According to Harley Davidson Chief Executive Officer Jim Ziemer, U.S. dealer retail sales dropped sharply in August. Recent economic difficulties are blamed for the fall off, from falling home values, higher fuel costs, rising food prices and even difficulty finding jobs. Harley stock slipped on the news.
Harley Davidson press release:
Harley-Davidson, Inc. (NYSE: HOG) announced today that it expects to ship between 86,000 and 88,000 Harley-Davidson(R) motorcycles in the third quarter of 2007. Shipments of between 91,000 units and 95,000 units were originally planned for the quarter. Shipments for the full year are expected to be in the range of 328,000 to 332,000 Harley-Davidson motorcycles.
“Initial reports about our 2008 model year motorcycles from our dealers and the media have been excellent, but this is a difficult time for the U.S. consumer,” said Jim Ziemer, Chief Executive Officer of Harley-Davidson, Inc. “Coming off a negative U.S. retail sales trend in the first six months of the year, we ran an effective promotion in July that increased retail sales and reduced inventories of 2007 model motorcycles. However, our U.S. dealers’ retail sales have fallen sharply during August. Against the current economic background, we no longer expect worldwide dealer retail sales to increase during the second half of 2007. As a result, the Company has decided to reduce its planned shipments of motorcycles to its dealers for the remainder of 2007. The Company expects its actions will result in fewer wholesale motorcycle shipments than dealer retail sales during 2007,” said Ziemer.
“Although this is a challenging time, Harley-Davidson is the worldwide heavyweight motorcycle market leader,” said Ziemer. “We enjoy an enviable position of financial strength, with a solid balance sheet, strong cash flow and a history of returning value to shareholders. While a decision to reduce shipments and expectations is never easy, it is clearly the right thing to do for the long-term health of the brand and the business,” said Ziemer.
I doubt this is a Harley Davidson only phenomenon. Other companies are most likely feeling the same pressures.