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Posts Tagged ‘Sales’

BITW-HelmetAs I write this I’m reminded that I was flying home from Barcelona, Spain about this time last year after a long work week at an industry event and that every year in business is different.

A few years are easy, some are hard, and most are somewhere in between. Each year you face a different set of circumstances: changing economic, political, social and what’s cool in the billet industry.

We know from the Discovery Channel which scripted a mini-series project about the history of Harley-Davidson, that in the early years the company really struggled to survive. From month to month, they worked hard to keep from getting further behind and sinking further into debt.  There were the AMF years and then came the housing bubble.  Those of you who have tried or are establishing a little business of your own know that success is much harder than you envisioned it should be. Many folks think there must be “one big thing” they are missing that if discovered and remedied would turn things around and put them on the path to major prosperity.

Clearly, that isn’t the case, and over the course of a few startup years often you learn that rather than “one big thing,” there are many functions throughout the business that had to get established in good working order for the business to really succeed.

After 114 years, this still holds true for Harley-Davidson. There are no guarantees or shortcuts to success. There is only doing the hard work that needs to be done, doing it to the highest standards, and identifying the next area to establish or improve in order to build the next generation of Harley-Davidson rides and riders to control their destiny.

All of this became acute over the last week when Harley announced their Q4 and full-year 2016 financial results (HERE).

Words like “intense competition, flat market, soft sales, and earnings miss” ruled the day.

These are just words.  I’m of the viewpoint that how well any company performs is a key factor in how well they succeed compared to their competition.  Since we’re a few days before Super Bowl — a sports analogy is in order — how well a team executes ALL aspects of their game has everything to do with whether they win or lose.

Obviously taste in motorcycle brands, styles, or in paint schemes, is subjective. Some in the press have beaten down the overall market with reports that seem to indicate the riding “fad” has ended. Granted there’s been negative publicity with Polaris shutting down the Victory Motorcycle brand and overall motorcycle industry earnings not being great, but there are many very nice motorcycles being made, and WE the riding enthusiasts/public have lots of choices.

Why do I bring this up?

I’ve notice in my travels that many successful companies have a sense that they are masters of their own fate; their success is within their control. They know it’s a myriad of little things done well that add up to their success. And no matter what their size, they realize that a company always has the resources at hand to take their next step. Isn’t that really the “art” of it: to creatively employ existing resources to advance the ride, the employees and the company?

Most of us know the answer to a problem is rarely found outside the company; it usually comes from within.  I’m confident that Harley-Davidson will find the answers and simply function better as an organization.  I predict they will do a more thorough job of performing the functions a successful motorcycle company needs to and roll out compelling new products that will be industry hits.

All Rights Reserved (C) Northwest Harley Blog

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Screen Shot 2016-08-10 at 11.42.14 AMI’m a bit late getting this information out, but you can read the company press release HERE.

From my experience you know it’s going to be a long day when the financial perspective includes statements about how we’re in challenging times…  “Political, economic and cultural forces working against the confidence and security for people everywhere in the world” — whoa, roll the eerie and scary sound effects!

Here is a quick synopsis:

The Bad:

  • Worldwide sales for the quarter were down due to significant declines in the U.S. industry which was a surprise and far weaker than expected. Worldwide retail sales of new Harley-Davidson motorcycles in Q2 were down 1.9%.  U.S. retail sales were lower than expected on surprisingly weak industry results.  Q2 retail sales in the U.S. were down 5.2% versus prior year, behind weak U.S. industry sales.
  • U.S. retail inventory was up at the end of the second quarter.
  • Manufacturing expenses were higher than expected, driven by startup costs related to the implementation of a new ERP system in Kansas City, and costs associated with plant retooling.  In addition, plant efficiencies were lower than expected due to lower production given soft sales in Q2.  This is an overly simple statement because in reality it’s complex planning and execution, including numerous down days, inventory bridges and careful new model ramp plans.
  • The motor company stated they are taking steps to lower expected 2016 shipments which is largely due to continued pressure on industry growth in the U.S.  Third quarter shipments are expected to be approximately flat to down 9% versus 2015 third quarter.

The Good:

  • Revenue was up slightly.  Net income was $280.4 million on consolidated revenue of $1.86 billion compared to net income of $299.8 million on consolidated revenue of $1.82 billion in last year’s second quarter.
  • Q2 market share of 49.5% in the U.S., was up a strong 2.0 percentage points. The gains came in all segments, Touring, Cruisers and the Street/Sportster segment size of motorcycles. And it came from all seven sales regions in the U.S. The market share gains were over double the nearest competitor and came largely at the expense of Japanese competitors.
  • Retail sales in international markets were up in Q2 in all regions except Latin America (Brazil).
  • The company added six new international dealerships in the second quarter and has a goal to add 150+ international dealers over the next 4 years.

Given this current environment one could wonder if Harley-Davidson is positioned appropriately for the flat/declining industry which seemed to surprise them in Q2 — management states they are prepared.

