Harley-Davidson to Cut 700 Positions and Take Charges

Harley-Davidson, hurt as younger riders avoid its classic big bikes, is cutting 700 positions and taking related charges.
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Harley-Davidson  (HOG) - Get Report shares on Thursday fell after the motorcycle icon said it would eliminate 700 positions worldwide.

The move, disclosed in a Securities and Exchange Commission Form 8-K, cuts 500 current staffers.

Last month Harley-Davidson cut 140 workers. Harley’s workforce totals more than 6,000. 

The Milwaukee company has struggled as younger riders have shied away from its behemoth classic motor bikes, gravitating instead to smaller vehicles.

Harley expects to incur restructuring charges for one-time termination benefits of $30 million, accelerated depreciation of $5 million and contract termination and other costs of $15 million through 2020.

Of that $50 million total, some $42 million will be taken in its second quarter. Of the $42 million, 90% will be cash charges. The charges are likely to continue into 2021, Harley said.

Earlier this week, Citigroup initiated coverage of Harley with a buy rating and a $33 price target.

Analyst Shawn Collins said in a note to clients that the recent decline in shares reflects a likely further near-term collapse in volumes and margins, but gives no credit for the "significant turnaround potential" under new Chief Executive Jochen Zeitz.

The analyst says Zeitz can kickstart a turnaround after his success at the athletic and casual footwear maker Puma. Zeitz took over Harley's top spot in February.

Harley recently traded little changed at $25.56. The stock has dropped 30% over the past 12 months but has rebounded 34% over the past three months.