Hornby's financial updates to the Stock Market

[JSpencer]

When I worked at Signalbox in the 90s, we had no problems with fixing or returning a faulty item brought from us.

 

What did annoy us was that after Christmas, toys r us and other train set shop customers would come down to us (often saying they were sent by the shop they brought it from) expecting us to repair their item for free because we were the local area "Hornby service dealer"!

 

I think I would prefer these conditions actually as it's clear to all Hornby sellers (and not just model shops) that a said faulty item must first be returned to the place they brought it and that shop then provides a Hornby details of when it was sold, when it was returned etc.

[JSpencer]

My understanding is that all existing orders and those made up to the 6th October by stockists with Hornby will be at the current price and orders made from the 9th October will be at the new prices.

Most increases are 0-5% but there are some much larger ones. If you want Sentinels, Q1s, J94s or Terriers it may be worth ordering sooner rather than later.

The price increases obviously must cover what they have in stock now and what is yet to be released.

 

My guess is that the bulk of these items were already on ore order by shops since a very long time. So it will only affect new orders shops place for the same items. I doubt shops will be ordering more Q1s and other locos, their orders will be focused on bread and butter items like track.

 

This means then, Hornby have undersold a large bulk of new locos and rolling stock, whose prices they will honor covered by pre orders while left over (un ordered) stock will be more expensive. Conclusion of that thought is a mix of sold items whose margins are too small or negative and some remaining stock they may find hard to shift due to price increases. Not the best method to ease debt.

 

I now see why Bachmann do not fix the price until 6 months or so before release.

[adb968008]

An interesting take on the "design clever" era of Hornby:

 

http://www.rmweb.co.uk/community/index.php?/topic/113725-basingstoke-in-oo-1958-67-layout-and-stock/?p=2869443

If Hornby followed Piko principle, then we'd have very heavy modern locos with traction tyres, that will run like a dream, pull anything you like and no complaints about build quality, performance and pick ups. Piko is very competitively priced too...and in tiny packaging.

 

Even diehard German fans are accepting Piko has redefined the market for each new prototype its produced, the new BR103 has reduced the older Roco ones to less than £40 second hand, from a £250 sale,as the Piko one is £120 new.., same story for the v200, BR110 and the new 2017 BR143... it's knocking the castle walls down of the establishment and putting the over priced Roco, Fleischmann and Trix examples in the same scrap bins Piko used to sit in the 1980's.

http://www.piko-shop.de/index.php?vw_type=artikel&vw_id=23380

(German link comparing here to the Roco one)

https://www.drehscheibe-online.de/foren/read.php?010,7784152,7784152#msg-7784152

 

Whilst you can say it's unfair to compare a 90's tooling to a 2017 one, consider that's still sold, at a very high price new, 274 Euro for Roco vs 164 Euro Piko, both are at the same standard, as someone wanting a BR 112 which one are you going to chose, and the second hand market reflects that, the Roco one is selling for less than the Piko one on ebay..its dumped. What Piko has done, is made better quality, cheaper, and reinvigorated interest that brings newer blood into the hobby at the same time. Their hobby range is very cheap (as low as £50) and very acceptable too... in Germany a Taurus at this price was unthinkable a few years ago, in a market who's entry level was way three times higher.

 

If Piko are making the class 87, I'd be very excited, if not, it's an opportunity missed... the BR143 is 169 Euro (I bought mine for £125), and want to compare it to the class 87 With its RRP of £169 but my gut feel looking at the pictures, though, is it's probably not.

 

I know UK modellers resent tyres, but that's only because they remember the millimetre thick elastic bands stuck without thought to a wheel used in the 1970's, not the fine grain detailed ones sat flush to grooved all wheel pickups used in Europe today.

