Harley-Davidson Inc on Tuesday unveiled a five-year turnaround plan to target low double-digit earnings growth through 2025 after unexpectedly swinging to a fourth-quarter loss.
The latest turnaround strategy from the company, which has struggled for years to grow sales beyond baby boomers, comes after a decade-long effort to grow sales overseas and draw younger riders with cheaper and newer models.
Harley said it would invest between $190 million to $250 million a year in its strongest motorcycle segments – touring, large cruiser and trike – to achieve mid single-digit growth in bike revenue.
Under Chief Executive Jochen Zeitz, who took charge last year, Harley has shifted the focus back to big bikes, traditional markets like the United States and Europe, and older and wealthier customers.
As part of the strategy, the company has trimmed its workforce, global dealer network, eliminated slow-selling models and exited 39 markets where weak sales and profits do not justify investment.
As part of his strategy to enhance the desirability of Harley’s brand, Zeitz has done away with promotional offers, tightened supplies and reduced inventory, enabling dealers to charge asking price for Harley’s bikes.
The strategy contributed to a 39% annual drop in revenue in the latest quarter as motorcycle shipments almost halved.
Total 2020 shipments to its dealers fell 32% to about 145,200, the lowest since 1997. Annual retail sales, an indicator of demand at dealers, fell 17% to 180,200, the lowest since 1998.
Harley posted a loss of 63 cents per share in the fourth quarter, compared with a profit of 9 cents per share a year earlier. Analysts surveyed by Refinitiv, on average, expected the company to report a quarterly profit of 14 cents a share.
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