Harley-Davidson Inc.’s third-quarter profit missed estimates and sales plunged amid elevated borrowing costs in the US and economic weakness around the globe.
The Milwaukee-based company on Thursday reported earnings of $1.38 a share, missing the $1.40 average of analysts’ estimates compiled by Bloomberg. Revenue from motorcycles and related products fell 9% from a year ago to $1.3 billion, below expectations.
Shares of Harley-Davidson were little changed at $29.20 in premarket trading in New York. They have fallen 31% this year through Wednesday’s close.
Chief Executive Officer Jochen Zeitz’s strategy of selling fewer bikes at higher prices to boost margins is being tested as the highest interest rates in more than two decades dampen US consumer appetite for discretionary products like motorcycles.
The company has rolled out generous new incentives at dealerships to stimulate demand, but even then, sales were weak in the third quarter, according to dealers and research from UBS AG.
“Against a challenging macro and consumer backdrop, we have been able to achieve a result that preserves profitability at an industry leading level,” Zeitz said in a statement Thursday.
The company maintained its motorcycle sales guidance of flat to 3% revenue growth this year, and an operating income margin of 13.9% to 14.3%.
Operating income at Harley’s financial services arm fell 27% from a year ago as higher borrowing costs and credit losses eroded earnings.
Retail motorcycle sales tumbled 15% in Harley’s core North America market in the third quarter. Sales dropped in every other region, contributing to a 16% decline worldwide.
The drop was most pronounced in Asia, where Harley said weaker-than-expected demand in China contributed to a 24% decline in the third quarter.
Zeitz, who named a new chief financial officer in June, is trying to generate more revenue from apparel and bike accessories after exiting unprofitable markets. Apparel revenue was down 29% in the quarter, driven by weakness in North America.
Separately, LiveWire Group Inc., the electric bike division spun out of Harley a year ago, reported a third-quarter operating loss of $14.6 million. Shipments dropped to 50 bikes in the quarter, down 76% in the same period in 2022.
