New CEO for Harley-Davidson
Harley-Davidson has had a very eventful 2020. On a tough note, Harley-Davidson reported a loss of $92,000,000 in the 3-month period that ended June 30th and its US retail motorcycle sales fell 27% in the quarter, the steepest decline in the last 6 years. What might be even bigger and potentially more important news for Harley-Davidson is the change of leadership at the top. In February 2020, Jochen Zeitz was named acting President and CEO after the company announced that former CEO and President Matt Lebatich was stepping down after taking over in 2015. During Mr. Lebatich’s tenor at the top, Harley-Davidson’s annual domestic sales fell for 5 straight years. In reviewing a number of articles about Mr. Lebatich’s time at the helm, I would see quotes like the following: “The Company has struggled to attract younger customers, ” “Dealers complain that learn to ride classes were costly and didn’t yield enough new motorcycle buyers,” and “Mr. Lebatich’s relationship with the company’s independent dealers had grown increasingly frayed as successful ways of new models, engines and other attempts to revive sales fizzled.”
Mr. Zeitz had been a Board of Director of Harley-Davidson since 2017, and was elected by the Board in February as Chairman of the Board and acting CEO. Mr. Zeitz’ professional background is in sporting goods and lifestyle products. He served as Chairman and Chief Executive of Puma from 1993 – 2011 where he led a turn around of the company when it was near bankruptcy. Soon after taking over as acting CEO Mr. Zeitz made the following comments: “As a result of my observations and assessment, I concluded we need to take significant actions and rewire the company now in terms of priorities, execution, operating model and strategy to drive sustained profit and long-term growth. We’re calling it the Rewire and it is our playbook for the next few months, leading to a new 5-year strategic plan.
New Direction for Harley-Davidson
In May Mr. Zeitz was permanently installed as CEO and Chairman of the Board, and at the time stated:
“In alignment with the board, my decision to become the President and CEO of Harley- Davidson reflects my deep passion and commitment to this company. During this extraordinary time of crisis my first priority is the well-being of our H-D community as I execute our COVID-19 response plan efforts to stabilize the business, resume operations and recover. I am also leading a necessary and comprehensive overhaul of the company structure, operating model, and strategy as we adjust to the new post COVID-19 realities. Over the next few months, we will rewire the business and define a new 5-year strategic plan later this year. I will then oversee the implementation of these changes and reignite Harley-Davidson as one of the most revered and iconic brands in the world.”
During the second quarter earnings report that was announced toward the end of July, Mr. Zeitz gave us some further detail regarding his vision for-Davidson. Here are some of his comments:
“A total rewire is necessary to make Harley-Davidson a high-performance company . . . the company is in five consecutive restructurings in order to sort of chase the downward trend in sales. That has affected moral and engagement by our team members around the world, which is totally understandable. . . As we reworked through Rewire, it was very evident to me that we had lost our focus on the strength of our brand in favor of promotional activities which erode our value and the investment our writers make in our products.”
Mr. Zeitz also indicated that Harley-Davidson would exit international markets where sales and profitability did not support continued investment and that company plans to narrow its motorcycle lineup by about 30%, departure from an earlier strategy to adding bikes to the portfolio and branching into new categories that even included a children’s bike. India appears to be a casualty of this new strategy. Harley-Davidson announced on September 24 that it has decided to shut down its India factory. This effectively means that Harley-Davidson is abandoning one of the world’s biggest motorcycle markets after a decade of unsuccessful efforts to gain a foothold. Also, Harley-Davidson indicated this past summer that it would be eliminating 700 jobs as part of a comprehensive effort to rebuild the company.
New CFO for Harley-Davidson
In addition to Mr. Zeitz, there has been another change at the top. Harley-Davidson just announced that on September 30, Gina Goetter would become its Chief Financial Officer. Most recently, Ms. Goetter was Senior Vice-President and CFO at Tyson Foods. After her appointment, Mr. Zeitz indicated that “Gina is a CFO with the experience to drive a transformation of core processes and reporting for improved operational efficiency,” and “We have a diverse management team structured in a new way that is designed to fuel Harley-Davidson’s brand desirability and lead Harley-Davidson as a high performing organization.”
Gary Poole, North Carolina Motorcycle Accident Attorney, “On the Side of Those Who Ride”