Why Only Have One War When Two Will Do
" Things fall apart ; the center cannot hold ; Mere anarchy is loosed upon the world ."
That is a quote from ' Second Coming ', a 1919 poem written by W . B . Yeats . Written at a post-war time when it appeared that even though it was theoretically peacetime , and the dreadful events of WWI behind him , the world felt to him like it was falling apart . Sounds familiar ? Technically those of us lucky enough to live in the United States , Europe or any of the other primary capitalist nations in the world are living in peacetime - at least our nations have not formally declared war , at least not on anything other than standards of behavior and good governance . Yet here we are . In this interconnected global society and economy , it is hard to believe that the old boundaries between nations have no meaning anymore . Which leaves us all ever more vulnerable to theoretically " foreign " events . Trade has replaced lines on maps as the connections , boundaries and competing interests between nations , societies , economies and cultures and , just as assuredly as with a spider ' s web , when one part is attacked , all parts are attacked . The first impacts we ' ll see from the events in the Middle East will be a compound of those we ' ve endured from the war in Ukraine - it will simply make stock and bond markets even more risk averse and , inevitably , be a risk to interest rates and , if it really gets out of hand on a wider scale , then all the other tropes of economic instability will come into the crosshairs , from inflation and supply chains to oil prices and employment . At the time of writing , dreadful though it so far is , there are no signs yet of the war between Israel and Hamas et al broadening into a wider regional conflagration ( or worse ), but in a region where stability has always been an unknown concept , we cannot assume that our humble little corner of global capitalism is assured of being unscathed . It ' s hard to predict quite how and why it will hurt us , but neither can be we sure that it won ' t . To channel Donald Rumsfeld , it is the " unknown unknowns " that can hurt the worst . Its not about what we know , it ' s about what we don ' t know . Which is exactly how I ' d characterize where Harley is placed as we eye its Q3 fiscals ( the week after press ) and a 2024 in which its fortunes will be hugely shaped by its FY 2023 results - due to be released at the end of January 2024 . Regardless of what its MY 2024 strategy reveals ( and my word , does it need to be something captivating !), and regardless of what investors and their analysts may think they believe , markets less concerned about products than they are about EPS and Earnings Per Share has been the principle which has driven management of H-D ever since the Wandell era . The nuance may have morphed away from the utterly single-minded focus that Wandell brought to the recovery program that he implemented ( as Harley reeled from the impacts of the 2007 - 2009 financial crisis ) under Levatich , under Zeitz that laserlike intensity of focus on keeping investors sweet has not only returned under Zeitz , but been amplified . After having moved so many of its long-term brand-loyal , enthusiast dealers out of the market or into retirement , a few months ago I described Harley ' s dealer policy as being to treat its ' New-Gen ' capital-rich dealers as its own personal corporate ATM
unknown unknowns ?
- a sentiment which , btw , found widespread recognition among AMD ' s authorized dealer readers . That has allowed Harley to manage inventory in tune with management bonus strategies rather than necessarily in-line with a dealership ' s local market needs and allowed the Harley board to maintain a level of shareholder remuneration ( through dividends and share repurchases ) that the direction of travel of its unit sales ( regardless of pricing ) simply cannot sustain . Exhibit number one - Harley ' s share price - floundering around the £ 30.00 mark and headed south . It hit a 3 1 / 2 year low in the $ 29.00 region in mid-September ( the lowest since crashing to around $ 23.00 in the March 2020 pandemic flash-crash ) and second lowest in more than ten years . Sure , all stocks are presently sliding like greased pigs , but really ? If this bright new era of brand value , desirability and exclusivity has not got a financial upside , then it has nothing . And here we are heading into yet greater uncharted and uncertain economic and geo-political territory . As a result , exhibit number two is Harley ' s market capitalization . At $ 4.36bn ( and headed south ), it is also the lowest since March 2020 and second lowest in a decade - despite the theoretically beneficial impacts of the share buyback programs . At traditional ratios , it ' s no exaggeration to say that there are less than well meaning potential buyers out there who could fit Harley-Davidson onto their Amex cards with limit left over . Harley-Davidson is ( again ) a hostile take-over risk , just assuredly as it was in the darkest days of the Wandell and Levatich eras . What saved Harley then , as much as anything , were the wider economic considerations had put M & A activity into the deep freeze . The difference between then and now though is that there is plenty of money sloshing around Wall Street - there is a potential tsunami of investment capital that is just begging to be spent . If Harley ' s share price and ' market cap ' continue to deteriorate after the 2023 annuals are filed , and it likely will , then as Harley puts the 2020 ' Rewire ' three full years into its rear-view mirror and enters the third year of the subsequent ' Hardwire ' strategic five-year plan , the clock will be ticking ever louder than it already is . Harley ' s Chairman , CEO and President has theoretically shown himself to be a past master at playing a result-based game with big numbers , but when a calculated risk becomes a gamble , it generally becomes time for investors to start seeking safety . But with events way outside the control of a specialty , discretionary leisure dollar sector such as ours , having the potential to negatively shape the financial " art of the possible " for all of us , don ' t be surprised if that global instability spreads like a virus , infecting underperforming board rooms all over the world , just as it did in 2007 / 8 - not least the one we care most about in Milwaukee .
Robin Bradley
Co-owner / Editor-in-Chief robin @ dealer-world . com
4 AFTERMARKET MOTO DESIGN - NOVEMBER 2023 www . AMDmag . com