Harley-Davidson beats forecast despite slack demand from millennials
Harley-Davidson stood by its full-year motorcycle shipments forecast and beat quarterly profit estimates on Tuesday, offering a glimmer of hope to a business struggling with an aging customer base.
The company’s shares rose 6 percent in premarket trading on Tuesday. The stock has fallen nearly 20 percent this year.
Harley, which commands about half of the US big-bike market, has seen its US market share erode in recent years as fewer younger buyers take to the brand and its rivals discount heavily.
“A lot of investors were expecting a guidance (2018 shipments) to be lowered, that didn’t happen,” Northcoast Research analyst Seth Woolf said.
To revive demand, Harley is spending aggressively on product development and marketing, including promoting its learn-to-ride academies at showrooms and developing electric motorcycle technology.
Revenue from motorcycles and related products rose for the second straight quarter following five quarters of declines. It rose 2.7 percent to $1.36 billion, beating analysts’ average estimate of $1.23 billion.
Shipments fell 9.7 percent to 63,944 motorcycles in the first quarter. For the second quarter, it expects to ship about 67,500 to 72,500 motorcycles, down from 81,807 units a year earlier.
However, for the full year it reiterated shipments of between 231,000 and 236,000.
Overall global retail sales — by dealers to customers — fell 7.2 percent, weighed down by a 12 percent decline in US sales.
International sales rose 0.2 percent — after five straight quarters of declines — helped by the company’s efforts to boost sales of overseas.
The company has also been restructuring its business to cut costs and adjust to the slack in demand. Harley said in January it will consolidate work at its motorcycle assembly plant in Kansas City, Missouri, into the one in York, Pennsylvania.
The Milwaukee, Wisconsin-based company said its net income fell to $174.8 million, or $1.03 per share, in quarter ended April 1, from $186.4 million, or $1.05 per share, a year earlier.
Analysts on an average had expected profit of 90 cents per share, according to Thomson Reuters I/B/E/S.