Updates share movement, adds analyst comment in paragraph 6 and 7, adds commentary from call in paragraphs 8 and 9

By Nathan Gomes and Aishwarya Jain

Feb 5 (Reuters) - Harley-Davidson HOG.N on Wednesday forecast 2025 profit and motorcycle revenue to be flat to down 5% as consumers temper big-ticket purchases, sending its shares down 5% in morning trade.

Demand for leisure vehicles has fallen off since the pandemic, while sticky inflation and steep borrowing costs have forced cash-tight Americans to prioritize spending on necessities rather than luxuries.

The storied motorcycle maker has also struggled to gain traction with younger riders, who are choosing modern, feature-packed and affordable bikes from other manufacturers instead.

Retail sales of Harley's motorcycles in top market North America fell 13% in the fourth quarter due to persistent pressure from higher interest rates and lower sales of non-core motorcycles.

To offset some of the profitability strain, Harley has updated its lineup for 2025 to include more higher-margin Touring bikes and sharpen focus on custom-vehicle operations targeted at its more affluent customers.

CFRA Research analyst Garrett Nelson called Harley's results "ugly", but raised its rating on the stock to "sell" saying Street expectations would now "reset to more realistic levels".

He also partly attributed the weakness to consumer backlash around Harley's decision to scrap its Diversity, Equity and Inclusion $(DEI)$ hiring quotas last year in response to criticism from conservatives.

TARIFFS

Regarding U.S. President Donald Trump's proposed tariffs on Canada, Mexico and China, Harley executives said the company has yet to incorporate any new tariffs in its outlook, but has been taking "all possible actions" to mitigate their impact.

Harley does not have production in Canada or Mexico, and the majority of its U.S. profits are from domestically manufactured vehicles, it said.

It posted a fourth-quarter net loss of $117 million, or 93 cents per share, compared with a profit of $26 million, or 18 cents per share, last year.

Total revenue slumped 35% to $688 million.

Analysts were expecting motorcycle revenue to rise 1.5% in 2025, per data compiled by LSEG.

(Reporting by Nathan Gomes and Aishwarya Jain in Bengaluru; Editing by Devika Syamnath)

((Nathan.Gomes@thomsonreuters.com;))