Weak demand for Harley-Davidson Inc's (HOG.N) motorcycles in the first quarter led to lower-than-expected retail sales at its dealers, raising concerns that the company could miss its already weak shipment forecast for the year.
Harley's shares fell as much as 5 percent to $56.39 on Tuesday, their worst intraday percentage loss in more than two months.
The company's shipments in the United States - its biggest market - fell 20.6 percent to 45,784 motorcycles in the quarter ended March 26. Retail sales at U.S. dealers fell 5.7 percent.
Analysts on average had expected U.S. retail sales to rise 2.4 percent, according to Wells Fargo analyst Timothy Conder.
Milwaukee-based Harley recognizes revenue when it ships motorcycles to dealers. A sell through of dealers' stock is a reflection of demand in the market.
A Reuters analysis showed that Harley has taken the rare step of offering rebates on its 2016 motorcycles to U.S. dealers as an incentive for them to shift a backlog that had restricted sales of its latest models.
Demand for Harley's motorcycles continues to be slow as its loyal baby boomer demographic ages and rivals such as the Indian brand bike maker Polaris Industries Inc (PII.N) and Japan's Honda Motor Co Ltd (7267.T) offer competitive discounts.
"We believe the U.S. industry continues to be adversely affected by soft used bike prices and weakness in the oil-dependent areas and we continue to expect the industry will remain soft for the full year," Harley's Chief Financial Officer John Olin said on a post-earnings conference call.
Harley, which commands about half the U.S. big-bike market, said it expected full-year shipments to be flat to down modestly, sticking to the forecast it issued on Jan. 31.
The company said it expected to ship 80,000-85,000 motorcycles in the current quarter, a 4-9 percent decline from a year earlier.
Harley's second-quarter shipment forecast implied a roughly 20 percent year-over-year increase in the company's shipments in the second half, RBC Capital Markets analyst Joseph Spak said.
"We believe the market will doubt that level of shipments is the correct strategy amid still soft retail," Spak said.
Harley said revenue per motorcycle fell about $342 to $15,526 in the first quarter. Total revenue from motorcycles and related products fell 15.7 percent to $1.33 billion.
Net income fell 25.6 percent to $186.37 million, or $1.05 per share.
Analysts on average had expected earnings of $1.02 per share, on revenue $1.36 billion, according to Thomson Reuters I/B/E/S.
(Reporting by Ankit Ajmera and Rachit Vats in Bengaluru; Editing by Maju Samuel and Sayantani Ghosh)