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Harley-Davidson 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 become reluctant to splurge on big-ticket leisure items as interest rates climbed over the past year while higher inflation forces them to focus on essentials.
Harley has maintained margin growth through its wealthier customer base, but has not been as successful in luring younger riders.
Fewer bike purchases have brought dealer inventories down to normal levels heading into the off season, Baird analysts said in a research note.
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 2024.
Rival Polaris reported a 4% decline in sales this week, an indication of an increasingly cautious consumer environment that is making investors more attuned to a downturn in the recreational vehicle industry.
The iconic motorcycle maker’s retail sales were down across all of its regions. North America, its largest market, declined for a third consecutive quarter. The company attributed the revenue shortfall to higher borrowing costs and the discontinuation of its legacy Sportster model at the end of 2022.
Sales from motorcycles and related products fell about 9% to $1.3bn in the quarter ended September 30.
Global motorcycle shipments decreased 20% during the period due to the production suspension announced late in the second quarter, the company said.
Harley’s net profit fell to $198.6m from $261.2m a year ago. Earnings per share tracked by analysts came in at $1.38 per share in the third quarter, slightly above expectations of $1.36.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Harley-Davidson reports 24% profit slump
Harley-Davidson 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 become reluctant to splurge on big-ticket leisure items as interest rates climbed over the past year while higher inflation forces them to focus on essentials.
Harley has maintained margin growth through its wealthier customer base, but has not been as successful in luring younger riders.
Fewer bike purchases have brought dealer inventories down to normal levels heading into the off season, Baird analysts said in a research note.
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 2024.
Rival Polaris reported a 4% decline in sales this week, an indication of an increasingly cautious consumer environment that is making investors more attuned to a downturn in the recreational vehicle industry.
The iconic motorcycle maker’s retail sales were down across all of its regions. North America, its largest market, declined for a third consecutive quarter. The company attributed the revenue shortfall to higher borrowing costs and the discontinuation of its legacy Sportster model at the end of 2022.
Sales from motorcycles and related products fell about 9% to $1.3bn in the quarter ended September 30.
Global motorcycle shipments decreased 20% during the period due to the production suspension announced late in the second quarter, the company said.
Harley’s net profit fell to $198.6m from $261.2m a year ago. Earnings per share tracked by analysts came in at $1.38 per share in the third quarter, slightly above expectations of $1.36.
Reuters
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