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Harley-Davidson reported first-quarter net income came in at $25 million, equal to 22 cents per diluted share, an 81% decline from the $133 million, or $1.07 per share, earned in the year-earlier period. Wall Street had been looking for 27 cents per share, per Reuters.
Total revenue dropped 12% to $1.17 billion, down from $1.33 billion a year ago. Most of this decline came from a 54% decrease in revenue at Harley-Davidson Financial Services. The company said this was due to fewer retail and wholesale finance receivables after selling loan assets in the second half of 2025.
At the motorcycle division, revenue fell 2% to $1.06 billion. Gross margin contracted 3.9 percentage points to 25.3%, hurt by tariff costs, higher sales incentives, and unfavorable product mix. The company said it incurred $45 million in tariff-related costs during the quarter and $15 million in restructuring charges.
Even though earnings fell short, retail motorcycle sales increased. In North America, 23,803 motorcycles were sold at retail, up 14%. Worldwide, retail sales reached 33,507 units, an 8% rise. Dealer inventory of new motorcycles dropped 22% from last year, which the company said was due to efforts to match wholesale shipments with real retail demand.
Operating income across the company fell 85% to $23 million. The motorcycle division's operating income dropped 84% to $19 million, while operating income at the financial services unit declined 65% to $22 million. The electric motorcycle unit LiveWire posted an operating loss of $18 million, an improvement from a $20 million loss a year earlier.
Harley-Davidson stock rose about 2.5% in early trading on Tuesday.
Alongside the earnings release, Starrs introduced a turnaround plan called "Back to the Bricks" that centers on more affordable motorcycles and a healthier dealer network. The company plans to introduce the Sprint, an entry-level motorcycle with a 440cc engine priced at about $6,000, later this year. Harley also revived the Sportster, a mid-tier model priced at about $10,000, according to Reuters. By 2027, the plan calls for the motorcycle business to generate more than $350 million in core profit, while also delivering upward of $150 million in cost savings.
Full-year 2026 guidance was left unchanged, with management continuing to forecast between 130,000 and 135,000 global retail and wholesale motorcycle units. The full-year tariff cost forecast was narrowed to a range of $75 million to $90 million, an improvement from the earlier ceiling of $105 million. The motorcycle division's full-year operating income is expected to range from a $40 million loss to a $10 million profit.
"We're pleased with our first quarter results, which reflect actions we've taken to drive demand and improve dealer health," Starrs said in a statement.