 

Ironically whilst U.K. Modelling is getting more expensive towards legacy European pricing, Piko is making European modelling magnitudes cheaper than its ever been, I'm not sure how the bastions of Roco,Fleischmann and Trix will respond, but right now they are starting to look old and expensive... Whilst the U.K. Market is healthy and open to higher prices, inevitably there is alesson that could still yet be learnt in the U.K... is Hornby a Piko or a Roco in the eyes of the customers, and is that vision stuck in the 90's or 2010's ?, even if it may be more clear on the factory floor.

Edited September 30, 2017 by adb968008

[jjb1970]

I honestly think that the Piko Br103 is the best model of that iconic locomotive around just now, all things considered. And it is cheaper than the Roco, Trix/Mark lin or ESU's alternatives although the old Fleischmann model can be found for less and still looks OK.

Edited September 30, 2017 by jjb1970

[Floreat Industria]

Roco/Fleischmann does not seem to be in a very happy state.

This article says that the bank wants to take over the shares:-

 

https://translate.google.co.uk/translate?hl=en&sl=de&u=https://extrajournal.net/2017/09/25/raiffeisen-will-modelleisenbahnen-fleischmann-roco/&prev=search

 

Both in mainland Europe and the UK the model railway market is shrinking and I think we have "never had it so good" as recently but can any of the big names carry on indefinitely?

[The Johnster]

As a UK modeller who 'resents' tyres (I would class my description of them as the Devil's expectorant as profound dislike rather than resentment, but don't want to start an argument about semantics), I think I need to point out that my objection to them is based on current usage, not the rubber bands of the 1970s.  I have yet to come across a loco fitted with traction tyres that does not immediately run better when they are removed, albeit at the cost of haulage capacity which is not an issue on my tiny BLT anyway but good running is!  They destroy the locomotive's ability to sit properly on the track and play havoc with electrical pickup, and that is before they even start to wear and stretch, which leads to all sorts of trouble.  I fail to see how things have improved since the 1970s in fact, though will admit that some modern applications sit better in their grooved wheels.

 

It may well be that Piko are able to mass produce locomotives with traction tyres that pick up reliably and run smoothly, but no manufacturer of British outline RTR has ever been able to do so and still can't.  This should not mean that a tyred loco is unsellable in the UK; I am quite happy to give the idea another chance if the model reviews well, runs smoothly, and picks up current reliably on reasonably well laid track; it's just I can't see it happening any time soon.  British outline manufacturers have only got the hang of smooth running in the last decade or so, and I'd call performance in this respect adequate rather than spectacular!

 

Sadly, it's a bit like the current situation with split chassis current collection.  A split chassis with no pickups to bear on the wheels should be able to run more smoothly and require less cleaning than a conventional one, but everybody remembers the disastrous Mainline ones and their derivates, a shadow from which Bachmann has only recently emerged having abandoned the concept altogether.  It was not the design that was ever at fault, but the poor choices of materials and failure of QC in assembly, but I can't see any UK RTR loco having a split collection chassis, even a very high quality one, for many years!

[Mark Saunders]

Roco/Fleischmann does not seem to be in a very happy state.

This article says that the bank wants to take over the shares:-

 

https://translate.google.co.uk/translate?hl=en&sl=de&u=https://extrajournal.net/2017/09/25/raiffeisen-will-modelleisenbahnen-fleischmann-roco/&prev=search

 

Both in mainland Europe and the UK the model railway market is shrinking and I think we have "never had it so good" as recently but can any of the big names carry on indefinitely?

 

Companies have come and gone over the years, the original Hornby, Triang, Mainline and many smaller ones have all gone.

 

New ones have appeared with the biggest player now Bachmann and Oxford, plus retailers starting to be commissioners/manufacturers.

 

Mark Saunders

[stewartingram]

With WIndows 10, if you change the motherboard, you need a new licence, so they still do that. Windows 7 and 8 licences were transferrable for retail licences, but OEM never were. For Windows 10, it is non-transferrable no matter the version now. Though there are some workarounds and phoning Microsoft can resolve it, but generally it is a non-transfer licence.

 

Really?

