Harley-Davidson looks for new leadership to end its sales struggle

[February 29, 2020]  By Rajesh Kumar Singh

(Reuters) - Harley-Davidson Inc <HOG.N> on Friday named a board member hailed for turning around the Puma brand's near-bankrupt business as its interim chief as the motorcycle maker gropes for an effective strategy to woo young customers and revive sales.

Jochen Zeitz was asked to take over after Chief Executive Officer Matthew Levatich stepped down following the Milwaukee, Wisconsin-based company's worst sales performance in at least 16 years.

Harley-Davidson said Zeitz will serve as interim CEO until an external search firm helps find a new chief executive.

Michael Uhlarik, founder of consultancy Motorcycle Global, said Levatich's exit was expected. He said Harley was likely to give Zeitz a long run as he has "proven turnaround" skills.

Zeitz is well known for transforming the loss-making Puma in the 1990s into one of the world's top three sports brands.

"It is not about the next quarter or earnings per share," Uhlarik said. "They will have to build a long-term, multi-year strategy."

Harley has failed for years to increase sales in the United States, its top market, which accounts for more than half of its motorcycles sold. As its tattooed, baby-boomer consumer base ages, the Milwaukee-based company is finding it challenging to attract new customers.

Levatich, who took the company's reins in May 2015, bet on new launches, including of battery-powered bikes, to turn around the company's fortunes in the domestic market.

A Harley-Davidson Inc. logo is seen at the Paris auto show in Paris, France, October 4, 2018. REUTERS/Benoit Tessier

The results, however, remained elusive.

Harley's 2019 U.S. bike sales were the lowest in at least 16 years. Falling sales in the past 12 quarters have forced the company to limit production of its bikes to prevent price discount pressure and protect profit.

In 2019, Harley's bike shipment volume in the United States was the lowest in at least two decades. Global shipments were the lowest since 2010.

With no sales revival in sight, investors were becoming restless.

Since Levatich took the helm, Harley's shares have fallen 46%. By comparison, the S&P 500 Index <.SPX> has gained 40%.

Falling sales have had made Wall Street speculate whether the company, which symbolized the counterculture movement of the 1960s, would seek refuge in a buyout or turn private to rework its product lines and branding without the pressure from shareholders to shield its profit margins.

Last month, Levatich tried to parry that question by expressing confidence in the current strategy. But he also acknowledged that the challenges facing Harley were "significant" as its heavy and expensive bikes were competing for "people's scarce time, people's scarce funding and commitment."

Levatich will assist with the transition through the end of March, the company said.

On Friday, Harley's shares closed down 2.2% at $30.47.

(Editing by Diane Craft and Tom Brown)

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