Shares of motorcycle maker Harley-Davidson (HOG) - Get Harley-Davidson Inc. Report tumbled pre-market Tuesday after the company reported a fourth-quarter loss and simultaneously unveiled a new five-year turnaround plan.
The Milwaukee, Wisconsin-based company reported a fourth quarter loss of 63 cents per share compared to a profit of 9 cents per share a year ago. On an adjusted basis, earnings swung to a loss of 44 cents per share from a profit of 20 cents per share. The company also posted adjusted revenue of $725 million.
Analysts were expecting earnings of a dime per share on revenue of $723 million.
Shares of Harley-Davidson sank 11.58% to $35.50 in pre-market trading Tuesday.
As a result of the surprise loss, Harley-Davidson unveiled a five-year turnaround plan targeting increased profitability and low double-digit earnings growth through 2025.
Harley is investing between $190 million and $250 million a year in its strongest motorcycle segments -- touring, large cruiser and trike -- to achieve mid single-digit growth in bike revenue.
Also as part of its plan, Harley is launching a pre-owned motorcycle program, creating a new division focused just on electric motorcycles and extending employee ownership to all its workers by offering an equity grant to roughly 4,500 employees.
Under the leadership of CEO Jochen Zeitz, who took over in 2020, the company has trimmed its workforce and global dealer network, eliminated slow-selling models and left 39 markets that had weak sales and profits.
"2020 was an extraordinary year in many ways and our team navigated many challenges," Zeits said. "We managed COVID-19 impacts, kept our community well-being at the forefront, protected liquidity and delivered $250 million in cash savings. We also successfully overhauled the entire company through The Rewire [its previous turnaround plan], building a strong foundation to successfully implement our new 5-year strategic plan, The Hardwire."
Zeitz has also done away with promotional offers, tightened supplies and reduced inventory, which has allowed dealers to charge asking price for Harley bikes.
However, that strategy contributed to the nearly 40% decline in year-over-year fourth quarter revenue from the previous quarter.
Total 2020 shipments fell 32% to about 145,200, the lowest level the company has reported since 1997.