Polaris has announced today that it will “wind down” operation of Victory Motorcycles, effective immediately. The news comes at the end of a difficult financial year for Polaris, which saw sales drop in the third quarter by 19% compared to the previous year. Total yearly sales by the end of Q3 were also down mid- to high-single digits percent. The 2016 financial wrap-up presentation and Q4 results will be presented by Polaris on January 24, 2017.
As for Victory, the company started production in 1998. Sales of Victory Motorcycles peaked in 2012 and have since declined. During three of the past five years, Victory has lost money.
Polaris plans to shift focus to Indian Motorcycle, which the company believes has “higher growth potential.” The Slingshot brand will remain in business as well. Factories in Spirit Lake, Iowa and Spearfish, South Dakota will remain in operation as the focus of these locations is primarily on Indian. The Slingshot factory in Huntsville, Alabama will continue production also.
The company will support Victory dealers in selling off remaining inventory, providing replacement parts and the like. There are around 400 North American Polaris dealers that sell Victory Motorcycles, with close to 150 operating as combined Victory/Indian dealers. For certain dealers that sell Victory only, Polaris will consider switching focus to Indian Motorcycle.
The entire Polaris press release, with comments from Chairman and CEO Scott Wine, is included below.
MINNEAPOLIS (January 9, 2017) – Polaris Industries Inc. (NYSE: PII) today announced it will immediately begin winding down its Victory Motorcycles brand and related operations. Polaris will assist dealers in liquidating existing inventories while continuing to supply parts for a period of 10 years, along with providing service and warranty coverage to Victory dealers and owners. Today’s announcement does not affect any other Polaris business units.
“This was an incredibly difficult decision for me, my team and the Polaris Board of Directors,” said Polaris Industries Chairman and CEO Scott Wine. “Over the past 18 years, we have invested not only resources, but our hearts and souls, into forging the Victory Motorcycles brand, and we are exceptionally proud of what our team has accomplished. Since inception, our teams have designed and produced nearly 60 Victory models that have been honored with 25 of the industry’s top awards. The experience, knowledge, infrastructure and capability we’ve built in those 18 years gave us the confidence to acquire and develop the Indian Motorcycle brand, so I would like to express my gratitude to everyone associated with Victory Motorcycles and celebrate your many contributions.”
Several factors influenced today’s announcement. Victory has struggled to establish the market share needed to succeed and be profitable. The competitive pressures of a challenging motorcycle market have increased the headwinds for the brand. Given the significant additional investments required for Victory to launch new global platforms that meet changing consumer preferences, and considering the strong performance and growth potential of Indian Motorcycle, the decision to more narrowly focus Polaris’ energy and investments became quite clear.
“This decision will improve the profitability of Polaris and our global motorcycle business, and will materially improve our competitive stance in the industry,” said Scott Wine. “Our focus is on profitable growth, and in an environment of finite resources, this move allows us to optimize and align our resources behind both our premium, high performing Indian Motorcycle brand and our innovative Slingshot brand, enhancing our focus on accelerating the success of those brands. Ultimately this decision will propel the industry-leading product innovation that is core to our strategy while fostering long-term growth and increased shareholder value.”
Polaris will reduce the appropriate operating cost based on this decision, while continuing to support the future growth of the ongoing motorcycle business. Polaris remains committed to maintaining its presence in the Spirit Lake, Iowa community with Indian Motorcycle production and in the Huntsville, Alabama community with its Slingshot production.
Any one-time costs associated with supporting Victory dealers in selling their remaining inventory, the disposal of factory inventory, tooling, and other physical assets, and the cancellation of various supplier arrangements will be recorded in the 2017 income statement in respective sales, gross profit and operation expense. These costs will be excluded from Polaris’ provided 2017 sales and earnings guidance on a non-GAAP basis.
Polaris will release its fourth quarter and full-year 2016 financial results and provide 2017 guidance on Tuesday, January 24, 2017. A webcast and conference call will be held at 9:00 a.m. Central Time on January 24, 2017 to discuss the results. A slide presentation and link to the webcast will be posted on the Polaris Investor Relations website at ir.polaris.com. To listen to the conference call by phone, dial 877-706-7543 in the U.S. and Canada, or 478-219-0273 Internationally. The Conference ID is #45015597.