Harley's U.S. Dealer Sales Drop

Second-quarter earnings still top estimates.
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Harley-Davidson's

(HOG) - Get Report

shares were falling Thursday after the motorcycle maker said dealer sales declined in the second quarter owing to a drop-off in the U.S.

Even so, revenue for the quarter ended July 1 jumped 17.7% from a year ago to $1.62 billion. Still, that fell a bit short of analysts' consensus target of $1.64 billion.

Harley earned $290.5 million, or $1.14 a share, compared with $243.4 million and 91 cents a share a year earlier. Analysts surveyed by Thomson Financial were looking for earnings of $1.13 this year.

During the quarter, the company shipped 95,117 Harley-Davidson motorcycles to dealers around the world. Sales fell 1.2%, with U.S. sales down 5.5%. The strength was found internationally, where retail sales grew at double-digit rates.

Retail sales in every major country in Europe were up during the quarter, resulting in 13.7% growth there. Japan, Canada and all other international markets climbed at a combined rate of 13.4%.

Lately the stock was down 4.3% to $58.50.

The company expects to ship between 91,000 and 95,000 Harley-Davidson motorcycles during the third quarter. For the full year, Harley continues to expect earnings per share growth in the range of 4% to 6% on moderate revenue growth.

Looking ahead to 2008 and 2009, Harley is predicting solid revenue expansion and EPS growth of 11% to 17%.

"While we remain comfortable with this guidance, U.S. retail sales of Harley-Davidson motorcycles in the first half of the year have not met our expectations," the company said. "As a result, we will continue to closely monitor the retail environment and regularly assess our planned wholesale shipments throughout the remainder of 2007."

Through the first six months of the year, shipments of Harley-Davidson motorcycles were 162,878 units, a 2.2% increase from last year.