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Greenberg: Why Michael Kors Should Stop Giving Guidance

By: Herb Greenberg | 08/05/14 - 07:23 AM EDT

Stocks in this article: KORS

SAN DIEGO (TheStreet) -- Regular readers know I'm not a big fan of quarterly guidance -- or any guidance. It merely gives management reason to pull all kinds of levers to avoid getting egg on their face.

Enter Michael Kors (KORS), whose earnings and post-earnings conference call didn't go over well with investors.

There was a lot about the quarter that should concern investors, and I laid it out, in detail, in Herb Greenberg's Reality Check.

Read More: Greenberg: Best Part About the Twitter Quarter

But one comment on the call, above all, grabbed my attention. It was this comment from CEO John Idol, who was responding to a question about lower margin guidance as the company invests for the future:

"We never believed that a 30% operating margin was a sustainable margin for the Company. And by the way, we don't want that. So I want to be very clear, let no one be misunderstanding. We don't think that is the right way to run our business. We need more investment, we are building this Company for the long term. We are not here for a quarter-by-quarter situation."

Reality: If they "are not here for a quarter-by-quarter situation," they shouldn't give quarterly guidance. Period, end of sentence, end of story.

Subscribe to Reality CheckHerb On TheStreet blog

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security. He can be reached at herbonthestreet@thestreet.com.

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