Harley-Davidson reported a first quarter drop in U.S. retail sales of 24.3 percent, against an industrywide decrease of heavyweight motorcycle (651cc-plus) retail unit sales of 21.4 percent.
Worldwide, retail sales of Harley-Davidson motorcycles dropped 18.2 percent compared to the prior-year quarter.
First-quarter operating income from Harley-Davidson Financial Services was $26.7 million, an increase of $15.5 million compared to a year ago. The company reports that this return to profitability after three consecutive quarters of operating losses was due primarily to improved credit performance in the retail motorcycle loan portfolio and by a lower cost of funds.
Revenue from Parts and Accessories totaled $149.1 million, down 12.1 percent, while General Merchandise revenue — which includes MotorClothes — was down 11.9 percent at $66.3 million.
“We are encouraged by our progress in the first quarter,” said Harley-Davidson president and CEO Keith Wandell. “We are seeing directional improvement in our dealers’ retail motorcycle sales as we enter the key selling season. At the same time, given the global economic uncertainty that still exists, we believe conditions will remain challenging throughout this year, and we will continue to factor that into how we manage the business.
Revenue from Harley-Davidson motorcycles during the first quarter of 2010 of $808.8 million was down 20.0 percent compared to the year-ago period. In line with guidance, the Company shipped 53,674 Harley-Davidson motorcycles to dealers and distributors worldwide during the quarter, compared to shipments of 74,670 motorcycles in the first quarter of 2009.
The Company reiterated its expectation to ship 201,000 to 212,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2010, a reduction of five to ten percent from 2009. In the second quarter of 2010, the Company expects to ship 55,000 to 60,000 Harley-Davidson motorcycles. The Company continues to expect gross margin to be between 32.0 percent and 33.5 percent for the full year. The Company also continues to expect full-year capital expenditures of between $235 million and $255 million, including $95 million to $110 million to support restructuring activities.