Consumers continue to cut back their spending on big ticke items, as Harley-Davidson said it's lowering its earnings expectations for the year, and is going to cut back on bike shipments. The announcement generated an eight percent drop in its stock.
Along with motorcycles, all-terrain and other leisure vehicle dealers are also saying consumers have been reluctant to pay for the higher priced items, with their concerns about the economic climate we're now in.
Harley-Davidson Chief Executive Jim Ziemer said in a press release: "While a decision to reduce shipments and expectations is never easy, it is clearly the right thing to do for the long-term health of the brand and the business."
Domestically, Harley-Davidson has experienced their first consecutive quarter losses in over 15 years. Sales are expected to remain flat for the rest of the year. Last quarter worldwide sales also were down by 1.2 percent.
Company guidance for 2008 earnings projects growth to be between 4 percent and 7 percent. That's a huge drop from previous guidance of earnings growth expected to be between 11 percent and 17 percent for both 2008 and 2009.
The number of shipments for the third quarter are going to be around 86,000 to 88,000 units, down from the prior estimate of 91,000 to 95,000 units. Shipments for the entire year are expected to be about 20,000 less than originally projected.
Concerns by consumers aren't the only reason for slower sales though, as industry watchers say the lineup of products released this year were nowhere near as innovative as the 2006 offerings. They needed something more to prod consumers to loosen up their wallets, something the company didn't come through on this year.
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