Harley-Davidson Upstaged by Polaris in Motorcycle Sales
Harley-Davidson Inc. reported disappointing retail sales of its motorcycles in the second quarter even as smaller rival Polaris Industries Inc. posted a strong showing, reported The Wall Street Journal.
Milwaukee-based Harley, the dominant supplier of heavyweight motorcycles in the U.S., reported a 30% rise in profit, reflecting higher profit margins and a rise in shipments to dealers for sales in the months ahead. In the second quarter, Harley dealers world-wide sold 90,218 new Harley motorcycles in the quarter, barely changed from a year earlier.
The company blamed bad weather in parts of the U.S. and said some customers apparently held off purchases because they were waiting for new models. Harley now expects its shipments to grow between 3.5% and 5.5% this year, down from an earlier forecast of 7% to 9%.
Harley said its share of the market for new heavyweight motorcycles with engines of 601 cubic centimeters or greater slipped to about 50% in the quarter from 53% a year earlier.
"We believe the flat retail sales are a temporary situation," Harley-Davidson Chief Executive Officer Keith Wandell said in a call with analysts. He said riders were enthusiastic about new Rushmore and Street models.
Quality problems with imported parts for the new lighter-weight Street models reduced availability of that product, Harley executives said. Harley generally relies on U.S. suppliers but is using imported engine parts to hold down costs on the Street bikes, which retail for between $6,800 and $7,500 and are aimed at young urban adults. Larger and more luxurious Harley bikes can retail for as much as $39,000.
Supplies of the Street models should be much higher later this year, said John Olin, chief financial officer. Also hurting sales in the second quarter was the absence of new models of the Road Glide series, which is being retooled. Road Glide accounted for 10% of sales in the year-earlier quarter, Mr. Olin said.
Polaris, which posted a 21% increase in second-quarter profit, touted a big increase in sales of its recently relaunched Indian heavyweight motorcycle brand. Polaris said sales at its motorcycles division more than doubled to $103.1 million.
Harley's profit came to $354.2 million, or 1.62 per share, up from $271.7 million, or $1.21 a share, a year earlier. Wall Street expected earnings of about $1.47 per share in the latest quarter, according to FactSet.
Harley's revenue, including motorcycles and financial services, grew 12% to $2 billion. The company books revenue when it ships to dealers.
Minneapolis-based Polaris, which also makes snowmobiles and all-terrain vehicles, reported net income of $96.9 million, or $1.42 per share, up from $80.0 million, or $1.13 per share. Sales increased 20% to $1.01 billion.
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