Harley-Davidson Q4 2025 Earnings Call Analysis

In the fourth quarter of 2025, Harley-Davidson shared its earnings results during a call led by CEO Artie Scars and Chief Financial Officer Jonathan Roof. The company faced significant challenges but also demonstrated a commitment to stabilizing operations and enhancing relationships with its dealer network. Key takeaways from the call include a substantial drop in revenue, strategic initiatives to improve dealer profitability, and a cautious yet optimistic outlook for 2026.

Financial Performance

Harley-Davidson's financial performance in Q4 2025 was marked by a 28% decline in consolidated revenue, which totaled $4.5 billion for the full year, down 14% compared to 2024. The breakdown of the financial results is as follows:

• Q4 2025 Revenue: Down 28%, with HDMC revenue decreasing by 10% and HDFS revenue plunging by 59%.
• Operating Income: Reported an operating loss of $361 million compared to a loss of $193 million in Q4 2024.
• Earnings Per Share: Loss of $2.44, widening from a loss of $0.93 year-over-year.

Despite these challenges, the company's North American retail sales of new motorcycles increased by 5% in Q4, reflecting a total of 15,847 units sold. This growth was particularly evident in the Grand American touring product line, which saw a 6% increase, largely driven by targeted promotional support.

Strategic Initiatives

In response to the challenges faced in 2025, Harley-Davidson is undertaking several strategic initiatives aimed at improving dealer relationships and inventory management:

• Stabilizing Dealer Relationships: The company is focused on restoring confidence among its dealers, emphasizing the importance of shared success and accountability. Scars noted the necessity of healthier inventory levels and a stronger product mix to drive sustainable growth.
• Inventory Management: The company has successfully reduced dealer inventory levels by 17% globally, exceeding their initial target of 10%. This reduction is crucial as it positions dealers for better performance in the upcoming riding season.
• E-commerce Strategy Reevaluation: Recognizing that past e-commerce strategies created customer confusion and led to excessive discounting, Harley-Davidson plans to shift to a model that promotes dealership traffic and improves sales.
• Strengthening Product Customization: The leadership team is committed to enhancing the customization options available to riders, a long-standing tradition of the brand that has been somewhat neglected in recent years.

Scars emphasized the importance of aligning Harley-Davidson's offerings with customer desires, including the need for a more affordable lineup of motorcycles to cater to a broader audience. This approach aims to balance aspiration with accessibility.

Future Outlook

Looking ahead to 2026, Harley-Davidson's management provided cautious yet optimistic guidance:

• Retail and Wholesale Expectations: The company anticipates retail unit sales of 130,000 to 135,000, aligning closely with wholesale units. This reflects a one-to-one relationship in inventory management, which is critical for maintaining dealer satisfaction and profitability.
• Operational Challenges: Harley-Davidson expects operating margins to face pressure due to deliberate production runs that are lower than wholesale shipments. This strategic decision is intended to support long-term dealer and company profitability.
• Tariff Impact: The company forecasts an incremental cost of $75 million to $105 million in new or increased tariffs for 2026, which will further challenge operating margins.
• HDFS Transformation: The Harley-Davidson Financial Services segment is transitioning to a capital-light business model, expected to yield a more favorable financial profile moving forward.

Despite the challenges ahead, management remains committed to rebuilding momentum and restoring trust within their dealer network. A strategic plan announcement is anticipated in May 2026, which will provide further clarity on the company's direction.

Conclusion

Overall, Harley-Davidson's Q4 2025 earnings call highlighted a year of significant challenges but also a clear pathway toward stabilization and growth. With strategic initiatives focused on dealer relationships, inventory management, and product alignment, the company is working diligently to reposition itself for a more stable financial future. Although the immediate outlook for 2026 includes operational challenges, Harley-Davidson's commitment to its core values and strong brand community will be pivotal as it navigates the evolving market landscape. Investors should watch for updates in May, which will provide more insight into the company's strategic direction and financial expectations.