Value Investing News

Harley Dealers See Business Declining in May and June

Negative

1. What is the best selling motorcycle model right now?

●         36% of respondents cited some version of the Sportster as the top selling model right now. The 09 FLXH Street Glide was seen as the top seller by 16% and 12% see the Night Train Softtail.

●         87% of respondents said they were not sold out of any models. 13% cited some models that were out of stock.

●         52% of respondents say that business is the same as a year ago. 36% say business is worse while 12% say it is better.

●         57% of respondents said that sales had not increased in the past month. 43% said they had. This mix of responses is a significant deviation from the trend we have seen across many of our covered companies in the past.

Conclusion of Channel Check: Harley dealers continue to see demand focused on their lower end models (from a price point perspective). Inventories appear to be sufficient to match demand. Business appears to be the same or lower according to 88% of respondents. The 57% citing lower sales in the past month should be a concern for investors as it is a sharp deviation in this answer set versus the past few months.

Twilight Fading for HOTT

●         100% of respondents reported having Twilight related products in stock, although one store mentioned it had very little left.

●         40% reported inventory had increased since last year, while 35% said it had decreased. 25% reported that it was the same.

●         65% of respondents said that sales of Twilight related products were slowing down, while 35% continued to report it as a top seller.

●         55% of respondents stated that Twilight products were being put on sale, with one respondent saying “everything Twilight” was going on sale. 

●         Respondents reported on average that 25% of accessory sales were Twilight related.

Conclusion of Channel Check: Hot Topic stores appear to have enough stock of Twilight specific apparel and are well stocked overall with merchandise. Twilight related products appear to slowing down and marked down with discounts. 25% of sales in the accessory category are related to Twilight in our survey. It appears to us that the engine of strong growth for Hot Topic, which had been the Twilight movie merchandise boom, is slowing down in June of 2009.