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Over the past few months, Harley-Davidson (HOG) has faced some significant setbacks in its business after it made a controversial decision that drew both praise and scrutiny from its consumers.
The iconic motorcycle company recently unveiled its third-quarter earnings report for 2024. Sales took an unexpected dip, causing the company to provide a grim outlook on its future.
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In the report, Harley-Davidson revealed that its sales in the U.S. declined by 10% year-over-year. The company claimed that its dealers faced “a slowdown in customer traffic in the region” amid higher interest rates and economic uncertainty.
Related: Harley-Davidson makes a tough decision amid ‘woke’ outrage
Harley-Davidson's global retail sales also shrunk by 13%, compared to the same time period in 2023, as its motorcycle shipments decreased by 39%. This contributed to the company’s 32% consolidated revenue decline. In addition, Harley-Davidson’s revenue from its parts and accessories unit fell by 6% year-over-year due to “lower customer traffic.”
Despite the declines in its core business, the company managed to increase its apparel revenue by 13% year-over-year.
Harley-Davidson’s operating income, which is a company’s profit after expenses, also took a major hit. The company earned only $106 million during the quarter, a 49% decrease from what it generated during the same time period in 2023.
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"We have worked diligently through the quarter to mitigate the impact of high interest rates, and macroeconomic and political uncertainty, that continue to put pressure on our industry and customers, especially in our core markets," said Harley-Davidson CEO Jochen Zeitz in the report.
Currently, the Federal Reserve interest rate is set at a target range of 4.75% to 5%. The Fed cut the rate by 0.50 percentage points at its Sept. 17–18 meeting to relieve pressure on the economy, the first decrease in four years. As a result, borrowers will encounter lower loan rates, which could positively impact future Harley-Davidson motorcycle sales.
Harley-Davidson reveals grim outlook on future sales
The recent headwinds prompted Harley-Davidson to lower the expectations on sales and global shipments in its full-year 2024 outlook.
The company now expects its retail sales to decline by 6% to 8%, compared to its previous prediction of sales remaining either stagnant or increasing by 3%. It also now expects its wholesale shipments to be down by 16% to 17%, after previously expecting it to only decline by 7% to 10%.