I've replaced my motherboard twice since installing Win10. So that is 3 motherboards in total. And Win10 was the free Pro version upgrade from Win 7 Pro (for which I bought a disc from ebay, and immediately upgraded it to Win10, being an XP user at the time). 

Each time I've changed the mother board, with the same copy of Win10, I've had to register it with Microsoft. As I've also had some HDD failures during the same period, I've also had to reinstall further times. I can't remember which way for each rebuild, but sometimes I've just entered the code ok, others I've had to do the phone call to MS to get a code to enter, no problems.

Sounds like I've had troubles with the PC I guess, but it is all homebuilt, staring in about 1995! The proverbial hammer with new heads and handles. I have 5 HDD installed, each one partitioned to give multiple drives on each HDD. I have no idea of the age of these drives now, so unluckily had 3 fail relatively close together).

 

Stewart

[Kelly]

Really?

I've replaced my motherboard twice since installing Win10. So that is 3 motherboards in total. And Win10 was the free Pro version upgrade from Win 7 Pro (for which I bought a disc from ebay, and immediately upgraded it to Win10, being an XP user at the time).

Each time I've changed the mother board, with the same copy of Win10, I've had to register it with Microsoft. As I've also had some HDD failures during the same period, I've also had to reinstall further times. I can't remember which way for each rebuild, but sometimes I've just entered the code ok, others I've had to do the phone call to MS to get a code to enter, no problems.

Sounds like I've had troubles with the PC I guess, but it is all homebuilt, staring in about 1995! The proverbial hammer with new heads and handles. I have 5 HDD installed, each one partitioned to give multiple drives on each HDD. I have no idea of the age of these drives now, so unluckily had 3 fail relatively close together).

 

Stewart

It was Microsoft's official response when asked by the various it press.

 

The windows 10 license is also linked usually to a Microsoft live account, meaning it is also not transferable to another person.

 

As I said there exists work arounds, it might well be that they're more lax at enforcement with Windows 7 upgrade copies to keep you using genuine software etc. But it will likely be the case of you went and bought a boxed copy of Windows 10 it wouldn't transfer from one machine to another.

 

Reinstalling to a new hard drive doesn't tend to count in this regard, it is supposed to be linked to the motherboard bios and version.

 

The windows 7 to 10 upgrade can still be grabbed if you require assistive technologies on Windows (screen reading etc).

[jjb1970]

Roco/Fleischmann does not seem to be in a very happy state.

This article says that the bank wants to take over the shares:-

 

https://translate.google.co.uk/translate?hl=en&sl=de&u=https://extrajournal.net/2017/09/25/raiffeisen-will-modelleisenbahnen-fleischmann-roco/&prev=search

 

Both in mainland Europe and the UK the model railway market is shrinking and I think we have "never had it so good" as recently but can any of the big names carry on indefinitely?

If people think Hornby has been a soap opera it has been nothing compared to the downs of Roco over the last 20 years. I don't think they ever really recovered from their first bankruptcy, at one time they were the gold standard of HO (well, this side of high end brass) but after the first bankruptcy they lost a lot of ground as other producers improved. That said, Marklin has hardly had the best of times in the same period, nor Fleischman (now a sister company of Roco) and we all know what happened to Lima/Rivarossi.

[adb968008]

If people think Hornby has been a soap opera it has been nothing compared to the downs of Roco over the last 20 years. I don't think they ever really recovered from their first bankruptcy, at one time they were the gold standard of HO (well, this side of high end brass) but after the first bankruptcy they lost a lot of ground as other producers improved. That said, Marklin has hardly had the best of times in the same period, nor Fleischman (now a sister company of Roco) and we all know what happened to Lima/Rivarossi.

Dare I suggest it's been at the risk of duplicating each other's models, putting new lipstick on old pigs, and repition of ranges year on year , the very thing that is becoming common in the UK.

 

To quote Piko's main man..(3 years ago)...

 

Why have there been so many economical problems among others in your business sector—Arnold, Fleischmann, LGB, Märklin, Roco?

