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Mar 27

Harley-Davidson Has Missed the Mark in Electric Transportation

By General Posts

by Travis Hoium from https://www.fool.com

The company can’t get over its past success.

The iconic Harley-Davidson (NYSE:HOG) brand is in trouble. The company has seen revenue fall for a half-decade, and earnings have evaporated. Strategies to get into electric motorcycles have largely failed, and the core business doesn’t show any signs of a turnaround.

Despite all of these challenges, Harley-Davidson stock is up 82% over the past year, and investors seem optimistic about a turnaround. But there’s good reason to think that won’t happen for this leisure stock.

Harley-Davidson’s motorcycle market is shrinking

One thing is clear: Harley-Davidson’s market is getting smaller as the culture that brought the company to industry dominance diminishes. The customer base is aging, younger consumers are no longer interested in the look or sound of Harley-Davidsons, and growing markets adjacent to the motorcycle market have been difficult for the brand to enter.

The biggest challenge is that Harley-Davidson was always a culture brand, and that’s what made it so powerful for decades. It wasn’t just motorcycles — it was people’s apparel, the sound the bikes made, and long rides on the open road. As more people move to urban markets and look for less disruptive means of transportation, the culture looks out of date.

Going electric isn’t enough

Harley-Davidson hasn’t been completely surprised by the industry’s changes — it saw the electric vehicle market coming to motorcycles. But it miscalculated what kind of products consumers want and where its brand can connect. The current LiveWire products are a similar form factor to traditional motorcycles, but that’s not where consumers are trending.

Electric scooters are really where the growth has been, with Statista estimating that about 50 million electric scooters and bicycles were sold in 2020. Grand View Research estimates the electric scooter market will grow from $20 billion in 2020 to $42 billion in 2030. This is where the growth is, and Harley-Davidson is essentially absent. If it’s looking to attract younger customers, scooters would have been a great way to grow the business.

Just getting into electric mobility isn’t enough — companies have to make the right products and have the right brands. Harley-Davidson is neither, meaning it is missing out on a huge growth market that’s adjacent to its core products.

No easy answers

Management has tried to lay out a turnaround strategy. They want to get into used motorcycle sales, and expand the lineup of electric motorcycles and bicycles. But used bikes are just an easy revenue grab, and there’s no indication that Harley-Davidson will build significant market share in smaller electric mobility products.

The future is looking dimmer by the day for Harley-Davidson. Sometimes an iconic brand like this simply sees the world pass it by.

Nov 24

Why Harley-Davidson Is The Tesla Of Motor Bikes

By General Posts

by Jim Osman from https://www.forbes.com

Visionary CEO Keith E. Wandell should go down in history as the man who introduced the electric motorcycle to the US market and possibly the first CEO to bring it to the world.

It was in 2011 that Mr. Wandell first showcased his unbranded team-made creation to a keen San Francisco motor bike enthusiast crowd. He might be the most notorious CEO that the iconic US bike manufacturer Harley-Davidson HOG +4.1% has had (founded 117 years ago in Milwaukee, Wisconsin).

However, The Edge (the global leader for activist ideas, special situations and Spinoffs) believes new CEO Jochen Zeitz is the best thing to happen to the company since Mr. Wandell left and successor Matthew S. Levatich was fired suddenly thanks to Impala Asset Management, the $2.4 billion activist hedge fund led by Bob Bishop.

The US military purchased over 20,000 motorcycles from Harley-Davidson in World War I and the company also lent itself to supporting US and Allied troops in World War II, with 90,000 military motorcycles handed over.

Harley-Davidson’s global fan club run in the millions of members, called Harley Owners Group (HOG), and their constant support of US military and Allied troops gives to many charities around the world.

Under Mr. Wandell’s stewardship, the electric motorbike became a reality for Harley-Davidson when the LiveWire was first displayed to the media in June 2014 and released to customers by September 2019.

It even became the star of 2019 documentary “The Long Way Up” featuring Unicef Ambassadors and Hollywood actor Ewan McGregor and his longtime riding buddy Charley Boorman when they traveled from Argentina to LA on the electric LiveWire bikes.

In the 1950s Harley-Davidson dealt with reputation damage as well as economic downturns, and was on its knees by the 1960s. In 1969, American Machine and Foundry (AMF) rescued the nearly bankrupt Harley-Davidson.

AMF sold the company to a group of 13 investors led by Vaughn Beals and Willie G. Davidson for $80 million in 1981. To this day, it’s one of only two major American motorcycle manufacturers to survive beyond the Great Depression.

On July 1, 1987, executives from Harley-Davidson and the New York Stock Exchange rode from the Harley dealership in Queens to the New York Stock Exchange on Wall Street to celebrate the first day Harley-Davidson began trading under the ticker symbol HDI, according to the Harley-Davidson museum.

Mr. Wandell joined Harley-Davidson in May 2009, becoming the first external CEO since 1981. On February 7, 2012, under Wandell’s reign Harley-Davidson changed its New York Stock ticker symbol from HDI to HOG.

