Hornby's financial updates to the Stock Market

[Pandora]

You think the hobby is in good health?

The hobby is in good health,  it is the manufacturers who have the health problem.  If the two key manufacturers ceased to be, (and I am not predicting their demise),  the hobby will roll on,  the considerable  "pool" of models they have manufactured and  sold to us over the last 30 years is enough to keep the hobby going for the foreseeable  future.

 

My thoughts are centred on  the lack of new blood (youngsters) who develop a long-term   interest in railways, certainly my introduction to railway models began with,  and ran in parallel, with my Ian Allen days.

 

Is there a  positive correlation between the  numbers of lineside enthusiasts and present / future  modellers?  I believe  that is the case

Edited December 18, 2017 by Pandora

[Pandora]

Web sites are good when you know what you want (or sometimes for finding a bargain) but not so good for just browsing and finding things you didn't know about. This will probably change - at some point you will probably be able to wander round a virtual shop on-line - but we're not there yet.

 

I also enjoy being able to chat to the staff in a model shop and - sometimes - other customers.

 

So for me it's worth paying a little more so that I'm doing my bit to keep the shop going.

 

For small things it's generally cheaper than getting on-line anyway as I don't have to pay postage, and also faster.

 

Of course I'm lucky to have model shops close enough to visit in my lunch break.

 

(Edited to remove duplicated text)

I agree with your post,  but not everyone is as decent to the retailer as yourself.  In  my local model shop certain faces are known for turning up at the counter requesting a model to examine out of the box, only to finish by  bailing out of the shop empty-handed. 

We know the situation  too  well,  curiosity satisfied,  they are heading off to purchase on-line elsewhere, 

Edited December 18, 2017 by Pandora

[phil gollin]

Sadly it looks as if my prediction of possible outcomes is coming to pass for Toys are Us.

 

https://www.msn.com/en-gb/money/news/fears-grow-for-toys-r-us-future-over-ppf-demands/ar-BBGWLXw?li=AA54rU&ocid=spartanntp

 

The pensions arena are taking fright and the UK arm is now under threat.

.

 

I am more than a little unimpressed by the Toys 'r Us position as stated in that article.  The fact that the pension fund was already underfunded and the £8m/year "royalty" payable to the US parent (i.e. a way of syphoning off money from UK tax) means I am rather more on the side of the Pension Protection Fund, even if it means the UK arm will go under.  The US authorities will not put aside monies sent to the USA for UK pensions, best those funds don't leave these shores (remember what happened with  Lehman Brothers in the credit crisis.)

 

.

[Pandora]

I found some  news of Hornby in the newspaper today.

 

Changes in the Hornby  Boardroom:

 

Chief Executive Lyndon Davies will be interim chairman until a replacement is found.

 

Kirstie Gould, a consultant in its finance arm will take over from David Mulligan as chief financial officer

[adb968008]

https://www.insidermedia.com/insider/southeast/senior-shake-up-at-Hornby

[peterfgf]

https://www.insidermedia.com/insider/southeast/senior-shake-up-at-Hornby

That's an up-to-date photograph that they used to illustrate the article!  It will do no end of good for the sales O-gauge three-rail tinplate track.  Did Binns Road ever produce a Southern L1 4-4-0?

Peterfgf

[meil]

"collectibles group"?

 

Well there we have it.Forget your model railway - it's only for collectibles.

Edited December 19, 2017 by meil

[Legend]

That's an up-to-date photograph that they used to illustrate the article! It will do no end of good for the sales O-gauge three-rail tinplate track. Did Binns Road ever produce a Southern L1 4-4-0?

