Harley-Davidson NYSE:HOG, a Milwaukee-based motorcycle manufacturer, reported second-quarter motorcycle shipments and revenue below Wall Street expectations as its price reductions generated less demand than analysts had projected. Shipments increased 9.4% from the previous year to 39,200 motorcycles, but remained below the 40,810-unit estimate, while revenue of $1.2 billion missed analysts' forecast of $1.3 billion. Harley-Davidson shares fell 1% at 9:34 a.m. in New York on Thursday, suggesting investors were weighing the sales shortfall against signs of improvement elsewhere in the results.
Harley-Davidson reported adjusted earnings of 75 cents per share, exceeding the 67-cent analyst estimate, and raised its full-year outlook for the motorcycle business. The company now expects motorcycle-unit income of between $10 million and $50 million, compared with its previous forecast ranging from a $40 million loss to a $10 million profit. Harley-Davidson also raised its maximum global motorcycle sales projection to 138,500 units from 135,000, after global retail sales increased 1% during the quarter. North American sales rose 3% and Latin America recorded growth, while Europe and the Middle East declined sharply and sales in Asia remained unchanged.
Chief Executive Officer Artie Starrs has lowered prices and plans to introduce the less expensive Sprint model as high interest rates continue to pressure motorcycle demand. Optimism surrounding the strategy helped Harley-Davidson shares rise 35% this year through Wednesday's close, while Loop Capital Markets, an equity research firm, upgraded the stock from hold to buy after analyst Brandon Rolle said more affordable models were helping younger riders access the company's motorcycles. However, S&P Global Ratings, a credit-rating firm, downgraded Harley-Davidson's debt to junk status earlier this month and warned that discounting could improve retail sales and market share while continuing to pressure profitability, leaving investors to balance stronger guidance against the financial risks of the company's pricing strategy.