- Harley-Davidson is running under a new operating model, which created a global commercial function to take charge of sales and inventory management across product lines, CEO Jochen Zeitz said on the company's earnings call Tuesday.
- One of the goals of the new approach to inventory management is "significantly reducing" the number of discounting price promotions, Zeitz said. "This is expected to drive retail pricing to help preserve the value and desirability of Harley-Davidson motorcycles for its customers and brand," the company said in a press release.
- At the end of the second quarter, the company's net inventory is down almost 29% compared to the same time last year and down almost 9% compared to the end of December 2019.
The new plans for inventory management are part of a broader restructuring strategy that comes as Harley-Davidson's retail sales slid almost 27% compared to the same time last year, and revenue for the second quarter was down 47% compared to last year.
Under the previous structure, inventory management was not the responsibility of those calling on the inventory, Zeitz said. "That’s the problem that we needed to fix."
But Harley-Davidson's troubles predate the pandemic. It hasn't seen sales growth in the U.S. for the last 14 quarters, according to Reuters.
As the company has seen demand slide, it has taken steps to "align [its] manufacturing capacity" with expected volume going forward, Zeitz said.
By cutting production and focusing less on discounting sales, the company is hopeful it can sell more product at full price. On average, 2020 model year motorcycles are currently selling at list price, the company said in its earnings release.
It is also cutting motorcycle offerings by about 30% to focus on more profitable models.
"This enables us to invest in the products and platforms that matter the most, while better balancing our investment in new high potential segments," Zeitz said of plans to streamline product offerings.
The motorcycle retailer was not immune to the lockdowns and stay-at-home orders put in place to help prevent the spread of the coronavirus.
"As we noted on our Q1 call, at the end of April, nearly 60% of our global dealer network was closed. We saw reopenings begin to occur towards the end of May into early July," Darrell Thomas, the company's interim CFO said on the earnings call. "And by the end of the quarter, 93% of global dealers have resumed normal operations."