<<< Continued from cover
and new, high- potential
segments; expanding product
offerings of its best-selling
motorcycles; delivering its first
Adventure Touring motorcycle -
the Pan America 1250 (in 2021);
shifting annual product launch
timing from August to early in the
first quarter; reinvigorating
launch efforts, including
collaborations with key
influencers to bring the brand
and new products to life and
drive brand desirability.
Among other plans, the company says
it is set to launch a new marketing
campaign including a collaboration
with DC Comics' "extended universe"
movie actor Jason Momoa "to
celebrate the shared journey and
unrelenting spirit of Harley-
Davidson." Apparently.
Growth Through
P&A and General
Merchandise
The company says it intends to
intensify its focus on its Parts &
Accessories and General Merchandise
businesses, "encouraging customers
to customize their entire riding
experience to match their own style.
Now part of the new Commercial
function, new leadership has designed
strategies for each business aligned to
the company's motorcycle and market
priorities with the goal of delivering a
holistic experience in the
marketplace."
Internationally Harley plans to "reset"
its "global business" to concentrate
on approximately 50 markets primarily
in North America, Europe and parts of
Asia Pacific, the "high-potential"
markets that represent "the vast
majority of the company's volume and
growth potential" and is "evaluating
plans to exit international markets
where volumes and profitability do not
support continued investment - in line
with the future strategy."
Marketing
In a very welcome step, one that
smacks of the kind of grass-roots nearmarket
connectivity between sales and
marketing that Harley has singularly
failed to embrace in the past 30 years,
the company says it also plans to shift
resources and marketing investments
"into the regions for maximum
impact.
"As part of this effort, the company
has streamlined regional offices and
created new groups of high potential
countries that will have the autonomy
to drive the business (within a clearly
defined framework)." Additionally, the
company plans to "optimize" its
dealer network to provide an
"improved and integrated customer
experience." Among corporates, this is
generally code for closing down a
large number of outlets.
Harley-Davidson has "revamped its
approach to supply and inventory
management, focusing on products
and initiatives that add value, while
significantly reducing discounting and
price promotions. This is expected to
drive retail pricing to help preserve the
value and desirability of Harley-
Davidson motorcycles for its
customers and brand."
"All of these efforts of The Rewire aim
to provide a better starting point for
the future and to build desirability for
the Harley-Davidson brand and
products."
In its Q2 news release, Harley has
highlighted several "Rewire
outcomes" that it says it has already
been able to bank - such as $250m in
cash savings (excluding restructuring
charges) including SG&A and capital
reductions expected in 2020;
restructuring charges of $42m that are
expected to result in approximately
$100m in ongoing annual savings
Jochen Zeitz, Harley-Davidson
Chairman, President and CEO
based upon actions taken; a reduction
in global dealer inventory of -32
percent with U.S. 2020 new model
year motorcycles selling at MSRP on
average and used H-D pricing up
significantly at retail and auction.
"The Rewire is expected to continue
through the end of the year, leading to
a first look at the company's 2021-
2025 strategic plan, "The Hardwire",
expected in the fourth quarter.
Building on the foundation and
principles of The Rewire, the driver of
the new plan will be Harley-Davidson
as the most desirable motorcycle
Pan America Adventure Tourer, captioned: The 2021 launch of the 1250 cc
'Pan America' Adventure Tourer is set to go ahead and rumors suggest that
Harley will follow manufacturers such as BMW, Yamaha and Honda with a
family of lower displacement variants in subsequent years.
The 'Rewire' update does NOT name check the planned new 'Bronx'
streetfighter model for 2021, which appears to confirm the widespread
speculation that the project is to be dropped - at least for the foreseeable
future.
brand in the world for its customers,
employees, community and
investors."
In terms of its COVID-19 Response
and Recovery the company says it
"continues to proactively manage its
business through the pandemic and
has implemented robust protocols to
keep workers safe in its factories. Most
non-production workers will continue
to work from home until the end of the
year. Response and recovery plans
include supporting global dealers and
customers. At the end of the quarter,
about 93 percent of our global dealers
were open for retail motorcycle sales
following pandemic interruptions."
Included in the company's broad cost
and cash savings measures are SG&A
reductions, curtailed capital spending,
suspended discretionary share
repurchases and a "prudent"
approach to dividend payments. The
company announced it will pay a third
quarter cash dividend of $0.02 per
share, in line with its second quarter
dividend. The dividend is payable
September 25, 2020 to the
shareholders of record of the
company's common stock as of
September 10, 2020.
The company has also further
strengthened its strong liquidity
position with nearly $4.7bn in liquidity
at the end of the quarter.
Second Quarter
2020 Results
Global retail motorcycle sales in the
second quarter of 2020 were
significantly impacted by COVID-19.
Q2 U.S. retail sales finished down 27%
compared to the prior year; -22%
YTD. European (EMEA) retail sales
were -30% Q2; -29% YTD. Worldwide
motorcycle retail sales were down
-27% Q2 and -23% YTD.
Revenue from the Motorcycles and
Related Products segment was down
in the second quarter of 2020 (-53%
and -33% YTD). Revenue from
motorcycle shipments specifically
were -59% in Q2 and -36% YTD.
Gross margin and operating margin
were down during the quarter,
primarily due to lower productivity and
absorption resulting from the
suspension of manufacturing.
"Second quarter 2020 results reflect
the impacts of COVID-19 and also the
actions taken in the second quarter to
rewire the company. Q2 GAAP diluted
EPS was $(0.60) versus $1.23 in Q2
2019. Excluding restructuring plan
costs and the impact of recent tariffs,
adjusted Q2 diluted EPS was $(0.35)
versus $1.46 in Q2 2019. Second
quarter net loss was $92m on
consolidated revenue of $865m versus
net income of $196m on consolidated
8 AMERICAN MOTORCYCLE DEALER - SEPTEMBER 2020 www.AMDchampionship.com