Mr. Wandell joined Harley-Davidson as CEO in 2009 and by 2012 he had assumed complete control as Chairman of the company’s board of directors while paying investors an increased dividend. It was Mr. Wandell who showed off his unbranded electric motorcycle to enthusiasts in downtown San Francisco in Autumn 2011.

But Mr. Wandell had an eye for talent and promoted Matthew S. Levatich, who joined Harley-Davidson in 1994, as Chief Operating Officer to President, and then CEO of the company in 2015 when Mr. Wandell retired.

Current President, CEO and Executive Chairman Jochen Zeitz (took office February 2020) made two purchases in May 2020, once on May 8 (97,850 shares at $21.26, totaling just over $2m) and again on May 13 (51,020 shares at $19.52, totaling just shy of $1m and representing a 51% increase to his holdings).

These were his first purchases of HOG stock and he has recently made another purchase on August 12 – this time buying 71,450 shares at $27.86 (again spending about $2m, representing a further 47% increase to his holdings) at a significantly higher level than his previous buys. From the May 8 purchase to date, Zeitz’s insider buying made an adjusted +23% return.

Another executive also bought on May 13, then-CFO John Olin, who bought 13,500 shares at $19.02 (spending $260k and representing a 19% increase to his holdings at the time. Since that purchase, Mr. Olin has left the company as part of the larger cost-cutting restructuring called “The Rewire,” though his purchase has yielded a significant return of +45% in just over three months.

Vice President & Treasurer Darrell Thomas has taken over interim CFO duties as of July 9 until a formal successor has been named.

In April 2020, in response to the ongoing COVID-19 pandemic, HOG announced a strategic turnaround plan called “The Rewire,” intended to overhaul the company’s global operating model and save costs.

As a result of the ongoing implementation of the Rewire, several optimization changes have been made to the global workforce and reduction of redundancies, there is an increased focus on offering customizable parts and accessories to help consumers make their motorcycles more personal.

The creation of Chief Digital Officer with Jagdish Krishnan in the role is designed create broader and more engaging digital marketing experience for consumers.

This initiative intends to bring Harley-Davidson into the modern era and appeal to generation Z consumers and beyond (as much of the counter-culture base has grown older and motorcycles have struggled to catch on with a wider young audience), and may provide another example of Mr. Zeitz’s turnaround magic.

Oct 27

Harley shines as CEO Zeitz’s turnaround plan boosts profit

By General Posts

by Rachit Vats from https://www.reuters.com

Harley-Davidson Inc beat profit expectations on Tuesday as tighter inventories helped drive up prices and it reined in costs as part of Chief Executive Officer Jochen Zeitz’s restructuring plan, sending its shares up as much as 28%.

Overall shipments were down only 6% in the third quarter, recovering from a 59% slump in the prior quarter, indicating a rise in demand for the maker of large cruisers.

The sharp recovery from the pandemic lows comes as CEO Zeitz looks to recharge the business by shifting the focus back to big bikes and traditional markets like the United States and Europe.

Harley also tightened supplies and cut production, driving up prices for pre-owned bikes, which used to be a drag on new motorcycle sales.

“We are managing inventory in line or rather a little short of demand,” Zeitz said. “Dealers are selling new bike at or very close to MSRP (manufacturer suggested retail price) and higher dealer profitability.”

Global dealer inventory was down 30% in the quarter and Zeitz said the company was planning to exit 40 unprofitable markets.

The company exited the world’s largest two-wheeler market, India, last month and recently announced a plan to develop and sell a range of premium motorcycles under its brand name in the country along with Hero MotoCorp.

Retail sales in its biggest market, the United States, where Harley has not recorded a sales rise for the past six years, fell 10% from a year earlier, but was much less than the 27% slide in the second quarter.

Total expenses fell 26% to $196.9 million in the quarter.

Net income rose 38% to $120 million, or 78 cents per share in the third quarter ended Sept. 30. Analysts were expecting a profit of 21 cents per share, according to Refinitiv data.

Motorcycles and related product revenue fell to $964 million from $1.07 billion a year earlier.

Jul 15

Harley-Davidson Racks Up Buy Ratings on Bets New CEO Can Turn Things Around

By General Posts

by Christiana Sciaudone from https://www.investing.com/

Harley-Davidson (NYSE:HOG) has swayed yet another analyst that a turnaround will bear fruit.

Shares are up 4.5% on Wednesday after UBS followed BMO Capital in upgrading the motorcycle maker. UBS bumped its rating to buy from neutral and gave Harley-Davidson a price target of $31, Seeking Alpha reported. The average price target of analysts tracked by Investing.com is $26.75. The stock has seven buys, 10 holds and one sell. It was trading around $28.60 during the morning session.

On Tuesday, BMO raised HOG to outperform from market perform and boosted its price target to $33 from $23, MarketWatch reported.

New Chief Executive Officer Jochen Zeitz, named in May, is expected to drive much-needed change at the company.

Shares are trading at a price-to-earnings ratio of 11, versus 16 for the average long-term ratio of the Dow Jones, according to data compiled by Investing.com and Zacks Investment Research.

