Harley-Davidson Inc. (NYSE: HOG) reported a significant decline in first-quarter profits Tuesday morning, even as it unveiled an aggressive new turnaround strategy aimed at reclaiming its heritage and attracting a new generation of riders.
The Milwaukee-based motorcycle giant posted a net income of $24.8 million, or $0.22 per share, for the quarter ending March 31. This represents an 81% drop from the $133 million ($1.07 per share) reported during the same period last year. The results fell short of Wall Street’s expectations, with analysts surveyed by Zacks Investment Research anticipating earnings of $0.34 per share.
Despite the earnings miss, revenue for the quarter reached $1.17 billion, exceeding analyst forecasts of roughly $958 million. The revenue beat was driven in part by a 14% surge in North American retail sales, which helped push global retail growth to 8%.
“Back to the Bricks” Strategy
Simultaneous with its financial release, President and CEO Artie Starrs introduced a multi-year strategic plan titled “Back to the Bricks.” The plan signals a shift toward more accessible pricing and a renewed focus on the company’s core dealer network.
Key components of the strategy include:
- The “Sprint” Model: An entry-level, 440cc motorcycle priced at approximately $6,000, designed to appeal to younger, urban riders.
- Sportster Revival: A return to the iconic Sportster nameplate to re-engage traditional enthusiasts.
- Dealer Profitability: A commitment to actions intended to help dealers double their profitability by the end of 2026.
- Financial Targets: The company is aiming for over $350 million in core motorcycle profit and $150 million in cost reductions by 2027.
Headwinds: Tariffs and Inventory
The company continues to navigate a difficult macroeconomic environment. Harley-Davidson reported a $45 million hit from tariffs in the first quarter alone, primarily related to imported components like semiconductors. For the full year 2026, the company expects tariff-related costs to range between $75 million and $90 million.
“We’re pleased with our first quarter results, which reflect actions we’ve taken to drive demand and improve dealer health,” Starrs said in a statement. He noted that global dealer inventories were down 22% compared to the previous year, as the company works to better align wholesale shipments with actual retail demand.
Harley-Davidson shares were up approximately 1.5% in early trading following the announcement, as investors weighed the ambitious new growth plan against the immediate quarterly shortfall.