Peterfgf

I think it’s from the latest catalogue due Jan 8th ! Well everybody wants something Southern

 

Of course you can’t read a lot into this, but I do wonder if this is Lyndon changing things around . But I still think Hornby don’t quite get it, they are a relatively small company to be appointing non executive directors. I think they should be cutting their cloth to suit. They’ll be appointing a team of consultants next , then we really are all doomed

Edited December 19, 2017 by Legend

[rovex]

Deck chairs and the Titanic, unfortunately spring to mind

[Mike Storey]

I think it’s from the latest catalogue due Jan 8th ! Well everybody wants something Southern

 

Of course you can’t read a lot into this, but I do wonder if this is Lyndon changing things around . But I still think Hornby don’t quite get it, they are a relatively small company to be appointing non executive directors. I think they should be cutting their cloth to suit. They’ll be appointing a team of consultants next , then we really are all doomed

 

Not so sure about that. They are making one of their very few consultants their next finance director, and the one new non-exec they are appointing was a long respected member of the Hornby team in times past.

 

Recent criticism of British company performance has been about the lack of independent non-execs. Hornby is not small, it is just not as big and successful as it could be. A good non-exec, who questions the decisions and actions of the Board, is an essential part of ensuring that group-speak does not take them down the wrong road.

[Crichel Down]

The hobby is in good health,  it is the manufacturers who have the health problem.  If the two key manufacturers ceased to be, (and I am not predicting their demise),  the hobby will roll on,  the considerable  "pool" of models they have manufactured and  sold to us over the last 30 years is enough to keep the hobby going for the foreseeable  future.

 

My thoughts are centred on  the lack of new blood (youngsters) who develop a long-term   interest in railways, certainly my introduction to railway models began with,  and ran in parallel, with my Ian Allen days.

 

Is there a  positive correlation between the  numbers of lineside enthusiasts and present / future  modellers?  I believe  that is the case

 

I care about neither of these issues.  I will pursue my hobby as long as I am physically and mentally able to do so, and it is of no concern to me whether younger generations take up the hobby or not.  If a shrinking market were to lead to various RTR ranges or kits becoming unavailable, I would just make do with what I could get hold of and (if necessary) scratch-build the rest.

 

I am old enough to remember a time when there were far fewer RTR models available, few of which were anywhere near the standard of today's models, and when the only alternative was lumpy whitemetal kits or scratch-building. And yet we thoroughly enjoyed our hobby.  If the likes of Hornby, Bachmann, et al disappear sooner or later, I certainly shan't lose any sleep over it.  I have found some of the current RTR models very useful, but there is really no product or component that is absolutely indispensable.  Whatever happens to the model railway market, most of us will carry on regardless with our chosen hobby.  

[No Decorum]

Um. Perhaps I am wide of the mark, perhaps not. As has been said, Hornby is neither big nor small. It fishes around for high-power chief executives but cannot afford the best. The ones it gets are ideas men, intent on “shaking things up” to justify themselves. The result is to make things worse. Sometimes, and I think it is the case with Hornby, what is needed is solid plugging away until things come right.

 

Of course, it isn’t only plugging away. Everything needs to be properly costed and to show a profit.

 

Hornby has been hit hard by a sucession of failures. Frank Martin’s Olympic tat was not, I think, an unreasonable attempt to diversify. It just didn’t work. Then he had his Ratner moment.

 

The collapse of Sanda Kan was terrible. Sensibly, Hornby reacted by looking for half-a dozen factories so that the failure of one would not bring the company to its knees. The trouble is, that’s half a dozen factories to keep an eye on and there have been hints that there aren’t enough eyes.

 

Design clever was a well-motivated response to complaints about rising prices. It’s execution was dismal; particularly under the skin. I think of rapidly-wearing bearings and pot-luck motors; flywheels being unable to disguise the worst examples. Thankfully we are back to brass bearings and five-pole, skew-wound motors. Nevertheless, they are not as consistently smooth or quiet as older Hornby models at their peak.

 

However, there is hope. Steve Cooke’s idea of actually talking to people (gasp!) was encouraging. There is a lot of talent at Hornby and we have been treated to some fine models, even if they do display some signs of haste and lack of good QC.

 

The new chief has experience. His business model was: don’t announce until the models are close to being available and don’t pay much attention to potential buyers. It didn’t seem to work terribly well. Let’s hope that Hornby carries on talking to us and producing good models but building on the buyers’ reactions. Choose carefully, take care, improve QC, ensure that models make a profit. Keep plugging away.

 

For heaven’s sake, stop f***ing things about.