Full Disclosure:  I have NO personal stock holdings in HOG or plans to procure any.

Some parts of the above text are attributable to the Seeking Alpha transcript on July 28, 2016.  Photo courtesy of Harley-Davidson.

All Rights Reserved (C) Northwest Harley Blog

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Indian Motorcycle 2017 Line-Up

Indian Motorcycles

Could this be a historic mark on Sturgis?

Seventy-five years after Ed Kretz dominated the first motorcycle race on the sands of Daytona Beach, Indian Motorcycle announces the 2017 line-up just days before the start of the 76th Sturgis Motorcycle Rally and just hours before Harley-Davidson’s Q2’16 financial results.

Indian states the 2017 lineup includes the recently released Scout Sixty, Indian Springfield and Chief Dark Horse models with new color choices.

A new and the industry’s largest and brightest touch-screen information and entertainment system has a 7-inch display with turn-by-turn navigation, Bluetooth audio and USB flash drive support. The Chieftain bikes come with 100 watts of audio, while the more expensive Indian Roadmaster has 200 watts.  The screen is glove compatible with two-finger touch capabilities, according to the company.

Indian has grown at a brisk pace, introducing nine new models since its relaunch in August 2013.  The motorcycle industry is looking to be flat this year, so Indian and Harley-Davidson are in a share battle.  For the full year, Polaris sees motorcycle sales increasing in the high teens on a percentage basis.

Time will tell if it’s a brand, a dealership or a bike thing as the two companies slog it out in the back half of the year.  On the surface it looks like Indian will once again challenge its main rival.

If you are headed to the 76th annual Sturgis Motorcycle Rally,  riders can view the entire new 2017 lineup at the Indian Motorcycle Factory display on Lazelle St. or experience them firsthand with a Factory Demo Ride at 2100 Whitewood Service Road (I-90 at Exit 30) from August 6 – August 12 from 9 a.m. – 5 p.m. daily.

Photo courtesy of Indian Motocycles.

All Rights Reserved (C) Northwest Harley Blog

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HOGchartHarley-Davidson announced it’s Q2 2014 financials, indicating that Q2 net income was $354.2M on consolidated revenue of $2.00B, compared to net income of $271.7M in the year-ago period on consolidated revenue of $1.79B.

Dealers worldwide sold 90,218 new motorcycles compared to 90,193 motorcycles in the year-ago quarter.  U.S. sales were flat/down as dealers sold 58,225 new Harley-Davidson motorcycles in the quarter, compared to sales of 58,241 motorcycles in the year-ago period.

Some interesting nuances from the analyst call:

  • Market share was down 2.6% on a year-over-year basis at 50.3%.
  • Management confirmed the Road Glide is coming back with the new 2015 product launch in August.
  • In the U.S. the Road Glide accounted for 10% of sales
  • There were self-inflicted wounds with the intro of the Street on Sportster sales which was down double-digit and compounded by lack of Street inventory.
  • Management stated Indian touring bikes have had little impact on Rushmore bikes which in the first half were up double-digits.  But, read this HERE which colors the picture a bit different.
  • The Street start-up issues are supply chain in nature and related to this being the first time H-D is manufacturing a product internationally.
  • H-D now expects to ship between 270K and 275K motorcycles worldwide which represents growth of approximately 3.5% to 5.5% versus prior year.

Despite the soft Q2 sales, H-D believes the demand fundamentals for the business remain intact and underlying growth trends are strong.  The industry has grown for three straight years coming into this year and there is more investment in the industry than Harley-Davidson management has seen in the last five years in terms of new products, marketing and advertising.

UPDATED: August 1, 2014 – Harley-Davidson officially reveals the 2015 Road Glide.

Photo courtesy of Edgar and H-D.

All Rights Reserved © Northwest Harley Blog

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NOAA-MapYou’re the CEO and going down your quarterly earnings check list:

  1. Still in business after 110 years – Check
  2. Secured music talent for 110th Anniversary Party – Check
  3. Number one seller of motorcycles to young adults (18-34) – Check
  4. Increase 2013 first quarter revenue to $1.57B (up 10%) vs. $1.43B a year earlier — Check
  5. Increase 2013 first quarter income to $224.1M vs. $172M a year earlier – Check
  6. HOG shares up 2.1% to closed at $54.31 – Check
  7. U.S. dealers sold 34,706 new motorcycles, down 12.7% from a year earlier – Ooops!

Colder temperatures and the wet climate set the stage for the quarterly sales miss.  At least according to Harley-Davidson CEO, Keith Wandell who stated in last week’s earnings call… “By far, the vast majority of the (sales decline) was weather related”.

Temp2-MapInteresting.  The earnings call didn’t signal any major marketing changes for the brand, instead pinning some of the losses on external factors such as rainfall in many parts of the country, the weak economy and the unseasonably cold weather.

