Harley launches 5-year turnaround plan after surprise quarterly loss


CHICAGO – Harley-Davidson on Tuesday unveiled a five-year turnaround plan to target weak double-digit profit growth through 2025 after an unexpected swing to a loss in the fourth quarter.

The company’s latest turnaround strategy, which has struggled for years to increase sales beyond baby boomers, comes after a decade of efforts to increase overseas sales and attract young drivers with role models. cheaper and newer.

Harley saw a 39% annual drop in revenue in the last quarter, with its motorcycle shipments falling 32% to 145,200 motorcycles in 2020, from the 214,900 it shipped in 2019. Quarter 16 in a row, resulting in an 8 percentage point drop in the market share of large motorcycles.

This decline comes at a time when motorcycle sales have increased due to demand for social distancing recreational outdoor activities.

Polaris Inc said last week that retail sales of its Indian brand of motorcycles in North America increased by more than 30% in the December quarter. In contrast, Harley sales in the region were down 15.4% year-over-year.

Harley said it would invest between $ 190 million and $ 250 million per year and develop its strongest motorcycle segments – touring, grand cruiser and trike – to achieve mid-single-digit growth in motorcycle revenue. The company, which launched its first electric motorcycle in 2019, has declared itself committed to electric motorcycle technology.

Under CEO Jochen Zeitz, who took the helm last year, Harley has shifted its focus to big bikes, traditional markets like the United States and Europe, and older and wealthier customers.

Harley shares, which have gained 38% since July when the company announced plans to restart operations, are down 14% at the start of trading.

As part of Zeitz’s strategy, the company has downsized its workforce, its global dealer network, eliminated slow-selling models and exited 39 markets where weak sales and earnings do not justify the investment.

To enhance the appeal of the Harley brand, Zeitz is focused on profitable growth. It removed promotional offers, tightened supplies and reduced inventory, allowing dealers to charge asking prices for Harley motorcycles.

This led to a 59% reduction in dealer inventory last year. A leaner inventory as well as a change in the introduction of new models in January from August, however, had a negative impact on bike sales in the last quarter.

Wedbush analysts, however, believe Harley’s depleted inventory has the potential to become a driver of additional revenue this year.

Harley is forecasting an operating margin of 5% to 7%, or profit on sales, for 2021, thanks to 20% to 25% growth in motorcycle sales.

It posted a quarterly loss of 63 cents per share, down from 9 cents per share a year earlier. Analysts polled by Refinitiv on average expected the company to report earnings of 14 cents per share.


About Todd Wurtsbach

Check Also

Kawasaki’s KR-1 was a temperamental failure…but a fantastic pleasure

For some enthusiasts, the most exciting era of motorcycling is the two-stroke era – when …

Leave a Reply

Your email address will not be published.