Harley-Davidson Inc. (HOG) reported a challenging third quarter of 2024, facing headwinds from a weakening global economy and a consumer pullback. Combined revenue for Harley-Davidson motorcycles (HDMC) and electric motorcycle brand LiveWire came in at $881.21 million, while consolidated revenue dropped a significant 26% to $1.15 billion. This fell short of analyst expectations of $965.78 million.
The decline in revenue was primarily driven by a 32% slump in HDMC sales, partially offset by a 10% increase in revenue for HDFS. Harley-Davidson attributed the weakness to several factors: a 13% decline in global retail motorcycle sales, a 10% drop in North American retail performance, and a weaker-than-expected international market performance, with EMEA and APAC regions experiencing double-digit declines. Dealers reported a slowdown in customer traffic, citing the impact of high interest rates and macroeconomic uncertainty.
Despite the revenue shortfall, Harley-Davidson managed to exceed earnings per share (EPS) expectations. The company reported EPS of $0.91, surpassing the analyst consensus of $0.79. However, the gross profit margin in HDMC contracted 160 basis points year-over-year to 30.1%, and operating income in HDMC dropped by 69% to $55 million. Consolidated operating income for the quarter declined by 43% to $106 million, with a margin of 9.2% compared to 13.5% a year ago.
Recognizing the persistent economic headwinds, Harley-Davidson lowered its fiscal 2024 revenue growth outlook for HDMC to a decline of 14%-16%, down from its previous forecast of a 5%-9% drop. The company also lowered its operating income margin outlook to 7.5%-8.5% from 10.6%-11.6%. Despite the revised outlook, Harley-Davidson reiterated its fiscal 2024 capital investment guidance of $225 million to $250 million.
“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 Jochen Zeitz, Chairman, President and CEO, Harley-Davidson.
Shares of HOG fell by 2.58% to $33.25 in pre-market trading following the release of the earnings report. The company’s performance reflects the broader challenges facing the motorcycle industry, which is grappling with rising costs, supply chain disruptions, and a less certain economic environment. Harley-Davidson’s commitment to its long-term strategic initiatives and ongoing investments in its future will be crucial as it navigates these headwinds.