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Kudos to Harley-Davidson's (NYSE:HOG) management, which was rather forthright in expressing disappointment with the company's lackluster second quarter results. The biggest clunker of the day was the news that domestic sales fell 5.5% to 67,9512 units. The drop was offset in part by strong international sales, where 27,166 bikes sold, a 19.2% increase. Overall, the company reported a quarterly EPS of $1.14, which matched analyst expectations, on sales of $1.62 billion.As expected, rising interest rates have had an impact on Harley-Davidson Financial Services. It reported that, of the loans securitized in this quarter, 35% were subprime, a percentage it expects to decrease with the tightening of the credit market. A drop in the recovery value of units, along with an increase of credit losses from 1.2% to 1.63%, and an increased use of promotional loans all diminished the quarterly results. On the brighter side, the percentage of unit sales financed through HDFS rose from 46% in 2006 to 53%.
One announcement I thought of interest was a new program of dealer allocations. As you might recall, I blogged earlier this year about the company overloading its dealer network. According to H-D CEO James L. Ziemer, while some dealers had too much inventory, others had too little, and he claims that the new system will allow more flexibility in allocating bikes to demand. He was very forthright, though, in promising that it will not ship more bikes this year than the dealers can sell.
More worrisome was the news that no agreement has yet been reached in labor negotiations with the workers at its Kansas City plant, which expires at the end of this month.
The company also intends to continue its repurchase program as prices warrant. It bought back 6.7 million shares for $430 million in this quarter, part of a board authorization for 15.2 million shares.
There were no bombshells to report in the 2008 product line (no three-wheelers, for example). It plans to celebrate its 105th anniversary in a style reminiscent of the 100th anniversary, along with holding the grand opening of the new Harley-Davidson Museum in Milwaukee.
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Reader Comments (Page 1 of 1)
8-07-2007 @ 7:33PM
Jack Morgan said...
I wrote a bad ass poem about Harleys. I hope this helps. Check it out, it was just published.
http://www.3ammagazine.com/3am/murdercycle/
9-07-2007 @ 11:45AM
joe said...
blame it on the dealer 20 meetings. the auto industry started this process 25years ago and look at where it has taken them. then harley dealers jumped on the band wagon. here is how it works. they form a group of approx. 20dealers that meet about four times a year and discuss how to screw their customers and how to screw their employees yes they bragg to each other and if their good employees dont like the new ideas they simply replace them with younger employees that are easier to brainwash. now harley dealers want the over 50 crowds money make no mistake there but welcome to all the young new salespeople and managers who are under high preassure to finance that new bike for 84 months and sell extended warranties gap insurance etc and bury the consumer for at least 5years so the greedy little dealers can make more $$$$$$$ lets see if they can come up with 20 different ways to correct this