Brandon Rolle : Good morning. Thank you for taking my question. Earlier in the call you touched on the dealer form you hosted in early October. Would you be able to touch on a few of the topics you discussed there? Feedback we received from dealers was overwhelmingly positive, especially around new products, but also some of the initiatives you are taking for 2024.
Edel O’Sullivan: Thank you, Brandon. That’s good to hear. We thought it was an excellent session as well. The main objective really was around the business planning opportunity with our dealers. Well, certainly there was value to all of us being together again, as a broader sort of HDMC and dealer body. Our main objective is to make sure that we are aligned going into 2024, on what we need to do to make sure that, we have a very strong year. We believe our network, as Jochen referenced in his commentary, is really a differentiated asset for us in terms of its reach, its strengths, its exclusivity. So the more that we can align and ensure that we are going to market together on some critical initiatives, the better. Our main agenda topic, we certainly had a section of this around product, which we don’t comment on our future product initiatives, but obviously a very important part of the session was making sure that our dealers were aware of some of what is planned for 2024 as they think about their own operations.
And then we did a more broad set of – we covered a broad set of topics around business alignment and some of our key initiatives, membership, and loyalty or apparel business, our broader omnichannel initiative, how we are thinking about profitability and growth. And again, very, very heavy discussion or a big component of the agenda around ensuring that we are aligned in our go-to-market and in our marketing investments in particular, again, leveraging the strength of that network and the investments that they bring to bear in the engagement with consumers. So, we felt it was an incredibly valuable session. It was a wonderful opportunity also to just energize around what has been, in many ways, a challenging year. So it was – I think we’ll bear fruit as we go into 2024 in a much more aligned and energized network.
Brandon Rolle : Great. Thank you.
Operator: Our next question comes from the line of James Hardiman from Citi. Please go ahead.
James Hardiman : Hey. Thanks for taking my follow-up. So back to sort of the inventory conversation. I think I get why inventories would be up versus ‘21 and ‘22. Those were pretty depleted levels, but I guess what I still struggle with here, inventories are – versus ‘19, they are down less than retail is, right? And so days-on-hand, weeks-on-hand, at least by my math, are up fairly meaningfully versus 2019. And you can – when you first came in it seemed like the message was pretty loud and clear that you guys thought that inventories were way too high coming out of 2019. So help me sort of square those two things. I mean, it just – it feels like so much of the effort in the first couple years went toward leaning out the channel and as we sit here today, we’re sort of worse than we were back then – at least on a weeks-on-hand basis.
Jochen Zeitz : Yes, I’ll let Edel comment here as well versus 2019, but I don’t think you can compare ‘21 and ‘22 to what we are seeing now. And for the reasons that I’ve mentioned in earlier on, it’s a very different environment. Demand is more selective; we’ve had a production interruption that and in order to get the right mix to the dealers, we need to structurally have a higher inventory if demand is more selective on product as well. And we still end up and I’ll hand it over to Edel here, significantly below 2019 levels. And I know that you’re – the way you’re doing the math is a little bit different to ours in terms of reach of the inventory, but from everything we’ve seen and everything we are hearing, we feel that we’re in a good spot here.
Edel O’Sullivan: Yes James, I think that the comparison point of 2019 is important. There are, as Jochen mentioned, a couple of differences in terms of where we are now more broadly in the business cycle than in 2019. So the first thing that I would say is undoubtedly we have been working throughout the quarter, certainly since the production shutdown, to make sure that we are adjusting our overall inventory levels. And again, it’s less about the total units which are still down versus 2019 than it is about the mix of the units in the channel. And that’s something that we certainly continue to hold as a very key principle of our overall Hardwire strategy, to make sure that we have adequate representation. The second element, and it really isn’t to be sort of underestimated, is the impact of the delay and the mix of what we were able to produce, particularly in the early part of the quarter, against our retail objectives.
So that is something where we believe many of those units, particularly the CVOs are still units that have the potential for retail in the year. So that is something to take into account as we look at the full 2023. But that is certainly a factor that we have been working through in the back half of the year. The third fact that I would note, and this is again a difference versus 2019, in the cadence of the year overall. We have stopped production of 2023 units as of this week. We will continue to ship those obviously as they finish up and we load plan, etc., and match them to dealer demand. But essentially that is a big distinction versus our business cycle in 2019 where we would’ve continued shipping units well into Q4 at sort of full force.
We are deliberately tapering down that production as we get ready for 2024. And then, the final point that I would make, and this is something that we have certainly learned this year with the change of our model year to the beginning of the calendar year. We intend to be fully ready for 2024 across all of the families, and particularly those where we have seen very high demand. Trike was referenced early in the conversation, and where we have struggled quite frankly all year to meet that demand in a timely fashion and a heavily seasonal business. And we want to be ready for 2024. We want to be ready for that ramp-up. We believe inventory has an important role in supporting the beginning of the year. And if you look at it through that lens, we are in a meaningfully different position than we were in 2019.
So those are a couple of the different factors that we are weighing and balancing. So certainly working through it, trying to get the mix right, which is our most important consideration. Managing the total units, obviously important this year, given the extra cost for the dealers, but ensuring above all that with the different production cadence, we are ready and prepared for the start of the season in a heavily, heavily seasonal business.
James Hardiman : And if I may, can I just clarify, I mean to this mix question and the wind-down of sportster. So the SKU count versus 2019 is what – it sounds like the SKU count is actually down, so that should help bring down inventories, correct, or am I not thinking about that the right way?
Edel O’Sullivan: Yeah, when I refer to mix, I refer to mix both within and across families. So, the balance relatively between, for example, our soft tail family and our Trike family versus what we have within the Touring family, those are some of the inputs. Those were – that balance is one that is not exactly or has not been exactly what we would’ve wanted across Q3. And even within something like our Touring family, 55% of our portfolio, there is a relative balance of some of our higher-end, more complex units, our STs, and our specials versus our base World Glides, and Street Glides, all of those individual units given supply disruption and then potentially even the change in consumer preferences and affordability throughout the year are units that we try to correct.