 

Many of the old managers and owners lacked in long-term strategies and they rested on their laurels of the history. The firms had just earned magnificently for decades. They simply did not notice the changes in the market.

 

https://www.ttnut.com/interview-with-boss-of-piko-t2339.html

 

But also another warning, that several people have referred to for many manufacturers..

How much time do you personally have to spend on-site?

 

I'm there every second month by turns with my technical director. If you don't do that, you can forget it. Then you'll need a German manager there, that's also expensive. If you don't handle it the way we do, you'll be bankrupt in two, three years.

 

 

Why?

 

I like Chineses, but they do what they want and fetch whatever possible. They want to earn money, they don't care about the firm. The education is by far not as good as always suggested. That sounds fairly blanket, it is. Of course, there are also very well educated Chineses who get involved with the firm, but that's not the bulk.

 

Of course one way to mitigate is to change t&cs relating to Quality control by imposing limitations at the retailer instead. Edited September 30, 2017 by adb968008

[jjb1970]

One of the things I find interesting about Piko is where they've positioned their product. They have three HO ranges, the weakest weirdly is their top tier classic range which is expensive and lags behind similarly priced models (I believe the classic models are still made in Germany). The Hobby and Expert ranges are superb, Expert loses some of the finery of full fat HO but not much and it is very competitively priced. I really think Piko Expert is what Hornby tried to sell design clever as, good high quality models which are good enough to meet the demands of "serious" modellers whilst keeping prices competitive and which do not look to be built down to a price or budget models. They are not really like the new generation Railroad models, they're better than that. And the market has responded very well to Piko finding that sweet spot, and that is a market with extremely high standards for quality and fidelity to prototype. I think that demonstrates that if a product is well designed, manufactured to a high standard and sold at the right price then customers will accept some degree of compromise. The Hobby range seems equivalent to the new Railroad models as affordable but good entry level models.

[The Johnster]

Despite what was said above, the Railroad Crosti 9F is new tooling (as of 2014), and so its price reflects that.  I also wonder if it may have been started under design clever, as it has features that to me don't make sense for a Railroad model, but at the same time compromises that don't fit the main range.

 

Despite that, pricing doesn't just reflect the cost of making the model.  While the tooling may be old, you need to try and maintain a consistency in your pricing scheme so that newly tooled models aren't dramatically more expensive than older models.

 

Hornby haven't always done well with this, in part because some of their models don't really fit well into either category of main range or Railroad, but pricing so that smaller models are cheaper than bigger models is a reasonable compromise.

 

 

 

In which case, why is it in the lo-fi, budget orientated, Railroad range and not a 'proper' full fat model justifying it's price tag.  In other words, what is Railroad and what is it for?

[Coryton]

One of the things I find interesting about Piko is where they've positioned their product. They have three HO ranges, the weakest weirdly is their top tier classic range which is expensive and lags behind similarly priced models (I believe the classic models are still made in Germany). The Hobby and Expert ranges are superb, Expert loses some of the finery of full fat HO but not much and it is very competitively priced. I really think Piko Expert is what Hornby tried to sell design clever as, good high quality models which are good enough to meet the demands of "serious" modellers whilst keeping prices competitive and which do not look to be built down to a price or budget models. They are not really like the new generation Railroad models, they're better than that. And the market has responded very well to Piko finding that sweet spot, and that is a market with extremely high standards for quality and fidelity to prototype. I think that demonstrates that if a product is well designed, manufactured to a high standard and sold at the right price then customers will accept some degree of compromise. The Hobby range seems equivalent to the new Railroad models as affordable but good entry level models.

 

So perhaps the time has indeed come for them to dip their toe in the UK market?

 

I've certainly been surprised by the quality and low cost of some of their models I've seen in shops. (Well, one shop - they aren't exactly that common in the UK).

[jjb1970]

So perhaps the time has indeed come for them to dip their toe in the UK market?

