Archive for the ‘harley-davidson’ Category

Survey: 3Q U.S. Harley Retail Sales Up 3.5%

October 3, 2011

Here is some good news for followers of Harley-Davidson: Retail sales in the third quarter were up 3.5%, compared to the 3Q last year when sales slumped 9.4%, according to a recently-completed survey of dealers by Wells Fargo Securities.

There’s more good news as well: Inventories remain at five year lows and all of the dealers described inventories as comfortable/light with a need to improve the mix such as adding more touring bikes. Inventory levels are at about 40-45 days, according to the survey.

However, dealers voiced concerns about the inventory mix and said there probably were lost sales due to lack of product availability on models such as the model year 2012 (MY12) touring, sportsters and softails. “We believe Harley underestimated U.S. summer demand, especially in touring (models),” says Tim Conder, Wells Fargo Securities senior analyst and author of the report. “It likely will be late fall before Harley has U.S. inventories normalized,” he added.

Here’s an interesting comment from Conder: “We continue to believe Harley is making specific efforts to limit some availability of Touring models, in part to encourage the dealer network to grow sales (i.e. Sportster, Dyna, Softtail) into targeted, less penetrated customer demographic segments (i.e., under 35, women, African-American, Hispanics). However, this effort may have been too aggressive when combined with York restructuring transitions.”

The survey included 40 dealers located in 24 states across the U.S., approximately, 6% of Harley’s U.S. dealers and was skewed toward larger dealers in major metropolitan areas. The survey included 10 dealers in the East,  10 in the South, 10 in the Midwest and 10 in the West.

The dealers surveyed were very aggressive in their marketing. In addition to selling new and used motorcycles, clothes, merchandise, parts, accessories and service, 98% of the participating dealers had Harley Owners Group (HOG) chapters, 55% offered rentals, 45% sponsored a Rider’s Edge training program and 33% had an on-line sales program.

The dealers also were very aggressive on their pricing. Seventy percent of the dealers sold at MSRP, 20% sold at MSRP with what Wells Fargo calls “minimal discounts,” and 10% sold at a premium to MSRP. Twenty percent of the dealers said they were selling at least some new models below MSRP, compared to 13% in the Q211 survey by Wells Fargo, and 18% in Q310.

Here are other findings from the survey:

  • The ratio of used to new bikes has improved from 2:1 to 1.75:1.
  • The price gap between used bikes and new bikes has continued to narrow. Used bike prices were stable through the 3Q after rising for much of the last 24 months, according to Conder.
  • Price discounting does not appear very likely in the near term, says Conder, “given clean dealer inventories, increased demand and management’s aggressively managing supply in line with demand.”
  • Used Harley bike prices stabilized in Q209 and have increased since then to the point where new bike demand “is positively impacted,” notes Conder. Since Q209, he says, dealers reporting flat or increasing used bike prices jumped from 25% to 88% in Q311.”
  • Prices of used Harley’s are likely to continue to increase, year over year, over the next year, Conder predicts.
  • Credit standards of Harley-Davidson Financial Services (HDFS) have remained basically stable between the second and third quarters this year, according to the dealers.

Harley common stock has traded in a range of $28-$47 over the last 52 weeks. It closed at $34.33 on Friday, Sept. 30, 2011. JD

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ATK Bets on Harley Dealers for Bike Sales

May 31, 2010

33,000 Bikes Would Be Sold Exclusively Through Harley Stores

Frank White has been working to put together a manufacturing partner with his ATK Motorcycles off-road company for the better part of a year, and it looks as though he’s finally done it. Last week, ATK announced it signed a $100 million manufacturing deal with S&T Motors Co., Ltd., to produce 33,000 motorcycles over the next four years.

The pact calls for S&T to produce the motorcycles at its Korean facilities next year and then begin assembling them at the ATK facility near Salt Lake City after that. S&T Motors is a Korean manufacturer that began developing and selling ATVs, scooters and motorcycles in 1978. Today, it sells powersports equipment under the Hyosung brand around the world, and it expects to generate annual sales in 2011 of $US 300 million, according to its website. It employs about 350 persons. Here is more information on S&T Motors. Make sure you go to the English language page.

