* Q1 profit up 34 percent, in line with expectations
* Retail sales in key markets show some weakness
* But company maintains full-year motorcycle shipment guidance
* Stock up 3.4 percent in afternoon trading (Adds industry background, executive comments, updates share price)
By James B. Kelleher
April 25 (Reuters) - Harley-Davidson Inc sounded an upbeat note about the state of the global consumer on Thursday with a 34 percent increase in quarterly profit and a big jump in shipments of its iconic motorcycles ahead of the traditional spring selling season.
The Milwaukee-based company, closely watched because of the window it provides on discretionary spending, said overall revenue from bikes, parts and accessories, and apparel rose 9.8 percent to $1.57 billion in the most recent quarter.
And it stuck to its full-year forecast for worldwide motorcycle shipments, overcoming a slow start to 2013 compared with a year ago when an unusually warm winter and spring enticed customers to buy new bikes sooner than usual.
"We feel very good about the overall business and the strength of it," John Olin, Harley-Davidson's chief financial officer, told Reuters in an interview.
The company, which saw its annual worldwide motorcycle shipments peak at about 350,000 units in 2006, said it believed that market grew even through the recent downturn - but that the growth was masked by a surplus of used motorcycles that flooded the market as squeezed consumers scrambled to raise cash.
With the economy growing once again, the housing market showing signs of recovery and Wall Street on a tear, the company believes retail demand for its bikes - which range in price from $8,000 for a basic Sportster model to $40,000 for a tricked-out touring bike - will rebound.
"So we're going to be shipping more in the spring than we retail," Olin said.
The company posted a first-quarter profit of $224.1 million, or 99 cents a share, up from $172.0 million, or 74 cents a share a year ago, lifted by continued margin growth made possible by an ongoing restructuring of its business.
Analysts, on average, expected Harley-Davidson to report a profit of 99 cents a share on sales on $1.46 billion, according to Thomson Reuters I/B/E/S.
The profit gains came even as dealer retail sales fell 12 percent in North America and 11 percent in Europe, the Middle East and Africa, regions that accounted for nearly 88 percent of sales in the quarter.
Harley-Davidson shares were up 3.4 percent at $55.03 on Thursday afternoon on the New York Stock Exchange.
Harley-Davidson's results contained about a penny a share in restructuring charges. The company has been revamping its manufacturing operations in Wisconsin, Pennsylvania and Missouri in recent years to cut labor costs and make its production line more responsive to the ups and downs of bike demand.
Like Winnebago Industries Inc, the motorhome manufacturer that has returned to profitability despite sharply lower production and sales volumes by slashing its workforce, closing some factories and restructuring others, Harley-Davidson's efforts appear to be paying off.
The company said it expects gross margins to continue to grow in 2013 to 35.25 to 36.25 percent, up from 34.8 percent in 2012.
Retail sales in Asia rose during the quarter, even in Japan, the company's single-largest overseas market, where the yen's weakness created a headwind for the company. Sales were also higher in Latin America, the company said.
The company, which now sells bikes in 84 countries, has said it wants to increase international business at a faster rate than North American sales.
As part of that effort, it has opened up 99 new dealerships since 2009 and now has more dealers outside the United States than in it.
The company said it was optimistic its effort to woo younger, nontraditional riders and increase its share of the motorcycle market would continue to boost demand for its bikes, which for years were perceived by many consumers as toys for middle-aged white guys.
While the average Harley-Davidson owner is still about 50 years old, according to UBS analyst Robin Farley, the company insists its effort to win over what it calls younger, more diverse "outreach customers" is helping drive its post-recession rebound.
According to Polk, a research firm that tracks the automotive and related industries, Harley-Davidson is now the market share leader among riders ages 18 to 34, as well as among women, African-Americans and Hispanics.
During the first quarter, Harley-Davidson said it shipped 75,222 bikes worldwide, up 17.1 percent from a year ago. It is those shipments - rather than dealer retail sales - that drive the company's top line and provide a gauge of dealer expectations regarding future consumer demand.
Most analysts greeted the company quarterly earnings enthusiastically, despite the gap between retail sales and shipments, which they said was not unusual at this time of year.
But Harley-Davidson's retail sales will have to start showing year-over-year improvement as well if the company is to meet its full-year forecasts, they said.
"Shipments drive their quarterly performance," Morningstar's Jaime Katz said. "But shipments ultimately depend on retail units moving. They can't just keep filling the channel."
The company said it expects to ship 259,000 to 264,000 motorcycles worldwide in 2013, sticking to the forecast it made earlier this year.
In 2012, it shipped 247,625 bikes, up from 233,117 in 2011. (Reporting by James B. Kelleher in Chicago; editing by Gerald E. McCormick, Maureen Bavdek and Matthew Lewis)