Posts Tagged ‘Conder’

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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Retailing Questions Continue for Powersports

October 4, 2010

Wells Fargo Consumer Conference

There wasn’t much to excite investors at the recent two-day consumer conference held by Wells Fargo Securities, according to a report issued by the company last week. The conference was held Sept. 29-30 in New York, but there were not many powersports companies among the 64 firm that gave presentations to the analysts. Perhaps the best known powersports participants were Arctic Cat and Brunswick. Other related companies included International Speedway Corp., Penske Automotive, Tractor Supply, Marine Products, and U.S. Auto Parts Network.

Several trends ran through the presentations, according to reports compiled by attending analysts. These include: A continuing major shift to online marketing in a number of forms; personalized marketing is growing, using the Internet and social media to drive sales at online and bricks and mortar sites; increased sourcing costs which could put pressure on margins even though many companies are operating in a more efficient manner, and holiday inventories seem to be in good shape.

“Powersports retail sales visibility likely will be clouded until the beginning of seasonal sales in March,”  Senior analyst Tim Conder wrote in his conference summary report. Near-term price movements of powersports stocks most likely will be tied to general economic activities, he wrote. In his conclusion about the leisure segment, Conder says he likes certain toy companies, followed by cruise lines and powersports companies. Not a real strong recommendation.

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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 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

Harley’s Top Financial Executive Departs

May 3, 2009

IMPORTANT  UPDATE: Tim Conder, analyst with Wachovia Capital Markets LLC, said today (5/4/2009) that Tom Bergmann, James McCaslin and Ronald Hutchinson were all internal candidates for the president/CEO position of Harley-Davidson, Inc., filled by Keith Wandell from Johnson Controls.

At the same time, Conder says Wandell seems to be a good choice to head the company. “(Wandell) appears very solid,” says Conder, adding that “Wandell’s primary adjustment from Johnson Controls to Harley will be an effective transition from an industrial to a consumer focused company.”

He also notes that Wandell is  developing both short-term and long-term strategic plans for Harley, and  has already publicly mentioned opportunities in the sport bike segment in the U.S. and internationally. JD

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Thomas Bergmann, CFO and Head of Finance Arm, Leaves
May 1 Was Moving Day for Several Other Executives at HOG

Thomas E. Bergmann, the top financial officer for Harley-Davidson, Inc., left the company April 30 to look at other career opportunities, the company said Friday. The announcement, made after the stock market closed, also included changes in the responsibilities for several other executives.

Bergmann was Harley’s CFO and also had been acting president for the company’s financial arm, Harley-Davidson Financial Services (HDFS).

“We wish to thank Tom for his many contributions to our business and wish him well in his future endeavors,” said Keith Wandell, Harley’s new president and CEO, who joined the company April 6.

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