 

I've certainly been surprised by the quality and low cost of some of their models I've seen in shops. (Well, one shop - they aren't exactly that common in the UK).

If not Piko I hope someone in the world of OO is looking at what Piko has been doing and considering how it might translate into UK outline.

One of my pet hates is the way that we are often told that because manufacturer A cannot produce models for less than £X because of the person hours needed etc then it must be true for all manufacturers. That assumes that manufacturing costs are fixed and ignores design, particularly designing in ease of manufacture, production efficiency etc. Because manufacturer A has a certain cost Base may be completely irrelevant to another manufacturer. There aren't that many fixed costs in a business.

Piko are successfully demonstrating that there is another way to design an manufacture models, it'd be nice if someone applied their philosophy to OO. For people want balls out detail and esoteric features and don't mind paying for it but if a company like Piko offer an alternative hen that can only be good, to offer a choice.

[shunny]

I managed to have a look at the new price most items small increases and some such as new Coranation have no increase, coaches are up by a couple of pounds which now makes Hornby's MK1's more expensive than Bachmann.

The main eye watering increases are the J94 is now £120! The other I noticed was the Q1 is up to £150 from £110!

[The Stationmaster]

The circular received from Hornby states the following:

 

"We will provide a 12-month warranty from date of purchase by the consumer if the following conditions are met:

a.      Proof of purchase by the consumer must be provided 

b.      The item must have been purchased from Hornby, by the 

         Customer, within 24 months of the sale date to consumer

c.      The return must come back through the original retailer and not 

         direct to Hornby

d.      Hornby shall be under no liability in respect of any defect arising 

         from fair wear and tear, wilful damage, negligence, abnormal 

         working conditions, failure to follow Hornby’s instructions (whether 

         oral or in writing), misuse or alteration or repair of the goods 

         without approval

e.      The decision to repair or replace will solely be the decision of    

         Hornby"

 

Thinking about this positively it looks like it could help achieve some of the things some retailers have long looked for.  Firstly it could finally spell trouble for the 'front room/garden shed' sellers who buy in from the wholesaler and then undercut regular retailers because they don't have retail premises etc overheads and other costs and can therefore undercut even the past deep discounters.    Secondly it puts back a repair/replacement responsibility onto retailers (assuming they wish to take it up of course) instead of the not too long past insistence that all repairs had to go back to Hornby - again something which might strengthen the hand of 'proper retailers' whose customer service extends well beyond the time when they sell the item.

 

From Hornby's side there is a potential admin, and information, benefit with repair etc claims passed back through retailers instead of coming in from all directions although that might increase waiting time for a customer seeking resolution of a problem.

 

A side effect relates to the 24 months 'at the retailer' as this can work in several ways.  Firstly it might encourage the retailer to turnover stock and place orders more frequently or at least at the annual ordering time because if they don't they are going to be saddled with a cost if they sell a faulty long-stocked item - yes, that can clearly work in two very opposite ways of course as it might encourage retailers to place smaller orders.  But the latter might too work beneficially for Hornby as it will give them more precse marketing information provided they carefully study order patterns and then relate them to production levels.

 

So overall while it might even appear to be iniquitous or even passing the buck to retailers it could have some interesting beneficial effects, the elast of which would be encoruraging buyers to keep their receipts and buy only from reputable retailers with proper 'bricks & mortar' shops.

 

Edit to crrect a typo

Edited October 1, 2017 by The Stationmaster

[adb968008]

The main eye watering increases are the J94 is now £120! The other I noticed was the Q1 is up to £150 from £110!

If that's right, I suspect they managed to grab defeat from the jaws of victory there.

 

They did that a year or so back with the K1.. roll on 2017, they are still £89 in some outlets, even if 62006 is now offered in a box with bizarre wagons at double the price, I wonder if that set has a price increase? , though I guess the value add it now brings is a "sell by date". But I can't help thinking Hornby maybe just gave us its own "Expiration date".