Last week, Harley-Davidson said it would cut 700 positions across global operations, with about 500 expected to exit in 2020. The chief financial officer also exited the company at the time. Harley-Davidson said it is overhauling its global operating model to become a “leaner, more nimble” organization.

Harley-Davidson’s stock surges toward a 4-month high after Morgan Stanley raises rating, price target

by Tomi Kilgore from https://www.marketwatch.com

Shares of Harley-Davidson Inc. HOG, +5.51% shot up 4.8% toward a four-month high in morning trading Wednesday, after UBS analyst Robin Farley turned bullish on the motorcycle maker, citing an upbeat outlook on margins over the next couple years. Farley raised his rating to buy, after being neutral for at least the past three years, and raised his stock price target to $31 from $24. He said he believes Harley could help boost margins by eliminating growth initiatives, as they were losing money, even if demand problems continue. “We believe [Harley] has room to reduce its shipment base and actually raise earnings, because of bike sales that currently detract from the bottom line,” Farley wrote in a note to clients. “Harley was losing money pursuing those [growth] initiatives because we believe they don’t have clear avenues for growth,” Farley wrote. The stock’s rally comes a day after it surged 5.6%, after BMO Capital’s Gerrick Johnson turned bullish, and lifted his price target to a Street high $33. Harley’s stock, which is headed toward the highest close since March 4, has soared 55.7% over the past three months, while the S&P 500 SPX, +0.90% has advanced 15.7%.

Jul 14

Harley-Davidson Rallies on BMO Upgrade, Expected Turnaround

By General Posts

by Christiana Sciaudone from https://www.investing.com

Harley-Davidson (NYSE:HOG) shares rose 5% after an upgrade by BMO Capital.

HOG was raised to outperform from market perform by analyst Gerrick Johnson, who also boosted his price target to $33 from $23, MarketWatch reported. The average price target is $26.75, while the highest is $34, according to data compiled by Investing.com. The stock was trading around $27.28 on Tuesday.

Johnson is more positive on the motorcycle maker thanks to management changes and the “high level of credibility” that Chief Executive Officer Jochen Zeitz has brought to the company.

While retail sales may not recover quickly, key metrics like used bike prices and dealer inventory levels should improve, showing proof of a turnaround, MarketWatch quoted Johnson as saying.

Last week, Harley-Davidson said it would cut 700 positions across global operations, with about 500 expected to exit in 2020. The company said it is overhauling its global operating model to become a “leaner, more nimble” organization.

HOG has seven buy ratings, 10 holds and one sell, according to data compiled by Investing.com.

Harley-Davidson’s stock surges after BMO Capital upgrades, raises price target to highest in the Street

by Tomi Kilgore from https://www.marketwatch.com

Shares of Harley-Davidson Inc. HOG, +5.55% hiked up 3.4% in premarket trading Tuesday, after BMO Capital’s Gerrick Johnson became the most bullish analyst covering the motorcycle maker following an upgrade and price target boost. Johnson raised his rating to outperform from market perform and lifted his stock price target to $33, which is 27% above Monday’s closing price of $25.92, from $23. His target is now the highest of the 19 analysts surveyed by FactSet. Johnson said he’s more positive on the company after recent management changes, as new Chief Executive Jochen Zeitz has brought in “a high level of credibility” that investors have embraced. “As strategic changes are implemented over the next several quarters retail sales may struggle, but other key metrics, such as used bike prices and dealer inventory levels, should improve, providing ‘evidence’ the turnaround is taking hold,” Johnson wrote in a note to clients. The stock has run up 34.0% over the past three months through Monday, while the S&P 500 SPX, +1.34% has gained 10.9%.

May 07

Harley appoints turnaround specialist Jochen Zeitz to revive sales

By General Posts

by Rachit Vats, Sanjana Shivdas from https://www.reuters.com/

(Reuters) – Harley-Davidson Inc (HOG.N) on Thursday appointed board member and turnaround specialist Jochen Zeitz to the role of chief executive officer, as the struggling motorcycle maker looks to tap into his expertise to woo customers and revive sales.

Shares of Harley, which were down 47% this year as of last close, rose 5% to $20.6 in morning trade.

Zeitz, a former CEO hailed for turning around German footwear brand Puma’s near-bankrupt business, is known to have led a push for sustainability at Harley and was a force behind Harley’s LiveWire, the company’s first electric bike.

The company said Zeitz, who joined the Harley board in 2007, will continue to serve as the board chairman.

Harley has failed for years to increase sales in the United States, its top market, which accounts for more than half of its motorcycles sold. As its tattooed, baby-boomer consumer base ages, the Milwaukee-based company is finding it challenging to attract new customers.

To make matters worse, the pandemic has further dented demand as Americans stay at home to curb the spread of COVID-19.

In April, Harley slashed here its dividend and halted share buybacks to boost its cash reserves to weather the impact from the health crisis.

Zeitz was asked to take over after CEO Matthew Levatich stepped down in February following Harley’s worst sales performance in at least 16 years.

In his first call with investors as acting CEO, Zeitz lined up plans to cut costs and “de-emphasize” some of its 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.