May 14, 2007 – H-D: U.S. 1Q sales shrink 6%

For the first time in at least two years, Harley-Davidson has seen a downturn in its worldwide retail motorcycle sales.
The leading seller of on-road motorcycles in the United States reported a near 6 percent decrease in its U.S. sales and an overall 1.3 percent drop in its worldwide sales in its first quarter.
The sales drop, combined with a three-week strike at the manufacturer’s York, Penn., plant, led to reduced earnings and net income in the Milwaukee, Wis., company’s first quarter.
H-D’s revenue was $1.18 billion for the quarter, an 8.3 percent decrease from a year ago. Its net income was $192.3 million, an 18 percent drop from the previous-year period.
“We anticipated that first-quarter results would be lower than last year due to the strike,” H-D CEO Jim Ziemer said in a press release. “Nobody wants a strike and no one wins in a strike. Not our employees, dealers, customers, suppliers or our shareholders. Now that the strike is behind us, our employees are focused on moving ahead, and with the new contract, we are better positioned for the future.”
But for now, the company is reporting a slowdown in sales. Harley’s U.S. sales dropped farther than its industry segment, according to Motorcycle Industry Council data that H-D reported. The industry’s heavyweight cruiser segment as a whole dropped 0.7 percent in the first quarter compared to the same period last year, while H-D’s sales dropped nearly 6 percent.
That sales downturn wasn’t experienced overseas, however. International sales, which made up about one-fourth of H-D’s total retail sales in the first quarter, grew 16.5 percent in the first quarter. Europe’s sales grew the most (25.7 percent over a year ago) while Canada (14 percent) and Japan (7.7 percent) also showed gains.
Other first-quarter positives for the company included:

  • a nearly 3 percent increase in its parts and accessory sales, totaling $188.2 million.
  • an 11 percent rise in its general merchandise sales, which includes MotorClothes apparel and collectibles. That segment’s sales totaled $76.1 million.
  • a 14.2 percent increase in its financial services’ operating income, which experienced higher wholesale and retail net interest income and higher fee income.
    Looking ahead, Ziemer said he expects moderate revenue growth and lower operating margin for the remainder of the year.
    The company also says it expects to ship between 94,000-97,000 motorcycles in the second quarter, which would be a 43 percent increase over the number of shipments made in the first quarter. psb

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