[JSpencer]

Design Clever was perhaps just ahead of its time. We are now seeing a distinct split in opinion. Those wanting the details and are willing to pay for it and those who will accept less (to an extent - railroad being far too less) for a better price.

 

Design Clever worked for HALs and BILs but went OTT with steam locos (molded cab detail would have passed in cases where the CAB is all but closed but not molded handrails).

 

As for people at the top, you get all sorts of mixtures ranging from "the people" BS gang to very competent leaders. Some really are born with lucky stars giving a false impression that they are competent. Others really did get there through hard graft and merit.

[robmcg]

I'm not sure how to phrase this in terms of business strategy but both Hornby and Bachmann are basing their future on selling desirable models, and you can buy models s/h or 'as new' or actually new but remaindered at prices far below the cost of producing new models.

 

I have been selling some models, as I sometimes do to finance new purchases, and when I look at a new but un-boxed Bachmann crimson Midland Compound which has a market value of under 100 Pounds I don't know how a current manufacturer can equal the quality for anywhere near that...  the H2 Atlantic will undoubtedly sell for about 50% more, but the market is simply awash with superb s/h models which must affect things.

 

Look at the fate of Hornby Kings and S15s and suchlike, there simply aren't as many buyers as someone, somewhere, guessed.

 

I show below a pic of the cab of the Midland Compound, 00 RTR at its best, and you can have this for pennies.   I'll still probably buy an H2 but I don't see the volume which was once perhaps deemed to be normal....   ?

 

 

I know it's not strictly in accordance with the thread title but just to reinforce the point here below is a top quality model, enhance with mild  editing, which you can buy for about £80..   so what can Hornby or Bachmann do?  I hear, 'stick to the basics', but I don't see a large public company surviving with that.  Yes I know Hornby have other irons in the fire.

 

 

edited pic will remove if required,  

 

I wish I knew a good strategy for Hornby's survival, in the meantime I truly enjoy the quality we are getting from manufacturers.

 

cheers

Edited December 21, 2017 by robmcg

[jjb1970]

I think s/h is the antidote for people who don't like the prices of new releases. There are still some good s/h bargains out there if you avoid some of the sillier prices on a certain well known internet auction site. I mainly buy s/h, I like brass HO and you can find some splendid brass models at relatively modest cost s/h.

[robmcg]

I think s/h is the antidote for people who don't like the prices of new releases. There are still some good s/h bargains out there if you avoid some of the sillier prices on a certain well known internet auction site. I mainly buy s/h, I like brass HO and you can find some splendid brass models at relatively modest cost s/h.

 

Actually it's not only Ebay s/h sellers who ask silly money, there are many other sellers who presumably get sales occasionally from people aren't wise to the market's better sellers. Amazon has sellers asking triple what you would pay from a box-shifter.

 

Not that Hornby can take any comfort from that.

 

As to brass H0 it truly can be attractive, and I'm wondering how the total spend on model railways will pan out in the next wee while. 

 

Hornby's shares at about 27p , but I don't know how to draw any meaning from this except it seems about the same as the beginning of the year, and a lot of management people have changed, my guess is that there is value in the company's assets as much as trading profits, if any, from model trains.

 

typo edit 

Edited December 21, 2017 by robmcg

[Legend]

I think s/h is the antidote for people who don't like the prices of new releases. There are still some good s/h bargains out there if you avoid some of the sillier prices on a certain well known internet auction site. I mainly buy s/h, I like brass HO and you can find some splendid brass models at relatively modest cost s/h.

Yes that’s true apart from 2 Dapol models all my purchases have been second hand this year. And it is a reaction to increasing prices. There are lots of Bachmann models I’d quite fancy but not prepared to pay the inflated prices. Instead I’ve gone down the route of acquiring locos I always wanted as a boy, including some Wrenn items. I bought four Hornby locos last year mainly on price 42XX , main range Hall and N2 . I bought them on impulse because they were good value . The exception was the Huntley and Palmers Peckett which I bought at the normal discounted price , but that was also sub £90 . I can’t be the only person doing this

[Mike Storey]

If we are on to demand, I haven't bought any Hornby this year, or last, (bar some Skaledale vehicles) because they simply are not making anything I would want, or at least in one case, in the livery I need. They did for a while, and I bought plenty. But my money has gone to Bachmann, Dapol and Heljan of late. I buy new because my previous experiences of second hand, both for locos/units and for rolling stock, has not been good. Buy new, you have some comeback.

