Harley-Davidson Inc. sales continue to gain traction from 2011, with dealerships saying consumer confidence has returned and the recession is mostly behind them.
The rebound has been noticed by Wall Street, too, triggered in part by analyst reports that motorcycle dealerships are having one of their strongest early selling seasons in years. Wednesday, the shares closed at $49.76, up 40 cents and a 52-week high.
On Jan. 24, Harley reported fourth-quarter earnings of 24 cents per share, beating analyst estimates by a penny, compared with an 18-cent per share loss in the same quarter a year earlier.
Harley-Davidson declined to comment on its current sales trend, but dealership surveys show a marked improvement that largely began in 2011.
Dealers contacted by Robert W. Baird Co. reported about a 30% increase in sales through mid-February, including a 46% surge in the Midwest where the winter has been mild.
Nationwide, 84% of the Harley dealers Baird surveyed said motorcycle inventory was "too low" or "about right." U.S. inventory was near its lowest level in a decade, according to Baird analyst Craig Kennison.
However, too many dealers were still selling bikes below the suggested retail price -- a stubborn metric that's yet to improve despite low inventories, Kennison said.
Analyst Gregory Badishkanian of Citigroup believes March sales will be key to determining Harley's overall performance in the current quarter, but that investors should be encouraged by what happened in January and February.
Warm weather has helped, Badishkanian wrote in a note to clients. Even excluding that, however, it appeared the momentum was strong.
He rated the company's stock as "Neutral," saying there was still risk that sales could slow if higher interest rates make it harder for people to get loans or if retail demand slows.
Harley shares have recently traded above the levels reached before the financial crisis hit in 2008, when the stock could be had for about $42 a share. In 2007, it was worth almost $65 a share.
In the Milwaukee area, Harley dealerships say they've noticed the improved motorcycle sales.
"We are seeing a lot more interest from people who are not traditional riders much earlier in the year," said Kirk Topel, owner of Hal's Harley-Davidson.
Some of the consumer focus has shifted from used to new motorcycles, according to Topel, as buyers have become more comfortable with spending.
There's more interest in motorcycle parts and accessories, said Bruce Tessmer, marketing director for S&S Cycles in Viola.
"Custom bike building is not what it was, but you can upgrade a motorcycle piece by piece without spending all of the money at once," Tessmer said.
Harley-Davidson's emphasis on attracting younger motorcyclists has paid off, said Genevieve Schmitt, editor of the website Women Riders Now.
New bikes such as the Sportster Seventy-Two are aimed at young men at a price they can afford, according to Schmitt.
"When consumer spending was red hot, there were a lot of people who came to motorcycling who had no business there. They were guys who had a lot of money to spend and were buying just another toy to put in their garage," she said. "When the recession hit, they were laden with debt, over-mortgaged on their home and had to sell those toys."
Now, some bikes are sold at below the suggested retail price, so a dealership gains a customer and can make up the difference later in sales of parts, accessories, clothing and service, Schmitt added.
Some of the bestselling motorcycles are from European manufacturers Ducati, BMW and Triumph.
"It seems like the Japanese manufacturers are still kind of in a holding pattern, with a lot of carry-over models. But the Europeans have invested heavily in product development in the last few years," said Aaron Frank, a Motorcyclist Magazine editor-at-large from Milwaukee.
Most Popular Stories
- Bipartisan Budget Deal Gets Key Support in House
- TFA Recruiting DACA Recipients
- Bitcoin Clones Lurch Onto Financial Scene
- Clinton to Keynote Annual Simmons Leadership Conference
- Scotch Whisky Sales Raise Distillers' Spirits
- Holiday Shopping Off to a Slow Start This Season
- Fake Deaf Interpreter Was Hallucinating, Has Schizophrenia
- Health Coverage Disparities Emerge Among States
- Podesta Likely to Reject Keystone XL
- Tea Party Glum in Face of Bipartisan Budget Deal