Harley-Davidson starts 5-year overhaul as coronavirus slams business
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Harley-Davidson Inc. announced plans to overhaul its business after the COVID-19 pandemic dragged the company to a loss in the three months through June.
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Harley reported a second-quarter loss of $92 million, or an adjusted 35 cents per share, as revenue sank 7 percent year-over-year to $865 million. Wall Street analysts surveyed by Refinitiv were anticipating adjusted earnings of 4 cents per share on revenue of $808.46 million.
“A total rewire is necessary to make Harley-Davidson a high-performance company,” CEO Jochen Zeitz said in a statement.
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The Milwaukee-based motorcycle maker’s five-year strategic plan, dubbed The Hardwire, will include vast changes to Harley’s operating model, update the company’s iconic motorcycles, add new products into the mix, and focus on the parts and accessories and general merchandise businesses.
The plan, which was teased alongside the company’s first-quarter results, will also include shifting new product launches from August to the beginning of the year and collaborations with influencers to reach new buyers.
A new marketing campaign focusing on the "unrelenting spirit" of Harley will include a collaboration with actor Jason Momoa, who has appeared in TV and film hits from "Aquaman" to "Game of Thrones" and "Stargate: Atlantis."
Harley-Davidson will focus on 50 markets, the majority in North America and Europe but also in parts of Asia. The company is working on plans to exit markets where volumes and profitability don't support further investment.
The Rewire, Harley's earlier course-correction plan that will continue through the end of 2020, is expected to result in $250 million in savings this year and $100 million in annual savings thereafter. The plan has reduced global inventory by 32 percent and resulted in higher used motorcycle prices.
Harley did not provide financial guidance due to the uncertainty caused by COVID-19.
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Shares fell 21 percent this year through Monday, worse than the S&P 500's 0.27 percent gain.
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