Harley-Davidson (HOG), facing falling motorcycle sales around the world, said on Tuesday it plans to streamline its operations, reorganize and reduce its workforce during the fourth quarter in a move that will cost the company $20 million to $25 million.
The motorcycle manufacturer cited continued slowed U.S. motorcycle industry growth as the main factor for weaker retail sales. Harley-Davidson did not give details on its reorganization plans nor initially say how many jobs may be impacted.
Harley-Davidson’s retail motorcycle sales fell 7.1 percent in the United States during the third quarter. Weak U.S. industry trends dragged on the company’s total global retail sales, which fell 4.5 percent.
“We continue to effectively navigate a fiercely competitive environment and an ongoing weak U.S. industry,” said Matt Levatich, president and chief executive officer, Harley-Davidson Inc.
For the nine months ended Sept. 30 motorcycles registered in the United States fell about 5.6 percent to 279,013, according to Motorcycle Industry Council data.
Arun Kumar, a AlixPartners consultant, said many Americans are putting disposable income toward automobiles, rather than motorcycles.
“The U.S. consumer is electing to upgrade to a luxury vehicle,” Kumar said.
RBC Capital Markets analyst Joseph Spak noted some market enthusiasm regarding Harley’s 2017 motorcycle lineup and positive September sales, but asked if it would carry on into the spring.
“Question is can they hold on into and convert in the meaningful riding season,” Spak said in a research note on Tuesday.
Harley-Davidson reported a lower quarterly profit on Tuesday, which was as expected due to weak sales in the United States, the company’s largest market.
The Milwaukee-based company said its net income was $114.1 million in the second quarter, down from $140.3 million a year ago.
Earnings per share decreased to 64 cents from 69 cents a year ago, in line with expectations. Revenue was $1.27 billion, down from $1.32 billion a year earlier but beating forecasts for $1.09 billion.