Shares of Harley Davidson (HOG) - Get Report plunged on Tuesday after the motorcycle maker reported a wider-than-expected second-quarter loss and sales that were half of what they were a year ago as the coronavirus pandemic stalled demand.
The Milwaukee-based company said it lost $92 million, or 35 cents an adjusted share, in the quarter ended June 30, vs. income of $196 million, or $1.46 a share, in the same period a year ago.
Analysts polled by FactSet had been expecting earnings of 10 cents a share. Sales fell to $865 million, above the $760.6 million expected by analysts polled by FactSet but about half of the $1.63 billion it rang in a year earlier.
Global retail motorcycle sales in the second quarter of 2020 were significantly impacted by Covid-19, the company said, with retail sales down 27% compared to the prior year.
Already struggling from competition and a general drop in sales before the pandemic, Harley Davidson said it has launched a restructuring program called “The Rewire” that it said will “reduce duplication and inefficiencies.”
"A total rewire is necessary to make Harley-Davidson a high-performance company,” said CEO Jochen Zeitz, noting the effort is expected to generate $250 million in cash savings and another $100 million in ongoing annual savings.
Following the rewire program, Harley Davidson will kick off its “The Hardwire” program, “which will be grounded in enhancing the desirability of our brand and protecting the value of our iconic products," Zeitz said.
Harley-Davidson plans to concentrate on approximately 50 markets primarily in North America, Europe and parts of Asia Pacific "that represent the vast majority of the company's volume and growth potential."
The company is evaluating plans to exit international markets where volumes and profitability do not support continued investment in line with the future strategy, it said.
Shares of Harley Davidson were down 9.8% at $26.41 in trading on Tuesday.