Q1’20 Harley-Davidson Retail Motorcycle Sales + Motorcycles and Related Products Segment Results
Let’s jump right to that impressive Q1’20 financial result:
- Harley-Davidson (NYSE:HOG) posted earnings of $69.7 million compared with $127.9 million in the same period a year ago.
- The dividend was slashed to 2 cents a share from 38 cents.
- The motor company is in talks with major U.S. banks to secure $1.3 billion in liquidity.
- Harley’s U.S. retail sales were down 15.5% compared with the same period a year ago.
- International retail sales were down 20.7% compared with 2019.
- Harley’s U.S. heavyweight motorcycle market segment share was down 2.2 percentage points, to 48.9%.
Another quarter, another poor performance from Harley-Davidson, though the market seemed to buy into the promise that this time it will be able to turn things around.
Déjà vu…
Management promising to fix things again by “crafting strategy accelerants” to deliver improved sales and better returns. However, it admitted that its efforts thus far haven’t worked and also said it was “refining” the plans it had already devised, but it wouldn’t reveal how it was going to achieve them until this summer. Granted the financial problems Harley-Davidson encountered this quarter aren’t necessarily all of its own making, though it hasn’t helped itself along the way.
It’s important to note that the Harley-Davidson trends in the U.S. have been weak for years despite the economy being strong for so long. That is a major problem and the acting Harley-Davidson CEO, Jochen Zeitz, remains vague on what the motorcycle company is going to do to change that dynamic.
The “ReWire” Board
The fact that management chose the term “ReWire”, emphasizing the electric future to describe their refining plans reads like a satirical article in The Onion. It’s as if CEO, Jochen Zeitz said, “I’ve heard some concerns going around, and I want to impress upon each and every one of you that I’m taking every possible step to ensure that we tap into a market that has traditionally been neglected by motorcycle manufacturers, Harley-Davidson is announcing a new line of motorcycles designed specifically for men.”
The “ReWire” plan consists of five main points:
- Enhance core strengths and better balance expansion into new spaces.
- Prioritize markets that matter.
- Reset product launches and product line-up for simplicity and maximum impact.
- Build the Parts & Accessories and General Merchandise businesses to their full potential.
- Adjust and align the organisational structure, cost structure and operating model to reduce complexity and drive efficiency, to set Harley-Davidson up for stability and success.
The ReWire playbook abandons some of the previously ratified “More Roads” plan, but there is so much “CEO Speak” — “designed to address top priority opportunities, drive consistent execution and reset the company’s operating model in order to reduce complexity, sharpen focus and increase the speed of decision making.” — in that investor call its difficult to know what exactly remains “committed” to or what will stop.
Little is certain these days, but there’s one sure thing: in a situation where 30+ million people were laid off or furloughed in the past 6-weeks, people are definitely thinking about their wallets. And living with ever-present, crushing uncertainty and the knowledge that people all around us are dying isn’t the stimulus to rush out and purchase a new motorcycle.
Let us face facts. It’s going to be a different world for a while. After all, temperature checks, touch-less payments, masks, wipes, take-out and distancing were not part of the Harley experience before the March closures.
If Harley-Davidson is about anything, it’s about bringing people together. Lots of them. And really, really close — with motorcycle rallies, music festivals, HOG events and all the cross country rides. Looking at you Sturgis!
The whirlwind of 400,000+ motorcycle enthusiasts half-hearted adherence to CDC guidelines, while gathering all week in a number of local bars, and eating VEGAN-burgers could be viewed as a controlled experiment to determine the virus’s true incubation rate.
I have some gray in my hair and beard, something you will see in a majority of Harley enthusiasts. I find the idea of a Harley specifically aimed at men deeply patronizing.
Photos courtesy of Harley-Davidson.
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Northwest Harley Blog 
You all can kiss Sturgis goodbye this year. Those hotels and motels who charge astronomical prices for normally cheap rooms (ie gouge the crap out of us) will sure be upset to hear this news.