Harley-Davidson plans job cuts amid decline in quarterly earnings

MILWAUKEE — Harley-Davidson Inc. said Tuesday it will reduce its salaried workforce by several hundred positions, mostly by the end of the year.

The company has about 3,775 salaried employees, including 1,060 at its Milwaukee headquarters.

“An early retirement incentive program will be offered to eligible employees in advance of what we believe will be a global reduction of around 250 salaried positions across the company, largely completed by the end of the year. Adjustments in positions and structure will be made in essentially every part of the business to achieve the right focus and support the increased demand-generating investments,” company spokesman Tony Macrito said in an email.

“There is no plan to reduce U.S. hourly workers as part of these actions,” he added.

Given weaker than expected sales and earnings, Harley said it will increase marketing and product development while allocating millions of dollars for employee separation and reorganization costs.

The company said earnings for the quarter that ended Sept. 27 came in at $140.3 million, or 69 cents a share, down from $150.1 million or 69 cents a share in the same period a year ago, and below analysts’ consensus for earnings per share of 78 cents.

Revenue climbed to $1.32 billion from $1.30 billion.

Dealers’ new motorcycle sales were down 1.4 percent worldwide in the quarter, compared with the year-ago period, with sales down 2.5 percent in the United States.

“In the short term, because the third quarter did not unfold as we expected, we are lowering full-year shipment guidance,” Matt Levatich, president and chief executive officer, said in a statement.

The company said it intends to reallocate spending and expects to incur one-time expenses of approximately $30 million to $35 million in the fourth quarter, primarily for employee separation and reorganization costs.

In 2016, Harley said, it will increase its spending in marketing by approximately 65 percent above this year’s levels. It also plans to increase its spending in new product development by approximately 35 percent from 2015 levels.

The changes represent an approximate $70 million increase in spending to drive demand for the company’s products.

“We expect a heightened competitive environment to continue for the foreseeable future, and now is the time for us to dial things up with significant additional investments in marketing and product development,” Levatich said.

The spending will be focused in four primary areas, according to Harley, including an emphasis on growing the sport of motorcycling in the U.S. and adding 150 to 200 new dealerships in international markets by 2020.

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The company’s stock shares have dropped 15 percent since the beginning of the year, while the Standard & Poor’s 500 index has declined 1 percent. Harley stock has fallen slightly more than 4 percent in the last 12 months. Following Tuesday’s earnings announcement, the shares fell nearly 14 percent to close at $48.25, down $7.80.

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