Company Reports

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and restore historical operating margin metrics, resulting in more tepid economic profits ahead.

Harley-Davidson delivered 39,209 motorcycles in its second quarter, up 9%, with wholesale shipments below retail sales. This resulted in a 17% decline in dealer inventory, supporting unit profitability via fewer promotions. The motor company operating margin of 6.6% was up 70 basis points.

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

Harley reported that first-quarter shipments fell 3% and motor company sales were down 2%, driving EPS of $0.22. The firm reiterated its prior 2026 outlook (shipments up 5% and enterprise operating income loss of $10 million-$65 million) and launched its "Back to the Bricks" growth strategy.

Harley-Davidson offered insight to its financial services arm (HDFS), which is responsible for wholesale and retail financing (writing more than 70% of domestic units).

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

Harley's fourth-quarter motor company sales fell 10% on a 4% shipment decline and significant pricing pressure (7%). The firm lost $2.44 per share in its seasonally smallest quarter on operating losses in all its segments, including the financial services arm, which hasn't posted a loss since 2009.

Harley-Davidson's brand has languished over the last 15 years, as evidenced by unit sales that have declined 40% and a stock that has fallen nearly 15% since 2010. In July, it agreed to sell most of its financial assets, lowering the capital intensity of its captive finance arm.

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

Harley-Davidson's core motor company business remains plagued by weak demand as evidenced by retail sales that fell 6% in the third quarter. Even with shipments rising 33% (lapping 39% declines last year), the firm reported a motor company operating margin of 5%, down 130 basis points.

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

Harley's board of directors named Artie Starrs as president and CEO, starting Oct. 1. A succession was expected, as current CEO Jochen Zeitz conveyed his intent to retire at the end of 2024.

Harley-Davidson's second-quarter shipments and EPS continue to slide, down 28% and 46%, respectively, as consumer fatigue in motorcycles persists. HDFS will receive $1.25 billion from KKR and PIMCO for its retail loan portfolio, facilitating debt paydown and accelerated share repurchases in 2025.

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

A first-quarter motorcycle operating margin of 10.8% supported by higher average selling prices led to EPS of $1.07, nearly $0.30 ahead of our forecast. Shipments fell a whopping 33%, and LiveWire shipped a mere 33 units in the period, as Harley continues to prune inventory at the dealer network.

Harley-Davidson's board of directors is searching for a successor to CEO Jochen Zeitz, who has been at the helm for the last five years and is planning to retire in 2025.

We lowered Harley-Davidson’s moat to narrow from wide in 2024. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.

A fourth-quarter sales decline of 35% and an operating margin loss of $193 million were driven by a 53% decline in shipments as consumer demand stalled. Continued hesitation in the retail environment sets up Harley-Davidson for another weak year of shipments and profitability in 2025.

We recently lowered Harley-Davidson’s moat to narrow from wide. We still see brand equity stemming from a long history of innovation, manufacturing experience, and a dealer network that has given Harley a dominant position in the US motorcycle market. However, we think its brand intangible advantage has declined in recent years, lowering our conviction in Harley’s ability to maintain market share and prevent operating margin degradation, resulting in more tepid economic profits ahead.