Harley announces four "Focus Area" investment plans as it reports Q3 unit sales of +2.4 percent in Europe, - 2.5 percent in USIn releasing its third quarter 2015 financial data Harley-Davidson has confirmed dealer new motorcycle sales are down -1.4 percent overall worldwide compared to the first nine months of 2014, with sales down -2.5 percent in the U.S. and up +0.9 percent internationally.
"We expect a heightened competitive environment to continue for the foreseeable future, and now is the time for us to dial things up with significant additional investments in marketing and product development," said Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc.
"We have a strong plan, built on our incredible foundation, to further assert Harley-Davidson's substantial market leadership and accelerate growth. We have great confidence in our plans to drive demand and grow our reach and impact with customers globally."
The company says it intends to fund the increased demand-driving actions by reallocating existing spending - it expects to incur one-time expenses of approximately $30 million to $35 million in the fourth quarter of 2015, primarily for employee separation and reorganisation costs related to this reallocation.
"In the short term, because the third quarter did not unfold as we expected, we are lowering full-year shipment guidance. Our ongoing commitment to manage supply in line with demand and maintain the premium nature of the brand remains a top priority for Harley-Davidson," said Levatich.
The company is highlighting four "Focus Areas" for increased investment in 2016 and says it will increase its investment in customer-facing marketing by approximately 65 percent above 2015 levels. The company also plans to increase its investment in new product development by approximately 35 percent from 2015 levels. These changes represent an approximate $70 million increase in investment to drive demand compared to 2015.
These four "Focus Areas" for increased investment are listed as increasing product and brand awareness, growing new ridership in the U.S., increasing and enhancing brand access, and accelerating the "cadence and impact" of new products.
The company says it has five [ambitious] objectives - to lead in every market; to grow the sport of motorcycling in the U.S., in part by growing the number of U.S. core customers and growing the number of U.S. outreach customers at a faster rate; to grow U.S. retail sales and grow international retail sales at a faster rate - in support of this objective, the company has a target to grow its international dealer network by 150 to 200 new dealerships by 2020; to grow revenue and grow earnings faster than revenue through 2020; and to outperform the S&P 500.
Dealers worldwide sold 72,178 new Harley-Davidson motorcycles in the third quarter of 2015 compared to 73,217 in the third quarter of 2014. In the U.S. dealers sold 48,918 units in the quarter compared to 50,167 in 2014 Q3.
In international markets dealers sold 23,260 new Harley-Davidson motorcycles during the third quarter compared to 23,050 motorcycles in the year-ago period, with sales up +5.1 percent in the Asia Pacific region and +2.4 percent in the EMEA region, but down -11.5 percent in the Latin America region and -1.7 percent in Canada.
Operating income from motorcycles and related products was $143.1 million during the quarter, down compared to $146.3 million in the year-ago period. Third-quarter revenue from motorcycles was $812.4 million, down compared to $815.4 million in the year-ago period.
The company shipped 53,472 motorcycles to dealers and distributors worldwide during the quarter, which is up compared to shipments of 50,670 motorcycles in the year-ago period.
For the first nine months of this year net income was $710.0 million on consolidated revenue of $4.81 billion compared to nine-month 2014 net income of $770.1 million on consolidated revenue of $5.03 billion.
Year-to-date in 2015 dealers sold 217,770 new Harley-Davidson motorcycles worldwide, down compared to the 220,850 it sold in the first nine months of 2014, with retail unit sales up +6.9 percent in the Asia Pacific region and down -1.3 percent in the U.S., -5.1 percent in the EMEA region, -5.1 percent in the Latin America region and -3.9 percent in Canada compared to the year-ago period.
The company shipped 218,233 motorcycles to dealers and distributors worldwide in the first nine months of this year, down compared to the 223,569 it shipped in the first nine months of 2014. Nine-month revenue from motorcycles was down -6.2 percent to $3.38 billion, revenue from parts and accessories decreased -2.3 percent to $692.9 million and revenue from General Merchandise increased +1.5 percent to $213.0 million compared to the first nine months of 2014.