Are the only unemployed consumers who keep getting rained on Harley-Davidson consumers?!

Generally speaking home sales and auto sales are up.  It would seem that management neglected to remind us about Superstorm Sandy, how federal tax returns have been delayed and how fuel prices are unsettling to consumers.  To be fair some retail outlets selling spring apparel, home and garden were depressed due to wintry conditions, but looking at the weather for an impact on Harley-Davidson consumer spending seems a bit trivial.

I spent the last week in Arizona and if you plotted temperatures from dawn until noon, you’d observe an alarming warming trend.  If you extended that trend line for the next 4-months, you’ll clearly notice that ice caps will melt and the poor polar bears will be swimming more.

We’ll soon know if the good weather in the upcoming quarter provides a recovery to more normalized sales volume.

Photo courtesy of NOAA

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U.S. Ambassador to China - Jon Huntsman

In a heady display of “feel the vib” and “look at me” doing that pursuit of freedom gig, the political poster child for human rights, dares onlookers of the patriotic possibility and the fact it’s not just something special for the American people as he rides his signature Harley-Davidson RoadKing Classic through the streets of Shanghai.

Some might even call him showing off a bit since urban incomes average about $2,200 a year in Beijing where the bikes sell for $12K to $37K.  Harley-Davidson opened its first store in China in April 2006 and the allure of its citizen’s growing spending power means the motor company is unwavering in its commitment to extract dollars from the world’s most sought-after-market… who cares if in Beijing and Shanghai, motorcycles are largely banned from most major streets and highways.

In fact, Shanghai stopped accepting motorcycle registrations back in 2002 so, I wonder how Mr. Huntsman got that motorcycle registered?  Was it shipped over or did he buy it there?  In a country well know for reproducing (“copy”) everything, unlicensed Harleys have been smuggled in to the country for years so his would likely go unnoticed. Details, details…Don’t bore me with the details.

The mandarin speaking Mr. Huntsman will resign as U.S. Ambassador to China on April 30th and according to Politico reports he might make a run for the Republican nomination in 2012.  Adding fodder to this speculation is the fact he’s booked for a speaking engagement in New Hampshire in May shortly after his return.

Interestingly, if a deal can’t be made and the government shuts down in less than 30 hours due to what looks like near-fatal-distrust of the two parties… I wonder how Mr. Huntsman will get back to the U.S. — charge it?!

UPDATE: June 21, 2011 – Mr. Huntsman enters the 2012 Presidential race.  Reuters report HERE.

Photo courtesy of AP.

All Rights Reserved © Northwest Harley Blog

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2011 CVO Ultra Classic Electric Glide

I’m talking about the Harley-Davidson CVO (Custom Vehicles Operation) division and their customers.

CVO versions take an existing Harley motorcycle, then add a host of additional parts, usually cosmetic but some are mechanical, including the 1,803cc (110 cubic inch) version of the stock Harley motor.  The bikes they design and build are by any definition “mass-produced,” so they’re not true “custom’s” in the purest sense of the word.  But, based on rider demand the CVO division makes specialized versions on a few Harley models each year.  The people who purchase these want to customize their motorcycles but don’t have the time or skills.

But they do have money!

I was out yesterday at lunch and did a local H-D dealer “drive-by” when I noticed they had two 2011 CVO Touring bikes on the show floor:

  1. CVO Street Glide (MSRP: $33,880 (includes shipping costs)) – Asking Price was $36,400
  2. CVO Ultra Classic Electric Glide (MSRP: $36,880 (includes shipping costs)) – Asking Price was $40,300

2011 CVO Street Glide

Whoa!  A $40K Harley-Davidson.  That’s a first.  And neither had the optional 200 Watt “Boom! Audio Bagger” package which would have pushed the asking price even higher.  The CVO models always sell out and I’m sure 2011 will be no different because H-D deliberately under produces to maintain a perception of exclusivity.

So what’s my point?  I think purchasing the CVO takes all the fun away from doing your own customization.  The research, planning, procuring and incremental accessory installations are what provides motorcyclists winter projects and if you purchase a CVO your relegated to just washing it, right?

For example a comparable bike to #2 above is the Electra Glide Ultra Limited which includes the Power Package (103cu in plus ABS/Security) with an asking price of $27,200K (MSRP: $25,280 (includes shipping costs)).  With very similar paint schemes (minus flames) it looks like the dealer is asking about a $13,000 premium for the CVO version.  Sure it has the 110 cu in and several other accessories, but the price difference gives a person a lot of room for upgrades and chrome that you specifically want vs. what the motor company decides you need.  H-D doesn’t care either way as long as you just buy a new 2011 model.

I’m thinking the dealer is wishing for a lot here with their additional mark up during these financial times.  It will be interesting to see how long the CVOs stay on the showfloor as $40K buys a lot these days.

Photo courtesy of H-D and Telegraph.co.uk/ Double Red.

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