(Adds analyst and executive comments; updates share movement)
By James B. Kelleher
July 22 Harley-Davidson Inc cut its
full-year forecast for motorcycle shipments on Tuesday, citing
weaker-than-expected U.S. retail sales and a delay in getting
its newest bike into dealer showrooms.
The new outlook, which came as the Milwaukee-based company
reported higher-than-expected second-quarter earnings, sent
Harley-Davidson shares down nearly 6 percent to $63.33 in
morning New York Stock Exchange trading.
Harley said it now expected to ship between 270,000 and
275,000 bikes to its worldwide network of independent dealers in
2014, down from a previous forecast of 279,000 to 284,000.
The low end of the new range translates into year-over-year
worldwide shipment growth of just 3.5 percent.
Harley said its second-quarter sales had suffered from
prolonged poor weather across parts of the United States and
soft demand for its low-priced Sportster motorcycles.
The company attributed the weakness in Sportster sales to
the anticipated introduction of the Street platform, its first
all-new bike in more than a decade and its first Harley-badged
foray into the lightweight market since the 1970s.
But those new bikes, which are even cheaper than Sportsters
and were supposed to begin appearing in dealer showrooms in May,
did not show up until late June, Harley said. The company blamed
the delay on problems with foreign component makers whose parts
failed to get to the company's Kansas City, Missouri, plant on
"This is the first time we're manufacturing product
internationally, and with that, a majority of the supply chain
is international," Chief Financial Officer John Olin told
investors during a conference call.
"And not only is it a much longer supply chain, but it's
with a lot of new suppliers ... We're going through a learning
Harley said its quarterly profit rose to $354.2 million, or
$1.62 a share, from $271.7 million, or $1.21 a share, a year
earlier. Analysts on average had expected $1.46 a share,
according to Thomson Reuters I/B/E/S.
Although the company maintained its outlook for operating
margins, Morningstar Jaime Katz said its admission that the
bargain-priced Street was affecting Sportster sales suggested
pressure in the coming quarters.
Harley said its worldwide network of independent dealers had
sold 90,218 new motorcycles in the second quarter, virtually
unchanged from a year earlier. Sales by U.S. dealers dipped to
58,225 motorcycles from 58,241.
The headwinds Harley-Davidson faced during the quarter did
not appear to affect rival motorcycle maker Polaris Industries
Inc, which also reported higher earnings on Tuesday but
raised its full-year forecast.
The Minneapolis-based company, whose brands include Indian
and Victory, said its worldwide bike sales jumped 107 percent to
$103.1 million in the second quarter.
(Additional reporting by Sagarika Jaisinghani; Editing by
Franklin Paul and Lisa Von Ahn)