 

As a market buying power indicator, I also model in 16mm/ft NG. You can buy live steam, meths fired, or indeed battery, locos for a few hundred, but the more detailed and controllable, gas fired live steam, you have to go at least to a grand, and now moving closer to two grand (with R/C). If you want real coal fired, think 3 grand or more. You can knock up a wagon kit for less than £20, or go up to several hundred. RTR has its detractors as much as 00 and 0, as many original folk are skilled amateur engineers in their own right, and bodgelling is also a much admired skill, but the garden railway as a hobby has so successfully attracted so many new people over the past 20 years, that RTR is now much more the norm. And the majority is still British manufactured, in 16mm/ft anyway. But the interesting fact is that the high price stuff has to be ordered perhaps a year ahead, and sells out almost all the time. You can get the lower priced kit almost any time. An elite past-time? Perhaps. But, when you include 45mm and 32mm gauge modellers and G gauge (1/24 to 1/29) as well as SM32 (1/19), latest estimates suggest some 25,000 or more people indulge in some way across the UK. That does not match the mass market of 00, but perhaps it shows that quality and functionality definitely sells.

[darren01]

Yes that’s true apart from 2 Dapol models all my purchases have been second hand this year. And it is a reaction to increasing prices. There are lots of Bachmann models I’d quite fancy but not prepared to pay the inflated prices. Instead I’ve gone down the route of acquiring locos I always wanted as a boy, including some Wrenn items. I bought four Hornby locos last year mainly on price 42XX , main range Hall and N2 . I bought them on impulse because they were good value . The exception was the Huntley and Palmers Peckett which I bought at the normal discounted price , but that was also sub £90 . I can’t be the only person doing this

The last loco i brought new was the 64xx , Since the price rise nothing.

[adb968008]

Earlier this year my father passed away.

I’ve had the task of handling over 2000 items of stock, locos, coaches etc, Removing the items of personal, sentimental and emotional value, to which ebay has been my vehicle of disposal for the remainder.

 

I’ve been astonished at the level of uptake and demand, for which much of the collection was 1970/80s Hornby and Lima period stuff, some of it was questionable quality.

 

I Can only conclude that the hobby is definitely alive and well, additionally people are hunting in the cheaper branches of the market for spares, trains for kids and modellers on budgets, indeed selling the 80’s stuff was an easier sell than “second hand/unused” recent models.

 

He had everything, ever made, I think sometimes given the volume of it. Indeed having merged many of his into my own i’m Finding that some of that 80’s £20-50 bracket models actually aren’t that bad when next to their peers in the £150-200 bracket.. so I agree to a point of why spend more.

[jjb1970]

He had everything, ever made, I think sometimes given the volume of it. Indeed having merged many of his into my own i’m Finding that some of that 80’s £20-50 bracket models actually aren’t that bad when next to their peers in the £150-200 bracket.. so I agree to a point of why spend more.

 

I find that often the attitude to some older models depends to some extent on whether people operate layouts or collect models. Some collectors actively collect fallen model marques or Hornby so are very interested in those old models but a lot of collectors will want the latest super detailed release. Layout operators on the other hand often take a different view and while they value the latest super detailed models they also value good models which look good and which will run around a layout and which can be handled and used without worrying about bits dropping off. And modellers see the potential in those older models for conversion, super detailing, re-painting etc.

Certainly, if you step back from the hyperbole around models and new releases, some older models still look pretty good from normal viewing distances, can scrub up very well indeed with a little effort and can be picked up cheaply so it makes perfect sense that there will still be a market for them. I still have a lot of Roco and other European HO dating back to the 1980's which I'm still very happy with. Are newer alternatives better? Probably (though not necessarily so) but if the model is accurate and looks good then it doesn't stop being a good model just because something better comes along. My main poison is Overland HO outline HO and a bit of Tenshodo HO JNR, in both cases the fact that most of my collection is over 20 years old is irrelevant to the fact that they are still detailed and finished to an extraordinarily high standard and many Overland models are not much more than modern super detailed plastic equivalents.

