These are challenging times for motorcycle sales and Amazon.com doesn't have anything to do with that. It's a demand issue and demand for Harley-Davidson (HOG 52.00) motorcycles has been weaker than expected. That news came to light in Harley-Davidson's second quarter earnings report and outlook.
The good news is that Harley-Davidson exceeded analysts' average earnings expectation, posting a profit of $1.48 per diluted share. The bad news is that the consensus estimate was depressed relative to the year-ago period when Harley-Davidson reported a profit of $1.55 per diluted share.
Frankly, there just wasn't much growth to be had for Harley-Davidson in the second quarter. Its operating margin rate for motorcycles and related products improved close to 100 basis points, yet that was a product of expense cuts as revenue for motorcycles and related products declined 5.6% to $1.58 billion.
Second quarter consolidated revenue, which includes its financial services business, declined 4.8% to $1.77 billion.
Motorcycle shipments fell 7.2% in the second quarter to 81,807. That was at the low end of the company's guidance range of 80,000 to 85,000. Worldwide unit sales of Harley-Davidson motorcycles declined 6.7% to 81,388, led by a 9.3% drop in unit sales in its core U.S. division to 49,668.
The sales difficulties in the U.S. were attributed simply to "weak industry conditions."
Demographics, and specifically the aging population, have been reportedly acting as a sales headwind for Harley-Davidson, which is why Harley-Davidson's long-term strategy is focused on building the next generation of Harley-Davidson riders.
For the near term, though, business conditions will remain challenging. To that point, Harley-Davidson said it expects to ship 39,000 to 44,000 motorcycles in the third quarter, down approximately 10-20% year-over-year. In turn, it is revising its full-year guidance for motorcycle shipments, saying it now expects to ship 241,000 to 246,000 motorcycles to dealers, which is down approximately 6-8% from 2016 and its prior full-year shipment guidance of flat to down modestly.
Shares of HOG aren't down modestly after the latest report. They have dropped nearly 10% in pre-market action, which is making a tough year for HOG shareholders even tougher. At Monday's close, HOG was down 10.9% year-to-date versus an 11.0% gain for the S&P 500 Consumer Discretionary sector.