Headline: "Harley-Davidson Lowers Revenue Forecast Amid Declining Demand"

Harley-Davidson Inc. has revised its full-year revenue projections downward due to persistent inflation and high borrowing costs weakening demand for its motorcycles in North America. This announcement on Thursday led to a drop of over 3% in the company's shares. The manufacturer, known for its luxury motorcycles, is experiencing a decline in consumer spending on high-priced products, as potential buyers are cautious about depleting their savings and taking on higher credit card debt. This shift has negatively impacted demand for luxury items.

Harley-Davidson CEO Jochen Zeitz acknowledged the challenges the company faces, stating, "We worked diligently throughout the quarter to mitigate the impact of high interest rates, macroeconomic and political uncertainty, which continue to put pressure on our industry and customers in our core markets." In response to weakening demand, Harley-Davidson adjusted its strategy by focusing on selling more of its profitable Touring motorcycle models, which allowed it to exceed third-quarter earnings forecasts. Despite a 10% decline in retail sales in North America, its largest market, these strategic sales helped the company achieve a third-quarter profit of 91 cents per share, surpassing the average analyst estimate of 79 cents.

The company had previously planned to reduce motorcycle shipments in the second half of the year to better align with retail sales. However, today's update indicates a more significant drop in expectations. Harley-Davidson now anticipates full-year global shipments to decline by 16% to 17%, a steeper drop than the previously forecasted 7% to 10% decline. Additionally, the company revised its annual retail sales forecast, now anticipating a decline of 6% to 8%, instead of the earlier projection of flat to 3% growth.

For 2024, the revenue forecast from motorcycles and related products has been revised to a decline of 14% to 16%, reflecting a notable decrease from the earlier estimate of a 5% to 9% decline. This adjustment reflects ongoing retail trends and the company's recalibrated expectations.

Raymond James analyst Joseph Altobello commented on the revision, stating, "Given these ongoing weak retail trends, as expected, HOG cut its 2024 guidance once again, but the magnitude of the decline was a bit more than we had anticipated." Harley-Davidson's announcement underscores the impact of the current economic environment on the luxury vehicle industry and the company's efforts to navigate these challenges.