 

We could find a slightly unfair situation, where years old stock ends up stagnant in a Hornby warehouse, gets dispatched to retailers with a 24 month sell by date.

 

I suspect as modellers many of us are too price savvy for these increases, and retailers aren't your usual corner shop types they will respond intelligently to the t&c changes, knowing what's inevitably going to happen when cash flow gets tight n Margate ? Perhaps it's aimed at the retail/concession customers who maybe are less so and hoping they suck this up or maybe there's another strategy we don't yet know ?

Edited October 1, 2017 by adb968008

[Black 5 Bear]

I'm willing to pay a bit more if Hornby sort out their quality control once and for all.

Buying their products of late tends be very hit and miss. One good reason for using outlets that run the locos prior to despatch.

[JSpencer]

I m

The main eye watering increases are the J94 is now £120! The other I noticed was the Q1 is up to £150 from £110!

They have 2 Q1s and 2 J94s in stock on their website and not showing any price increase at this time. There are no others to follow.

 

I would have suspected that most model shops already have a fill. It could be a scare tactic to make them take more in the few days that rest. But any left in stock on that date are not going to move very quickly, considering there will be lots left in model shops for far cheaper. Those will look an absolute bargain (even the rails one) at these prices.

The J94 is now more expensive than its modern DJM rival.

 

This leaves me in two minds, either Hornby made a loss or zero margin or the margin now is over calculated. Something got calculated wrong somewhere.

Edited October 1, 2017 by JSpencer

[Ian Hargrave]

I'm willing to pay a bit more if Hornby sort out their quality control once and for all.

Buying their products of late tends be very hit and miss. One good reason for using outlets that run the locos prior to despatch.

Indeed that is a sound policy.However problems tend to occur after a period of running .For example,my Rails Q1 ground to a halt after 5 minutes running time....having shed the retaining screw on its r/h central driver.Fortunately,I found the culprit and refit it .It now seems to run well...fingers crossed.As they say,nothing under the sun is new....hey ho.

[Coryton]

A side effect relates to the 24 months 'at the retailer' as this can work in several ways.  Firstly it might encourage the retailer to turnover stock and place orders more frequently or at least at the annual ordering time because if they don't they are going to be saddled with a cost if they sell a faulty long-stocked item - yes, that can clearly work in two very opposite ways of course as it might encourage retailers to place smaller orders.  But the latter might too work beneficially for Hornby as it will give them more precse marketing information provided they carefully study order patterns and then relate them to production levels.

 

 

I don't see it at all beneficial to Hornby If the effect is that more stock sits around in Hornby's warehouse (incurring storage costs, and having generated no income) rather than in shops (Hornby now have the money and it matters little to them how long it sits there).

 

(Time value of money and all that)

[Clearwater]

All depends on how much stock Hornby produce. Surely the lesson of recent times is produce less and have to reorder rather than have the warehouse full and have to discount to shift the stock. If they are producing less, then these new terms may work... let’s wait for the first moans from retailers that they’ve missed out on a model that’s now out of stock....

 

David

[sc2016]

I managed to have a look at the new price most items small increases and some such as new Coranation have no increase, coaches are up by a couple of pounds which now makes Hornby's MK1's more expensive than Bachmann.

The main eye watering increases are the J94 is now £120! The other I noticed was the Q1 is up to £150 from £110!

Do you know if the Royal Scot, Black Fives, 4MT, Battle of Britain, IEP and the Cattle Wagons are going up in Price?

 

Thanks,

Samuel.

[Stanier16]

Excuse me for saying this, but, Hornby's position could well have been better, if they were to actually stock a decent range of spares for its recent and current range of locomotives etc. It seems to me that by no sticking said spares, or for that matter well known spares outlets, they either expect the purchaser to source a new, or secondhand item, if they can find one! All this forgetting that maintaining adequate stocks of spares would garner much goodwill with the public. Instead, all that can be heared is a thunderous silence! Not everyone has limitless disposable cash to maintain their fleet. A very short sighted attiude by those at Hornby.