Its U.S. distributor, Hyosung Motors, is based in Norcross, Georgia. More information on Hyosung Motors can be found here.

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Polaris Outperforms May Stock Slump

May 31, 2010

Dow and S&P 500 Decline Sharply

Polaris Industries common stock lost ground in May, but its decline was only about one-third of the ground lost by leading market indicators, and it was much better than two other powersports stocks, Harley-Davidson and Arctic Cat.

Polaris closed May 28, 2010, at $58.70, off $2.35, or 3.8%, from its close on May 3 of $61.05. Polaris stock was given a strong boost on May 24 when analyst Joe Hovorka of Raymond James upgraded his Polaris rating from Market Perform (third level rating) to Strong Buy (top rating).

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Harley-Davidson Forty-Eight, Coming Right Up

April 16, 2010

Just got word from the good folks over at Harley-Davidson that a loaner Forty-Eight, the latest Sportster-based bike in the Dark Customs lineup, will be coming my way next month. If you read this here, it’s pretty obvious that I’m a fan of this growing class of bikes. Low, light and quick. Good stuff all the way around.

I first got to see the Forty-Eight when it was unveiled during the International Motorcycle Shows New York stop. The most striking thing (more…)

Harley Stock Fever Cools

March 18, 2010

Who is Kohlberg Kravis Roberts & Co. (KKR)?

Investors continued to trade Harley-Davidson (NYSE: HOG) stock in heavier volume than normal on St. Patrick’s Day, but the activity was down sharply from Tuesday’s very heavy activity.

HOG shares were off .17 Tuesday from Wednesday’s close of 28.35 on volume of 4,4558,600 shares, down from Wednesday’s huge volume of 18.4 million. Average daily trading volume over the last three months is 3.6 million shares.

Tuesday’s heavy trading pushed the stock up 1.85 or 7%, but it failed to break the 52-week high of 30.00. The 52-week low is 11.20.

Today’s mid-day trading was in the 28.40 range.

The feeding frenzy was started by rumors that Harley was going to be purchased by Kohlberg Kravis Roberts & Co. (KKR), a huge New York-based private equity firm that specializes in leveraged buyouts (LBO). The international firm, founded in 1976, has more than $50 billion under management and reports it has completed more than $400 billion worth of LBOs.

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Harley Sale Rumors Flying

March 16, 2010

Is Harley-Davidson about to be sold? Could be, because anything is for sale at the right price, but so far the talk is nothing but rumors, and at least one respected securities analyst doesn’t think it’s going to happen.

“In our opinion, any such buyout is highly unlikely ” says Tim Conder of Wells Fargo Securities. “We believe the new management team is highly focused on executing the restructuring of the company. If anything is potentially developing near-term, we believe it could be the company forging a joint venture or fee type of arrangement with a depository institution partner as it relates to HDFS.”

However, HOG shares rose more than 5% to $28.02 today on unsubstantiated rumors the motorcycle maker is the target of a leveraged buyout.

Private-equity firm Kohlberg Kravis Roberts was named as a possible buyer. Officials from KKR and Harley both declined to comment on the rumor.

Trading was three times the normal volume in Harley shares as investors looked for a bargain.

Harley reported a loss of $218.7 million in the fourth quarter. And its new management team has moved aggressively to make changes at the American icon motorcycle company, including dumping two of its motorcycle operations, Buell and MV Agusta. JD

Contact me with story ideas or news tips at 952/893-6976 or jdelmont@dealernews.com.

Harley Posts Big 4Q 2009 Loss

January 22, 2010

Harley-Davidson lost $147.2 million from continuing operations in 4Q 2009 on revenue of $764.5 million. For the year, it earned $70.6 million from contining operations on revenues of $4.29 billion. Full year income from operations was down 89.4% from the $684.2 million it earned in 2008. 4Q shipments were down 53.1% from 4Q 2008. For the full year 2009, revenue from Harley-Davidson motorcycles was $3.17 billion compared to $4.24 billion in 2008 on shipments of 223,023 Harley-Davidson motorcycles, compared to 303,479 motorcycles in 2008.

