By Dennis Chung
Harley-Davidson reported its first quarter 2020 results, announced actions to address the impact of COVID-19 and outlined a new strategic plan for the company, moving forward.
It comes to no surprise that the Q1 numbers were bad, considering the recent departures of former Chief Executive Officer Michael Levatich and chief operating officer Michelle Kumbier, plus an attempted proxy fight with minor shareholder Impala Asset Management. And that’s all before the full impact of COVID-19 will really take hold.
For those keeping score, Harley-Davidson says it sold 40,439 motorcycles over the quarter, down 17.7% from the 49,151 models sold in the same quarter last year. International sales saw a 20.7% increase, while U.S. sales, which represents the bulk of Harley’s market, were down 15.5%. According to Harley-Davidson, U.S. retail sales were actually up 6.6% until mid-March when the pandemic crisis began to impact, well, everything, but especially motorcycle production.
Revenue was down from all segments, including motorcycle sales (-6.8%), resulting in a first quarter operating income of $84.6 million (-22.0%). Harley-Davidson Financial Services also saw a hit, with an operating income of $22.9 million (-60.9%) despite a 5.1% increase in revenue, due to an “increase in the provision for loan losses related to the impact of the COVID-19 crisis.”
Addressing the pandemic, Harley-Davidson outlined measures to address its impact and prepare for recovery. The measures involve reduced capital spending (including a freeze on hiring and bonuses plus temporary salary reductions) and the retiming of new product launches; maintaining liquidity; supporting dealers; and continuing to take steps to protect the safety and health of employees. Harley-Davidson says it has restarted some manufacturing and will gradually ease work-at-home restrictions at the appropriate time.
Harley-Davidson also announced a new five-year strategic plan it calls “The Rewire” that will modify its current “More …read more