Spring is the most important time of the year for Harley-Davidson (HOG, news, msgs). It sells about a third of its bikes in April, May and June, analysts say, as the weather warms up and bikers itch to hit the road.
After the horrible year Harley has had, I can only imagine the company was hopeful for a miracle this spring. But that didn't happen. Analysts at UBS say retail sales at Harley plummeted 35% in April and May, according to Barron's.
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And so Harley's problems continue. Americans still love their motorcycles, they just don't love brand-new Harleys. Here are the biggest problems the company faces:
- The used motorcycle market does a brisk business.
- Harley buyers are getting older. Only 12% of buyers are under 35.
- Harley offered no-money-down financing to subprime buyers who either couldn't or wouldn't repay their loans. As a result, its financing arm is in trouble with delinquent loans and credit rating concerns.
- The company has cut back shipments to retailers in hopes of bringing down inventory. Harley also had to close plants, lay off employees and cut production this year.
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Last year at this time, the share price was nearly $40. It plunged below $9 in March, bounced back above $20 in May, and these days is lingering in the $15 to $17 range.
Friday, Citigroup cut its rating on Harley to sell. Barron's thinks the stock may have topped out in May.