Shares of Harley-Davidson (NYSE:HOG) experienced a significant 10% drop to $26.05 today, following a sales downturn in the third quarter. This decline contributes to an annual decrease of 38%, attributed to production disruptions and concerns surrounding consumer discretionary spending.
The company announced a 20% reduction in motorcycle shipments for the third quarter, leading to a 9% revenue decline for the unit handling bikes, parts, and apparel sales. The unit generated $1.3 billion, falling short of the anticipated $1.36 billion based on analysts' expectations.
Despite these challenges, Harley's quarterly profit managed to reach $1.38 per share, slightly surpassing analysts' predictions. However, high inflation and rising interest rates have negatively impacted demand for Harley's products.
Edel O'Sullivan, CCO of Harley Davidson's motorcycle unit, noted that customers are deferring discretionary purchases until 2023 due to economic uncertainties. Meanwhile, Harley's financing unit has seen an increase in provisions for credit losses, which has negatively affected its operating profit.
During a conference call today, CFO Jonathan Root highlighted increasing credit losses and delinquencies as signs of a more stressed consumer scenario in 2023.
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