HD Q1 - Domestic US Unit Sales Up, International Down, Revenue Down, Profit/Loss Position Improved as Starrs Heads "Back to Bricks"
Responding the reporting of Harley's Q1, 2026 results, President and CEO Artie Starrs is quoted as stating: "We're pleased with our first quarter results, which reflect actions we've taken to drive demand and improve dealer health.
"We saw a 14% increase in retail performance in North America, which drove global retail sales growth of 8% [international retail unit sales were down, overall Global up due to strong domestic], and achieved a 22% year-over-year reduction in global dealer inventories, as we continue to prioritize aligning wholesale with retail demand.
"We are energized by the positive early reception to our new RIDE marketing platform, and excited to activate against our new 'Back to the Bricks' growth strategy."
Highlights of that strategy will see a big win for dealer demand with an MY 2027/2028 return for an air-cooled Sportster (starting at $10k), with domestic US units being made at the York, Pa. Facility, and the long-awaited appearance of the Sprint - still expected to be based on the Hero MotorCorp, India developed X440cc oil-cooled single - for some stage of the 2027 model year.
While the Sprint is thought likely to have a sub $10k entry level price-point, giving it breathing room beneath the pricing of the new Sportster, it not now expected to hit the sub $6,000 mark that Jochen Zeitz had projected last summer.
Overall, the new strategy ('Bricks' refers to the employee colloquial for the iconic Juneau Avenue, Milwaukee HQ that Harley is now re-populating) could equally well be thought of as a 'Back to Basics' strategy.
Harley will build on the recently announced new 'RIDE' marketing platform with a focus on accessibility (Starr's preferred way of referencing affordability), dealer profits, Parts and Accessory revenues (with what, in the May 5 Investor Call appeared to be confirmation that aftermarket P&A will get a fairer shake when it comes to authorized showroom access and inventory), and customising with a recalibration of "blank canvas" model offers to stimulate P&A and individual personal expression.
The re-focus on the importance of ensuring that the dealer network is financially healthy, as well having the right number of sellable motorcycles (rather than "too many of too few motorcycles on dealer floors"), is being widely welcomed. The overall recalibration of what unit "lifetime value creation" looks like has the potential to revolutionize 'MoCo' and dealer balance sheets with Starrs adding that he and his team are "relaxed" about a mixed network of legacy, family owned stores alongside the chains.
The Q1 highlights included that 14% increase in North American retail sales vs. the prior year (23,803 units), with overall global retail motorcycle sales of 33,507 units, up 8% vs. the prior year.
Global dealer new motorcycle inventory levels were said to have ended Q1 '26 down 22% vs. end Q1 '25, with HDMC global motorcycle shipments of 37,295, down 3% vs. the prior year.
HDMC revenue of $1.1bn was down 2% vs. the prior year, with the rebuilt profile of HDFS producing a Q1 operating income margin of 19.9%. Harley delivered diluted EPS of $0.22 and repurchased $128m of shares (6.6 million shares) on a discretionary basis, though it indicated that they now expect conclude their reporting on this program.
Harley incurred $15m of costs related to strategic changes, including termination benefits and other restructuring charges.
Artie Starrs reiterated that the LiveWire loan that Harley backed and provided for LiveWire at the end of 2025 would indeed be the end of the gravy train for the EV brand where access to Harley's balance sheet was concerned.
Upcoming at LiveWire is the launch of a 125 cc equivalent S4 platform model - The 'Honcho' - designed as an urban/commuter and trails/off-road capable machine. This will see the LiveWire brand (finally) being focussed on the two segments where electric PTWs have (so far) gained some traction.
Starrs also confirmed Harley could explore those M&A opportunities in the coming months and years where there was a compelling fit with their new corporate plans and priorities. He specifically alluded to adding to what amounts to good additional reasons for riders to visit dealer showrooms.
In detail, Q1 2026 results showed consolidated revenue in the first quarter was down 12%, driven largely by an HDFS revenue decrease of 54%.
Consolidated operating income in the first quarter was down 85%, driven by a decline of 84% at HDMC and a decline of 65% at HDFS. At the LiveWire segment, the operating loss improved by $2m or 11% lower than the prior year's loss. Consolidated operating income margin in the first quarter was 2% relative to 12.1% in the first quarter a year ago.
First quarter global motorcycle shipments decreased 3%, in-line with the Company's expectations. Revenue was down 2%, driven by the decrease in wholesale shipments and the unfavorable net effect of global pricing and sales incentives, partially offset by favorable foreign currency. Parts & Accessories revenue was down 1%, and Apparel revenue was flat.
First quarter gross margin was down 3.9 points due to the cost of new or increased tariffs, the net effect of global pricing and sales incentives, and unfavorable product mix. These factors were partially offset by a favorable court judgement resulting in a tariff refund in the EU and favorable foreign currency. First quarter operating income margin was down 9.0 points due to the factors above, while operating expense was $49m higher than a year ago, including restructuring expense of $15m in the quarter.
As reported, global retail motorcycle sales in the first quarter were up 8% versus the prior year, reflecting strong year-over-year results in North America and soft international results. North America retail experienced 16% growth in the US, driven by strength in the Touring category and a positive response to the new '26 motorcycle line-up.
EMEA retail performance, down 3%, was characterized by modest growth in France, the Benelux region and the UK, while the German region experienced a decline. APAC retail performance, down 9%, saw declines in most major countries. Latin America retail was characterized by strong gains in Brazil and Mexico.
HDFS revenue was down 54% from prior year, driven by lower retail and wholesale finance receivables at lower yields. The decline in retail receivables was due to the sale of loan assets as part of the HDFS transaction, which took place in the second half of 2025. Other income within HDFS revenue was favorable year-over-year due to new servicing fees, investment income, and new gains on third party loan sales. HDFS' operating income decreased by $42m in the first quarter or 65%. Total quarter-end net finance receivables, including both retail and wholesale loans, were $2.4bn, a 67% decline over the prior year primarily due to the HDFS transaction.
LiveWire revenue for the first quarter increased by 87%. The revenue increase was due to higher electric motorcycle unit sales and higher STACYC electric bike sales. LiveWire's operating loss of $18m in the first quarter compared to a loss of $20m in the prior year period.
Look for more 'Back To The Bricks' coverage in the upcoming June edition of AMD Magazine, along with Robin Bradley's next 'op-ed'.
