Interim CEO steps in at Harley-Davidson after slump

Harley-Davidson on Friday named a board member hailed for turning around the Puma brand’s near-bankrupt business as its interim chief executive. The motorcycle maker has been searching for an effective strategy to woo young customers and revive sales.

Jochen Zeitz was asked to take over after chief executive Matthew Levatich stepped down following the US company’s worst sales performance in about 16 years.

Harley-Davidson said Mr Zeitz will serve as interim chief executive until an external search company helps find a new chief executive.

Michael Uhlarik, founder of consultancy Motorcycle Global, said Mr Levatich’s exit was expected. He said Harley -Davidson was likely to give Mr Zeitz a long run as he has “proven turnaround” skills.

Mr Zeitz is well known for transforming the loss-making Puma in the 1990s into one of the world’s top three sports brands.

“It is not about the next quarter or earnings per share,” Mr Uhlarik said. “They will have to build a long-term, multi-year strategy.”

Harley has failed for years to increase sales in the US, its top market, which accounts for more than half of its motorcycles sold. As its tattooed, baby-boomer consumer base ages, the Milwaukee company is finding it difficult to attract new customers.

Mr Levatich, who took the company’s reins in May 2015, bet on new launches, including battery-powered bikes, to turn around the company’s fortunes. Results, however, remained elusive.

Harley’s 2019 US bike sales were the lowest in 16 years. Falling sales in the past 12 quarters have forced the company to limit production of its bikes to prevent price discount pressure and protect profit. In 2019, Harley’s bike shipment volume in the US was the lowest in at least two decades. Global shipments were the lowest since 2010. Overall, revenue for 2019 dropped 6 per cent to $5.36bn (Dh19.7bn).

With no sales revival in sight, investors were becoming restless. Since Mr Levatich took the helm, Harley’s shares have fallen 46 per cent. By comparison, the S&P 500 Index has gained 40 per cent.

Falling sales have had made Wall Street speculate whether the company, which symbolised the counterculture movement of the 1960s, would seek refuge in a buyout or turn private to rework its product lines and branding without the pressure from shareholders.

Last month, Mr Levatich tried to parry that question by expressing confidence in the current strategy. But he also acknowledged that the challenges facing Harley were “significant” as its heavy and expensive bikes were competing for “people’s scarce time, people’s scarce funding and commitment”.

Mr Levatich will assist with the transition through the end of March, the company said.

On Friday, the company’s shares closed down 2.2 per cent at $30.47.