There is no getting around it. Harley-Davidson had an exceptional Q3’13.
There was of course the strong financial performance, the biggest launch of new motorcycle models in the company’s history that resulted in excellent retail sales and who can forget the epic 110th anniversary in Milwaukee. In the initial 45 days at retail since launch, the Rushmore motorcycles sparked the largest year-over-year new model sales increase in 20 years. Sales were up markedly in both the U.S. and internationally. In fact, it was the best international model year launch ever in terms of initial volume.
H-D have been telling us for quarters that they are laser focused on the international businesses. They are targeting 100-150 international new dealer points through 2014 and, over the last 3+ years, have opened 110 new dealer points, with two-thirds being in emerging markets.
Last week H-D reported Q3 revenue of $1.34B and net income of $162.7 million, or 73 cents per share. For the motorcycles and related product segment revenue was up 8.4% in the third quarter, including a 10.7% increase in motorcycle revenue largely driven by the strong mix of the touring bikes. U.S. sales were up 20% from July through September and profit jumped 21%.
During Q3’13, parts and accessories sales were up 7.0%, driven by the success of certain product categories such as LED lighting and audio. General Merchandise was down 12.6% compared to Q3’12 due to what H-D referred to as lapping the strong sell in of 110th anniversary apparel and accessories, which began in Q3 of 2012.
Important to the Road Glide riders is the fact that H-D discontinued the Road Glide Custom and Road Glide Ultra. Management was quick to point out that these models, represent, on an annual basis, about 4-5% of the overall Touring volume. In terms of retail sales, H-D had brisk retail sales of the Road Glide in the third quarter. It will be interesting to see if there is any sales headwind from discontinuing the Road Glide in Q4.
One of the items that jumped out at me is that wholesale and MSRP prices have increased by an average of about 3.5% on the new 2014 models. By region, U.S. prices are up roughly 4.25%; EMEA, up 1.5%; and Asia-Pacific and Latin America, each up about 2.5%. The significant new “content,” which was added to the 2014 model year motorcycles was expected to increase costs by 2.75%.
H-D did not change the 2013 forecast of motorcycle shipments of 259K-264K. Poor weather in the U.S. during Q2 was again cited as the primary reason for challenges in hitting the high forecast number.
Photo courtesy of H-D