Over the past few months, Harley-Davidson (HOG) has faced some significant setbacks in its business after it made a controversial decision that drew both praise and scrutiny from its consumers.
The iconic motorcycle company recently unveiled its third-quarter earnings report for 2024. Sales took an unexpected dip, causing the company to provide a grim outlook on its future.
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In the report, Harley-Davidson revealed that its sales in the U.S. declined by 10% year-over-year. The company claimed that its dealers faced “a slowdown in customer traffic in the region” amid higher interest rates and economic uncertainty.
Related: Harley-Davidson makes a tough decision amid ‘woke’ outrage
Harley-Davidson's global retail sales also shrunk by 13%, compared to the same time period in 2023, as its motorcycle shipments decreased by 39%. This contributed to the company’s 32% consolidated revenue decline. In addition, Harley-Davidson’s revenue from its parts and accessories unit fell by 6% year-over-year due to “lower customer traffic.”
Despite the declines in its core business, the company managed to increase its apparel revenue by 13% year-over-year.
Harley-Davidson’s operating income, which is a company’s profit after expenses, also took a major hit. The company earned only $106 million during the quarter, a 49% decrease from what it generated during the same time period in 2023.
"We have worked diligently through the quarter to mitigate the impact of high interest rates, and macroeconomic and political uncertainty, that continue to put pressure on our industry and customers, especially in our core markets," said Harley-Davidson CEO Jochen Zeitz in the report.
Currently, the Federal Reserve interest rate is set at a target range of 4.75% to 5%. The Fed cut the rate by 0.50 percentage points at its Sept. 17–18 meeting to relieve pressure on the economy, the first decrease in four years. As a result, borrowers will encounter lower loan rates, which could positively impact future Harley-Davidson motorcycle sales.
Harley-Davidson reveals grim outlook on future sales
The recent headwinds prompted Harley-Davidson to lower the expectations on sales and global shipments in its full-year 2024 outlook.
The company now expects its retail sales to decline by 6% to 8%, compared to its previous prediction of sales remaining either stagnant or increasing by 3%. It also now expects its wholesale shipments to be down by 16% to 17%, after previously expecting it to only decline by 7% to 10%.
Related: Lowe’s cuts back major policies amid woke blowback
Harley-Davidson also now predicts that its revenue will shrink by 14% to 16% for the full year, compared to the previous expectation that it would decline by 5% to 9%.
“We believe these reductions position the company more appropriately for 2025,” said Harley-Davidson Chief Financial Officer Jonathan Root during an Oct. 24 earnings call.
Harley shares started to show signs of recovery Monday, climbing 3.75%, trading above $33 per share after dropping as low as $31.65 in the wake of its earnings report.
Harley-Davidson recently faced controversy for going 'woke'
Harley-Davidson’s disappointing third-quarter performance comes after its customers recently held its feet to the fire over its supposed “woke” policies.
In July, conservative activist Robby Starbuck, took to social media platform X to accuse the company of having a “total commitment” to diversity, equity and inclusion, or DEI.
Starbuck alleged that the company supports a plethora of LGBTQ-based policies, events and training for its employees. He also claimed that the company’s CEO signed the CEO Action for Diversity & Inclusion Pledge and that Harley-Davidson is “openly working to have fewer White suppliers, dealers and employees.”
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Starbuck’s post went viral on X, garnering almost 3 million views, and many consumers threatened to boycott the motorcycle company for supporting these initiatives.
On Aug. 19, Harley-Davidson finally responded to the backlash by clarifying that it quietly cut its “DEI function” in April and that it will adjust several of its policies going forward.
This includes ensuring that its business resource groups “exclusively focus on professional development, networking, and mentoring.” The company will also remove “socially motivated content” from its employee training, while its sponsorships and affiliations will be under “review” and will only be approved and managed by the company or its foundation.
“We remain committed to listening to all members of our community as we continue on our journey together as one Harley-Davidson. United We Ride,” said Harley-Davidson in a statement on X.
The changes from Harley-Davidson drew mixed reactions from consumers who both praised and criticized the decision.
thanks for doing this, we see it and we appreciate it
— Mike Benz (@MikeBenzCyber) August 20, 2024
DEI is not anti white and it should be a part of every corporation. pic.twitter.com/oRv9FZmU8v
— 𝕁𝕒𝕪 𝔸𝕤𝕙𝕞𝕒𝕟 (@fvckinashman) August 19, 2024
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