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Harley-Davidson cuts dividend, halts buybacks to preserve cash

by Ankit Ajmera from https://www.reuters.com (Reuters) – Harley-Davidson Inc (HOG.N) slashed its dividend and halted share buybacks on Tuesday to boost its cash reserves as global lockdowns due to the coronavirus pandemic hit motorcycle demand in the first quarter. The company has $1.47 billion in cash and is in talks with big U.S. banks to get $1.30 billion in loan to ride out the crisis, it said, adding it would focus on its core U.S. market to prop up sales. Harley shares, which have lost nearly half of its value so far this year, jumped as much as 17% in morning trading after the company rolled out its cash preservation plan. “Harley continues to struggle with declining sales, but it continues to generate respectable free cash flow and we consider shares fairly valued at current levels,” said CFRA Research analyst Garrett Nelson. To boost sales, the company also said it will “de-emphasize” on some unprofitable international regions. The shift in strategy for the company that symbolized the counterculture movement of the 1960s comes as it struggles to woo the next generation of younger riders with its electric and more nimbler bikes in the United States. Sales have been declining for the past five years in its largest market as its baby-boomer fan base ages. To make matters worse, the pandemic has further dented demand as Americans stay at home to curb the spread of COVID-19. “We are at critical time in our history that requires significant changes to the company,” said acting Chief Executive Officer Jochen Zeitz, who took helm in February and is best known for turning around the Puma brand. Zeitz’s plan to move the launch of new models to early part of the first quarter from August to better align with the start of the riding season […]

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Harley-Davidson Acquires Company That Makes Electric Bikes for Kids

Harley-Davidson is trying to attract a new generation of riders at a very young age. The iconic motorcycle company announced Tuesday that it was buying StaCyc, which makes two-wheel electric bikes for kids. StaCyc has two models — the 12eDrive and 16eDrive — that the company describes as “the perfect choice for little rippers” between the ages of 3 and 7. The bikes have a top speed of about 10 miles per hour and sell for a range of $649 to $699. Harley-Davidson said in a statement that Harley-Davidson branded versions of StaCyc’s two models will be available at select Harley-Davidson dealers in the United States in the third quarter of 2019. “The StaCyc team shares the same vision we have for building the next generation of riders globally and we believe that together, we will have a significant impact in bringing the fun and enjoyment of riding to kids everywhere,” said Heather Malenshek, Harley-Davidson senior vice president of marketing and brand, in the statement. Harley-Davidson is increasing its bets on electric vehicles as sales of traditional bikes slow. The company has already announced plans to launch the LiveWire premium electric motorcycle this fall. It is also developing other electric bikes that it plans to start selling in 2021. Harley-Davidson needs new growth opportunities as the company struggles to deal with tariffs from the Trump administration that have hurt earnings. Sales and profits are expected to fall this year and revenue is only expected to rebound slightly in 2020. Shares of Harley-Davidson have rallied this year with the rest of the market, rising 10% so far in 2019. But the stock is trading nearly 20% below its 52-week high.

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