Harley-Davidson Inc (NYSE: HOG) has created an iconic brand in the motorcycle industry. However, today, the company is feeling the pain because no matter how strong their brand may be, their sales are suffering at the moment. As a result, the stock is taking a nosedive in the market today as investors react to the most recent data released by the company. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (10:26), HOG is trading at $47.01 per share after a loss of $4.99 per share (9.60%) thus far today.
HOG Dives On Sales Blues
As mentioned above, the iconic Harley-Davidson is falling on hard times in the market today after a warning from the company led to fear among investors. Early this morning, the company warned investors that both full-year bike sales as well as profit margins would likely fall short of analyst expectations for the year.
In their announcement, HOG said that full-year shipments of motorcycles to dealers are on a bit of a downtrend. In fact, shipments of new motorcycles to dealers are now expected to fall by between 6% and 8%. This is a massive slide, considering that the last thing we heard about this year’s shipments was that they would be either flat or down modestly. No one quite expected a reduction of 6% or more.
Unfortunately, United States industry challenges and an inadequate balance of supply and demand are leading to the lower forecasts. The big driver to the poor forecast has to do with third quarter deliveries. In particular, HOG said that it is expecting that third quarter deliveries of new motorcycles to dealerships will fall between 10% and 20%. Not to mention, the company said that it is expecting a full percentage point drop in operating profit margin for the year.
So, What’s The Rub?
Of course, any time sales are down, investors are going to get concerned. However, it’s not just about sales being down. At the end of the day, the concerns surround why sales are down. You see, the idea here is that millennials simply aren’t interested in living the HOG lifestyle. As lifestyle changes occur in large populations, spending habits start to change as well. While the motorcycle lifestyle may have been intriguing in older generations, leading to strong sales, the concern is that sales will continue to taper off as the new generation takes hold.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on HOG. In particular, we’re interested in learning what the company plans to do in order to combat the decline in sales. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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