around $3,000. The company also sells watches and accessories.
With a market capitalization of $18.3 billion at Tuesday's close, the company has already grown bigger than Coach, which is valued at about $12.8 billion.
At those levels, Michael Kors' stock is valued at 31.77 times forward earnings, almost double that of Coach and Fossil Group Inc, according to Thomson Reuters data.
"I love the company and they are killing it," said Shawn Kravetz, president of investment management firm Esplanade Capital. "Unfortunately, in this market particularly, we only buy things on sale and KORS is at full price."
Michael Kors' share of the U.S. handbag market rose to 7 percent from 4.5 percent between 2011 and 2012, according to Euromonitor International. Coach's share fell to 17.5 percent from 19 percent in the same period.
Brands such as Fossil, Jones Group Inc's Nine West and Kering's Gucci also lost market share in the same period.
Many retailers also took a hit during the 2013 holiday shopping season, the most discount-driven since the recession.
Last month, Coach reported a sharp decline in North American sales during the key holiday quarter - its third straight quarter of decline.
In sharp contrast, Michael Kors on Tuesday posted a 51 percent jump in North American sales for its third quarter, and said its gross margin rose 100 basis points to 61.2 percent.
"KORS is gaining market share at a dramatic pace across numerous categories," Cowen and Co analyst Faye Landes wrote in a note. "Clearly not all companies had a lousy holiday season."
Michael Kors also said revenue from Europe more than doubled in the third quarter, despite the slowdown in many European economies.
"There's still money being spent in these markets and consumers are responding to the right product, presented in the right way and delivered in the fashion environment," Chief Executive John Idol said on a post-earnings call.
A former judge on TV show "Project Runway", Kors launched his brand more than 30 years ago and retains a 2 percent stake in the company, worth about $400 million at the current price.
The 54-year-old has designed clothes and accessories worn by first lady Michelle Obama and celebrities including Gwyneth Paltrow, Jennifer Hudson and Amber Heard.
The company's largest shareholder is Fidelity Management & Research Co, with a 6.3 percent stake as of Sept. 30. At the current price, the stake is worth about $1.15 billion.
Hong Kong-based Sportswear Holdings Ltd, led by Silas Chou and Lawrence Stroll, who have had a hand in developing fashion brands including Tommy Hilfiger and Pepe Jeans, also owns a stake worth more than $1 billion.
Raising its full-year profit forecast for the third time, Michael Kors said on Tuesday it expected earnings of $3.07-$3.09 per share for the year ending March 2014. Its earlier forecast was $2.77-$2.81 per share.
The company also raised its revenue forecast for the year to $3.18 billion-$3.19 billion from $2.9 billion-$3 billion.
Analysts on average expect a profit of $2.83 per share on revenue of $3.03 billion, according to Thomson Reuters I/B/E/S.
Shares of Michael Kors closed at $89.91 on the New York Stock Exchange on Tuesday.
Coach shares closed down almost 2 percent at $45.63. (Additional reporting by Aditi Shrivastava and Shailaja Sharma in Bangalore; Editing by Robin Paxton and Savio D'Souza)