Harley-Davidson Investors See Possible Recovery Signs

Harley-Davidson Inc. reaffirmed its shipments forecast for the full year and said it is expecting dealers to sell more of its motorcycles in markets overseas, offering hope to the struggling business with a customer base that is aging across the U.S.

Shares of the company rose 3.6% Tuesday as investors were able to see past a further decline of 7% in retail sales for the motorcycle maker.

Harley, which has a firm grip on about 50% of the big-bike market in the U.S., has seen its market share there erode over the last few years as buyers are opting for rival bikes that have been heavily discounted.

Many investors expected the motorcycle maker to lower its guidance for shipments and that did not happen, said one Wall Street analyst.

To revive big-bike demand, Harley is aggressively spending on its product development and in marketing, which included the promoting at showrooms of its learn to ride academies and developing technology for electric motorcycles.

CEO Matt Levatich announced that more sales and marketing support is lined up to help deliver the goals for spring sales. Levatich added that the two new bikes the company launched earlier this year have been well received by both dealers and loyal customers.

For Harley, total shipments – those bikes sent to dealers – were down 9.7%. For its second quarter, Harley expects shipments of between 67,500 and 72,000 motorcycles, which are down from the more than 81,800 for the same period one year ago.

For its full year, Harley reaffirmed its shipments would be 231,000 to 236,000 bikes. International sales were up 0.2% after declines the previous five straight quarters.

Harley has been pressured by the higher aluminum and steel prices and has said that prices have increased further since the move by President Donald Trump to impose new tariffs on imported aluminum and steel.

The tariffs, which to date have not hurt sales at Harley, could possibly place the business at the center of a trade war as the European Commission has threatened to apply duties on Harley’s bikes.

The motorcycle maker said it has been working with trade officials and trade groups in different European countries and the U.S.

Levatich said the company is fully aware of headwinds it is facing and is making good process in its plans to address the challenges.

Profit was down 6.2% ending at $174.8 million equal to $1.03 a share, but beat estimates of 90 cents a share by analysts. Revenue was up 2.7% to end the quarter at $1.36 billion beating estimates of $1.23 billion.