Tim Conder, a senior analyst with Wells Fargo Securities, notes that Q4 is the seasonally weakest at retail and is subject to the largest year over year percentage swings. He also noted today that Harley’s planned shipments this year of 201,000 to 212,000 units, down 5%-10%, were below expectations of analysts who follow the company. Analysts thought shipments this year would be about flat.

Conder said that Harley’s U.S./global sell-through was worse than his expectations. U.S. retail sales for Harley motorcycles were 162,385 units. JD

Contact me with news stories and tips at 952/893-6876 or joe@powersportsupdate.com

A Saturday at Harley-Davidson of St. Augustine

January 18, 2010

Dealernews Top 100 Dealer Builds Traffic Several Ways

ST. AUGUSTINE, Fl. (Jan. 16, 2010)—Owner Clark Vitulli opens his small Harley-Davidson store here before 8 am this cool, drizzly Saturday morning, making last minute preparations for a couple of special events and the shooting of several TV commercials.

Sales of all makes of new and used motorcycles were down more than 40 percent in Florida last year, but Vitulli’s operation bettered that sad figure; his sales were off by less than 30 percent. The operation generated revenues of nearly $10 million last year. One reason for his success is that he worked hard on promoting the store and giving prospects many opportunities to visit his 16,000 sq. ft. facility. It has a 9,000 sq. ft showroom and a 7,000 sq. ft. service department with 10 service bays that is completely air conditioned with an AC duct in each bay. There are 20 full-time and part-time employees.

There’s a picnic area and a band shell for live music every weekend. There’s also a shuttle bus running to the huge outlet mall nearby.

Clark Vitulli

Today, the store is promoting a 9 am blood drive, followed by the monthly meeting of the store’s HOG group. After the meeting, the film crew will move in to shoot footage for a series of 30-second TV commercials featuring customer testimonials. The shoot will last a couple of hours. After that, traffic should slow down this afternoon.

While it seems a bit crazy here, it’s a typical Saturday for the store.

The dealership also operates a tiny retail satellite operation (Harley calls it an Alternate Retail Outlet – ARO) a few miles away in St. Augustine’s Old Town, the center of this delightful historic tourist attraction. St. Augustine is the oldest city in the United States, older than Jamestown by 42 years, in fact. It was founded in 1565, 55 years before the Pilgrims landed at Plymouth Rock. Vitulli and his business partner, Allen Good, opened the small 1,500 sq. ft. store to sell apparel and accessories in December, 2009. It’s in the high rent district of splashy retail shops on St. George Street, the main tourist venue, but with the high pedestrian traffic, it generates sales of about $200/sq ft and helps drive riders to the main store located on the edge of town, just off I-95.

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Reaching Powersports Customers with Social Networking

January 4, 2010

This story originally appeared in the Dealernews December 2009 issue.

Happy New Year, all. We’ve made it through 2009 and the mad rush of the holiday shopping season and are now edging our way toward Dealer Expo and the great unknown of 2010.

I spent a lot of time online over the holidays (possibly too much) frequenting the social networking site Facebook, obsessively checking my e-mails, perusing various dealer and other industry-related websites. Along with figuring out that I need to get out more, I noticed that a lot more dealerships are embracing the online world.

Facebook pages. E-mail newsletters. E-commerce sites. Websites that are more than a store’s cyber-billboards. It seems that many more powersports retailers are starting to grasp the possibilities of the online world — but not all just yet. In fact, it’s going to be a long slog up the learning curve for the bulk of dealers. But the small empirical slice I saw looked promising.

