Harley Davidson (HOG) was one of only two motorcycle manufacturers to survive The Great Depression.
Since 1903, their iconic motorcycles have been a mainstay of Americana.
And it recently saw a surge in pageviews from institutional advisors in our TrackstarIQ data.
YETI (YETI) is a toddler, by comparison, starting in 2006.
Yet, the market capitalization for both companies is nearly identical.
Not only that, Harley Davidson does nearly 4x the sales of YETI.
These two might appear to have much in common.
In fact, they both serve extremely niche markets.
And at the moment, YETI does it much better.
This creates an interesting study.
What is it that one brand does better than another?
Why do investors clamor for tumblers instead of raw power between their legs?
Mirror images
Take a look at the key metrics for YETI and HOG over the last several years:
They look just like the other one in reverse.
YETI saw revenues and margins increase as HOG watched them drop.
Harley Davidson suffered from a depleted customer base. Their traditional riders aged out but were not replaced by new customers.
And it wasn’t for a lack of trying.
It’s because that particular niche market was on the decline.
On the other hand, YETI saw increasing market share in a segment that also saw organic growth.
The good and bad of niche markets
Focusing on one core segment often leads to better margins for companies.
It speaks to the idea that it’s better to do one thing amazing than a bunch of things good.
But niche segments can and do change.
Those companies that build a larger purpose often survive these inflection points.
YETI took the steps to build itself as a lifestyle company rather than just outdoor equipment.
Its network of ambassadors create a customer experience that is second to none.
And they constantly look to expand into adjacent verticals.
To their credit, Harley Davidson realized this and implemented their ‘Rewire’ program. The company plans to reduce costs, expand internationally, and deliver more electric motorcycles.
And so far, it’s saying the right things.
Yet, it feels as though their plan falls short of a breakthrough, opting instead to regurgitate talking points without critical solutions.
Saying you’re a lifestyle brand and connected to the customer is one thing. Showing it is another.
Our hot take
The best word to describe our feelings toward the stock is indifference.
Harley Davidson holds a place in our hearts. They have the tools and resources necessary to pull off the needed transformation.
The question is whether they can execute.
