All Signs Point to Maybe For Harley Davidson
So how is Harley-Davidson doing in a business sense?
By most measurable metrics, the boys from Milwaukee are headed in the right direction, the stock price and earnings results are mostly positive and the design team is coming out with bikes people under the age of 60 want to ride.
On the red ink side of the ledger? They’ve cause some waves and negative publicity with money-saving layoffs designed to cut wages for their work force and their bikes are still too expensive.
When I opened up my email today, I was confronted with the following four stories from the web, and they were actually presented in the order you’ll see below, so I leave it to you to be the judge.
What does this kind of news say to me? It’s says it’s a good time to make motorcycles but a damn tough time to be selling the product to the riding public…
HOG Futures Up?
New York, January 4th
(TradersHuddle.com) – Shares of Harley-Davidson, Inc. (NYSE:HOG) closed the trading session at $39.33 just above calculated resistance at $39.22 effectively breaking out, grabbing the attention of momentum traders, which could eventually push the stock to different trading range
Harley-Davidson, Inc. (NYSE:HOG) manufactures and sells motorcycles. Its products include heavyweight touring, custom, and performance motorcycles, as well as a line of motorcycle parts, accessories, and general merchandise.
Harley-Davidson’s stock was trading in a well defined range with support at $36.06 and resistance at $39.22, given that this range was broken traders will be closely monitoring the stock.
Harley-Davidson shop in Christiansburg has closed
Jan 04, 2012
(The Roanoke Times – McClatchy-Tribune Information Services via COMTEX)
New River Valley Harley-Davidson in Christiansburg has closed after three years in business.
Loyd and Kathy Shiffer, who have sold motorcycles in the Roanoke Valley since 1982, opened the Christiansburg store in 2008.
The Christiansburg store, at 2700 Roanoke St., closed Saturday and has merged with Roanoke Valley Harley-Davidson on Peters Creek Road in Roanoke, said manager Zack Shiffer.
(c)2012 The Roanoke Times (Roanoke, Va.) Visit The Roanoke Times (Roanoke,
Va.) at www.roanoke.com Distributed by MCT Information Services
Copyright (C) 2012, The Roanoke Times, Va.
Cape Town’s premier Harley-Davidson dealership has been liquidated.
January 4th, 2012
Harley-Davidson Cape Town, in Somerset Road, closed down on December 20 and was placed under provisional liquidation in the Western Cape High Court on Tuesday, following a court application brought by Turnsil Investments, which owns the store.
According to court papers, the dealership’s motorcycle sales had declined over the past three years and it presently had a shortfall of more than R2.5 million.
According to an affidavit by Jason Nicol, one of the Green Point branch’s directors, they needed to sell about 200 motorcycles a year to sustain the business.
Sales figures had steadily declined since 2006 and 2007, during which years it sold 214 and 222 motorcycles respectively.
Sales dropped to 170 in 2008 and 141 in 2009. In 2010 the dealership sold only 80 motorcycles – 64 percent fewer than in 2007 – and in 2011 it sold 100 motorcycles.
Nicol said they had attempted to secure additional funding from banks, private companies and automotive groups, without success.
“Between 2006 and 2011, the number of sales of motorcycles effectively halved. The only explanation for this is the global financial crisis,”he said.
Harley-Davidson set to see decent profitability growth
January 4th, 2012
Harley-Davidson (HOG) faces demographic headwinds, an uncertain global economic environment, and increasing competition, which could make for a choppy ride in the near term. Still, we think the motorcycle manufacturer is set to see decent profitability growth once consumers recover from the economic downswing and are willing to once again spend on big-ticket items. We believe the shares are currently about fairly valued, but given a wide enough margin of safety, we would be buyers as we start to see stability in the employment and overall economic picture.
We believe operational changes are key to improving profitability over the long term. Management has made great strides in creating a best-in-class manufacturing process. Its new lower cost structure provides additional flexibility, which allows Harley to adapt production to marketplace demand and outsource processes when it makes competitive sense to do so. The company’s restructuring is expected to yield savings of $300 million annually–equivalent to 7% of the total expense base. Harley’s transformation strategy also includes two brand-boosting goals: improving brand acceptance by extending customer outreach, and maintaining leadership in the cruising and touring segments by increasing loyalty through innovative products and services.
The company’s high-level financial objectives seem reasonable. Management aims to outperform the S&P 500 over time, increase earnings at a faster rate than revenue, and run a high-margin, high-return business. A few years ago we might have doubted these targets, but since CEO Keith Wandell took the helm in 2009, the manufacturing business has undergone major changes which, in our view, reset the company’s earnings potential trajectory. The focus on increasing revenue through introducing new products and reaching a wider audience via international expansion makes us feel better about potential top-line gains over the longer term.
While shipments have reset to lower normalized levels, Harley can still squeeze out decent margin gains. Motorcycle demand remains soft, but we think management has taken appropriate steps to keep the company strong. Domestic shipments in the most recent reported quarter were still off more than 40% from the peak–there were 273,000 bikes shipped domestically in the trailing four quarters ending December 2006 and 146,000 bikes shipped in the trailing four quarters ending September 2011. But the company is still quite profitable, and the operating efficiencies that it has implemented will further rightsize the manufacturing capacity for market demand that might remain depressed for at least a few more years. We expect operating margins will return to their 10-year historical average of 21% in 2012, up from 4% in 2009.
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