Harley-Davidson to cut jobs after sales sputter
Americans are hitting the brakes on new motorcycles from the country’s best-known maker.
Harley-Davidson warned Tuesday its full-year bike sales and profit margins would fall well short of expectations, concerning investors already fretting about the industry’s struggles to draw in Millennials.
The manufacturer also plans to cut jobs to compensate for the disappointing sales, though the number of positions wasn’t im- mediately clear.
Harley said its full-year shipment of motorcycles to dealers would fall by 6% to 8% from last year, marking a sharp decline from its previous projection of “flat to down modestly.”
The new projection includes a 10% to 20% decline in the third quarter, as well as a full percentage-point drop in operating profit margin for the full year.
Harley CEO Matt Levatich told analysts the company would slash hourly jobs at “some of our U.S. manufacturing plants” beginning immediately. A spokesperson de- clined to comment on how many jobs would be lost.
Levatich said the company’s innovative 2018 model-year motorcycles would provide a lift. But investors are concerned that Millennials aren’t interested in the “hog” lifestyle that energized previous generations. Levatich said Millennials were buying used bikes in encouraging numbers, but the company must persuade them to buy new.
The dour outlook comes amid speculation that Harley is weighing a $1.7 billion acquisition of rival motorcycle maker Ducati. With sales slumping, the company could face increased urgency to get a deal done because Ducati sales are up 13% over the past two years, according to UBS.
For Harley, second-quarter revenue fell 4.8% to $1.77 billion and net income declined 7.7% to $258.9 million, compared with the same period last year. Global sales declined 6.7% to 81,388. That included a 9.3% decline in the critical U.S. market, where the company sold 49,668 units.