Adding fuel to the “burned out” leisure vehicle market was today’s earnings report from Harley-Davidson.
The company announced the cut of 1100 jobs and that Q4 profits fell 58% to $77.8M. Revenue fell 6.8% to $1.29B from $1.39B in the year ago quarter. Worldwide sales fell 13.1% in Q4 with sales in the U.S. market (it’s biggest) falling nearly 20%. However, International sales did creeped up 0.7%. For the full year, worldwide retail sales fell 7.1%.
Just the numbers (Q4):
- Revenue from motorcycles only was $1.02B (a decrease of $95.4M)
- Total shipments of motorcycles totaled 76,581 units (down 4,625 units)
- Revenue from Parts and Accessories totaled $152.1 million (down by $13.1M)
- Revenue from General Merchandise, (apparel etc.) totaled $69.0M (declined $4.4 million)
Harley is slicing even further new motorcycle production this year to somewhere between 264,000-273,000 to adjust to the down market. In 2008 Harley shipped more than 303,479 motorcycles — down 8% from the 330,619 shipped in 2007.
The companies new three-part strategy is: A). to invest in the Harley-Davidson brand, B). get the company cost-structure right, and C). obtain funding for HDFS to help our dealers sell motorcycles and retail customers to buy them. The company also plans consolidate engine and transmission plants as well paint and frame operations. They will also close distribution facilities and discontinue domestic transportation fleet operations which will now be outsourced.
The HDFS financial arm is really struggling. They finance more than half of the company motorcycle sales and had to write down $63M as a result of credit losses which led to a $25M operating loss in the 4th quarter alone.
The only bright spot I could find was that the General Merchandise (apparel etc.) revenue increased 2.8% for the year to $313.8M compared to $305.4 in 2007. I suppose people like Harley’s logo and if they can’t buy a high-priced luxury “ride” then wearing one is the next best thing?
Photo courtesy Flickr.
Northwest Harley Blog 