Harley-Davidson Inc Stock Slumps As Profits, Sales Decline

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Harley-Davidson released its latest quarter earnings report before opening bell this morning, and its stock surged in premarket trading immediately after the print. However, it quickly reversed during regular trading hours, erasing nearly half of its premarket gains to decline by more than 3% to as low as $45.46 per share.

Harley-Davidson beats earnings estimates

The motorcycle manufacturer posted earnings of $1.36 per share, which beat the consensus estimate of $1.28 per share. Total consolidated revenues climbed 4.8% to $1.75 billion again topping the consensus at $1.5 billion, while motorcycle and product-related revenue amounted to $1.58 billion. Motorcycle revenue was $1.3 billion in the first quarter, representing a 5% increase. Harley-Davidson Inc (NYSE:HOG) said higher-than-expected motorcycle sales driven by new products boosted its profits on the back of increased marketing expenses.

Latin America sales tumbled 26.5%, while sales in the U.S. slowed 0.5%, as a result of increased competition. A 4.5% increase in international retail motorcycle sales drove the 1.4% global increase. Harley-Davidson sold 57,458 motorcycles during the first quarter, including 35,326 in the U.S. Units grew 8.8% in Europe, the Middle East, and Africa.

Harley-Davidson releases guidance

The company said it launched its “Live Your Legend” marketing campaign in an effort to battle the sales slump. Baby Boomers have traditionally been Harley-Davidson’s customers, and as they age, the company must tap the younger generations to boost sales. The first “Live Your Legend” ads appeared during the NCAA tournament.

Management said the new ad campaign is “beginning to take hold” and that they expect to see continued progress in their focus areas. They also launched two new cruisers recently: the Low Rider S and the CVO Pro Street Breakout, notes USA Today. On Monday, the motorcycle manufacturer unveiled a third new product, the Harley-Davidson Roadster.

Harley-Davidson management said they expect between 269,000 and 274,000 motorcycles this year, representing about a 1% to 3% increase. In the second quarter, they expect to ship between 82,500 and 87,500 motorcycles, which compares to last year’s second quarter shipments of 85,172. They project an operating margin of 16% to 17% and capital expenditures of $255 million to $275 million for the full year.

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