Harley-Davidson (NYSE:HOG) said Tuesday its second-quarter profit slipped 7.7%, and the company warned that its motorcycle shipments will decline more than expected this year.
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Harley-Davidson, which has sought to attract new riders amid slower U.S. sales, now expects 2017 shipments to drop 6% to 8% compared to last year. The new outlook would reflect total motorcycle shipments of 241,000 to 246,000. Previously, the iconic motorcycle maker said shipments in the current year would be “flat to down modestly.”
The downbeat forecast for demand comes after Harley-Davidson posted a 6.7% drop in global retail sales during the second quarter. U.S. sales were down 9.3%, and Harley’s market share in the heavyweight segment fell to 48.5% from 51.3% in the first quarter.
The company also lowered its full-year operating margin guidance, forecasting a 1% decline. Harley-Davidson had said its operating margin would be roughly in line with 2016.
Shares tumbled 11% to $46.29 in recent trading, setting a new 52-week low.
“Our long-term strategy, focused on building the next generation of Harley-Davidson riders, is our true north,” said Harley-Davidson CEO Matt Levatich. “Our new product investment is one pillar of our long-term strategy to build riders globally and we are energized by the strength of our model year 2018 motorcycles coming later this summer.”
Harley-Davidson is the dominant motorcycle brand in the U.S., but it has struggled to fend off competition from Japanese brands that offer steeper discounts. The Milwaukee-based manufacturer has also faced a growing rival in Indian Motorcycle, a division of Polaris (NYSE:PII).
Harley-Davidson booked net income of $258.9 million, down from $280.4 million in the year-ago quarter. Per-share earnings fell to $1.48 from $1.55. The results still managed to beat Wall Street’s estimate for earnings of $1.38 a share.
Revenue fell about 5.3% to $1.58 billion, just shy of expectations for $1.59 billion.