Harley-Davidson profit slumps on sluggish demand
Harley-Davidson shares are down roughly 30% year-to-date
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Harley-Davidson Inc on Thursday reported a 24% fall in third-quarter profit as customers cut back on discretionary spending due to higher borrowing costs and inflationary pressures.
Customers have turned more selective in buying big-ticket leisure items as interest rates have climbed over the past year from the U.S. Federal Reserve's aggressive monetary tightening while higher inflation is forcing them to focus on essentials.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HOG | HARLEY-DAVIDSON INC. | 32.82 | +0.35 | +1.08% |
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Harley has maintained margin growth through its wealthier customer base, but hasn't been as successful in luring younger riders with the release of the Sportster S models and electric bikes that sell for nearly half the price of its popular Cruiser, Trike, and long-distance Touring models.
Man driving a custom Harley-Davidson motorcycle in Toronto, Ontario, Canada, on July 02, 2023. (Photo by Creative Touch Imaging Ltd./NurPhoto via Getty Images) (Getty Images)
Fewer bike purchases have brought dealer inventories down to normal levels heading into the offseason, Baird analysts said in a research note.
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Harley's price increases and surcharges for popular models have lifted the manufacturer's earnings per share in previous quarters, but analysts say slowing demand is reflective of a murkier outlook for the retail sector heading into next year.
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Rival Polaris Inc reported a 4% decline in sales this week, an indication of an increasingly cautious consumer environment that's making investors more attuned to a downturn in the recreational vehicle industry.
Sales from motorcycles and related products fell about 9% to $1.30 billion in the quarter ended Sept. 30.
Global motorcycle shipments decreased 20% during the period due to the production suspension announced in late second quarter, the company said.
The company's net profit fell to $198.6 million, or $1.38 per share, from $261.2 million, or $1.78 per share, a year earlier.
Harley Davidson