When will we decide that Europe can't always be a negative or that there has to be investment in Europe for the moment it actually goes back to normal, whatever normal is.
Yesterday a very confident Michael Kors (KORS) spent a tremendous amount of time on its call discussing how it intends to press forward with major initiatives in Europe. The gist of the decision: the market for high-end luxury there is just too juicy to pass up. You got the feeling that Kors was confident that the same-store sales numbers there, low teens, wouldn't deter them and that when it comes down to it they are doing so well in Asia and America that it is worth it to bring down the overall average a few percentage points to make the presence bigger and more important.
What I liked about the call was the total lack of defensiveness about their position in Europe. They simply didn't give a darn. They know that the major countries in Europe are growth markets and that the wealthy 35-year-old cohort -- their sweet spot -- can make them a lot of money.
I like the Kors approach because what it says is that they are going to use this moment to get bigger, not go home. They are going to take share in Europe for the eventual turn even as there is no turn in sight.
Which leads me to a larger question: when will there be a moment when it is worth being opportunistic to move into Europe? Kors thinks it is now, but many think that is reckless.
I know that Kors was penalized yesterday and it would have been up a lot more if they didn't have Europe. But Kors runs the company as a business, not a stock, and it doesn't want to cater to the quick-draws who want to blow out of the stock because they see the euro area as something that could slow the growth of the company.
I believe that some companies simply have to take advantage of the moment and Kors has the advantage of such insane growth that it can get away with the expansion.
But almost no one else can.
Still, it was refreshing for once to hear that Europe represented an opportunity not an albatross.
Lets see who else follows suit.