Why is this so exciting for me? For one, I’m in a demographic that straddles the divide between the digital natives who have grown up surrounded by and regularly using technology and those whose VCR clocks (those who still have VCRs) will forever be flashing 12:00. I’m (more…)

Investors In Powersports Stocks Enjoyed 2009

December 31, 2009

Harley, Polaris, Arctic Cat Post Hefty Gains

Investors who placed bets on the powersports industry last year at this time— and held steady for the ride through the year— have reason to celebrate tonight. I checked the performance of three of the leading powersports stocks this year—Harley-Davidson (HOG), Polaris Industries (PII), and Arctic Cat (ACAT) and each of them outperformed the Dow Jones Industrial Average (DJIA) by a wide margin in two cases and matching it in the last one.

It wasn’t a smooth ride, however, and it took a firm hand to stay in the game through the sharp downtown in the first quarter.  For example, while the Dow lost 13% in value during the first two months of 2008, Polaris lost 25%, Harley  dropped 21%, and Arctic Cat slipped 20%.

For the year, though, the Dow climbed 1,772 points from 8,776 on Dec. 31, 2008, to 10,548 at the close yesterday. That’s a 20% jump. During the last 52 weeks, the Dow ranged from a low of 6,440 to a high of 10,605.

Polaris, the Minneapolis-based manufacturer of ATVs, UTVs, motorcycles, snowmobiles and electric vehicles, posted the biggest dollar gain during the last year of the three companies I looked at. Polaris common moved from $28.65 on Dec. 31, 2008, to $43 at the close yesterday. That’s a gain of $14.35, or 50.1% over the year. Its 52-week performance ranged from $14.53 to a high of $49.74.

If you would have purchased 1,000 shares of Polaris common stock one year ago, your investment would have gained $28,650, not considering quarterly dividends nor any sales commissions. Now, wouldn’t that provide a nice party tonight.

Securities analysts who follow the Polaris stock like the management team lead by new CEO Scott Wine, and Bennett Morgan, president and COO, and a long-time Polaris executive. When talking about Polaris, investors also talk about its ability to quickly bring new products to market, its efficient operations that emphasize cost controls, and its growing ability to control inventories at the dealer level through its Max Velocity Program (MVP) which allows dealers increased ordering flexibility.

Harley-Davidson gained $8.53, or 50.3%, climbing from $16.97 at the close on Dec. 31, 2008, to $25.50 at yesterday’s close. Harley investors had perhaps the toughest time waiting calmly for gains on the HOG stock as the company reworked its operations in several major steps.

One move with immediate and long-term implications was  the new contract it won with workers at its York, PA, plant that  permits the company to cut loose nearly half the 2,000 employee York work force and move ahead with major physical improvements in the plant. The plant modernization will be aided by a stimulus package from the state of Pennsylvania. Harley said at one point that it was considering relocating the operation to Kentucky.

In its second big reorganizational move, Harley dumped its MVAgusta operation and it closed its Buell sport bike business.

During the 2009 52-week period, Harley stock ranged from a low of $7.99 to a high of $30.00

Arctic Cat common stock is played at a much lower level than either Polaris or Harley, but it, too, posted a nice gain of 20% during the period Dec. 31,  2008, to Dec. 30, 2009. It climbed $4.16 for the year, moving from $4.79 in December 2008 to $8.95 yesterday.

Cat had a tough year, partly because of its dependence on snowmobiles and partly because of the loss of Gander Mountain, its high visibility outdoors retail chain based in Minneapolis. Gander had been carrying Arctic’s ATV and SXS lineup in its major stores. Arctic stock ranged from a low of $2.40 to a high of $9.27 during the last 52 weeks.

Okay, so now you’re probably waiting for my forecast on the performance of these stocks in 2010. Sorry, I don’t have one. After reporting on publicly traded stock for more than 40 years, I’ve come up with one basic rule: Stock market performance doesn’t always reflect corporate performance, especially when you try to tie it to a specific quarter or other reporting period. I don’t have a clue how these three stocks, or the Dow, for that matter, might perform over the next four quarters. And if I did know,  I wouldn’t give that information away; I would charge a lot of money for it. Isn’t that what investment advisors do?

Happy New Year and good luck with your investment decisions. I hope your powersports stocks perform well for you in 2010 as these three stocks did in 2009. JD

Contact me with news tips and story ideas at
976/893-6876 or joe@powersportsupdate.com