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But the Milwaukee-based company stood by its outlook for the year, and its earnings beat Wall Street’s expectations. Shares of Harley climbed in morning trading.
“We’re positioned well for the current economic environment and we continue to see international sales grow,” Chief Executive Jim Ziemer said in an interview.
Harley said its earnings for the quarter ended June 29 fell 23 percent to $222.8 million, or 95 cents per share, from $290.5 million, or $1.14 per share, in the same quarter last year.
Revenue dropped nearly 3 percent to $1.57 billion from $1.62 billion in the year-ago quarter.
The results beat Wall Street estimates. Analysts polled by Thomson Financial expected earnings of 76 cents per share on $1.4 billion in revenue, on average.
“Earnings certainly did very well,” said Robin Diedrich, senior consumer analyst at Edward Jones. “Not a great quarter pretty much down across the board in terms of sales numbers and profit numbers, but it’s a game of expectations, and they definitely did better.”
Like nearly all vehicle makers, Harley-Davidson has grappled with the challenges posed by gas prices and the economy. Harley’s sales are closely tied to discretionary spending, which has declined sharply.
In April, Harley said it would respond by cutting shipments to its dealers and distributors by the thousands. The company also said in April it would idle plants and change production schedules, resulting in the loss of 370 unionized positions and 730 positions companywide.
Ziemer said in a conference call with investors that Harley finalized those work force reductions during the second quarter, which he expects will save the company $35 million to $40 million annually, starting in 2009.
Ziemer said in an interview he was comfortable with the number of employees at Harley following the reductions.
“I think we’re in a good position right now,” he said.
Harley said shipments of its motorcycles to dealers and distributors fell more than 15 percent to 80,326, primarily due to the shipment cuts it announced three months ago. Retail sales fell 3.6 percent from the year-ago quarter.
However, the company said its international sales grew sharply, reflecting the company’s increasing focus on overseas markets as weakening demand crimps U.S. sales. Harley said sales in its international markets jumped 11.2 percent during the quarter, and overseas sales now account for just over a third of all sales.
Ziemer said the company is looking to expand further into emerging markets such as China, India and Brazil, and expects overseas sales to continue to make up a larger share of Harley’s market. “It’d be nice if we eventually get to a 50-50 split,” he said.
Last week, Harley announced the purchase of Italian motorcycle maker MV Agusta Group for about $109 million as part of an effort to expand into the European market.
Harley maintained its full-year outlook of between $3 and $3.18 per share. Analysts expect earnings of $3.05 per share for the year, on average.
Shares of Harley rose $2.55, or 7.1 percent, to end at $38.73 Thursday.