[adb968008]

I find that often the attitude to some older models depends to some extent on whether people operate layouts or collect models. Some collectors actively collect fallen model marques or Hornby so are very interested in those old models but a lot of collectors will want the latest super detailed release. Layout operators on the other hand often take a different view and while they value the latest super detailed models they also value good models which look good and which will run around a layout and which can be handled and used without worrying about bits dropping off. And modellers see the potential in those older models for conversion, super detailing, re-painting etc.

Certainly, if you step back from the hyperbole around models and new releases, some older models still look pretty good from normal viewing distances, can scrub up very well indeed with a little effort and can be picked up cheaply so it makes perfect sense that there will still be a market for them. I still have a lot of Roco and other European HO dating back to the 1980's which I'm still very happy with. Are newer alternatives better? Probably (though not necessarily so) but if the model is accurate and looks good then it doesn't stop being a good model just because something better comes along. My main poison is Overland HO outline HO and a bit of Tenshodo HO JNR, in both cases the fact that most of my collection is over 20 years old is irrelevant to the fact that they are still detailed and finished to an extraordinarily high standard and many Overland models are not much more than modern super detailed plastic equivalents.

I couldn’t agree more on the Roco 1980’s scene, most of it is unchanged in 2017, except the price. Technology with Roco has moved on in all areas (sound, RC etc), but the basic drive mechanism looks the same, it does what it says on the tin. I also agree with newer Trix too, but in many areas Fleischmann looks old, as I run DC this is an easy choice for me to stick with the older stuff, except new releases like the 01.5, S160 and rh109. However upstarts are definitely Piko.,, there new stuff is fantastic, and half the price of Roco, Fleischmann and Trix. Upto last year I think there was still some snobbery regarding Piko, but I think the results are overwhelming speaking for themselves. In the past two years Piko has been the predominant purchase for my HO, though I had a wobble and spent ridiculous amounts on Brawa PKP and SZD pt31 a few years back, but knowing there’s only 150 of each, and no repeats so far in 8 years, I feel ok with it, especially as they’ve appreciated well and are.. well just impossible to find.

 

People comparing European to UK prices would do better to compare UK to Piko, with their new tools, made in China, rather than a company using 30 year old tools sold at today’s rates.

Edited December 22, 2017 by adb968008

[jjb1970]

I really think Piko are the elephant in the room of the whole price - quality debate. They're really disrupting the European HO market by releasing models which are good enough to satisfy people who were formerly customers of the likes of Roco, Fleischmann, Trix etc at prices which generally undercut the more traditional suppliers and which are comparable to UK OO. I'm a huge fan of the Piko expert range, the mechanisms are superb and quality of finish and detail is excellent. Maybe they're not quite as fine as Roco or other more expensive models but they're close enough that it makes little difference and in many cases not enough to justify paying a lot more. I have the Piko Br103 and in many ways I think it is about the best model of that iconic locomotive available in HO.

Edited December 22, 2017 by jjb1970

[robmcg]

.....

 

 i’m Finding that some of that 80’s £20-50 bracket models actually aren’t that bad when next to their peers in the £150-200 bracket.. so I agree to a point of why spend more.

 

This is to my mind one of the great problems for RTR manufacturers, why invest heavily in new tooling when existing tooling is good, and the s/h market is buoyant?

 

I have just been photographing a recent Hornby Duchess R3241 46036 'City of Bradford' which is 'old tooling' ... at least c2009 tooling based on 2002 tooling, and to the eye it is very little different to the the new tooling.  I have a new tooling NRM 46229 'Duchess of Hamilton' which has shinier paint, better colour (although Bradford is very good, but more matt, comparison is tricky) better front end detail, cab and tender frames but you just don't notice unless you care. R3241 was £131, the NRM model £189.

 

I hesitate to put the two side by side as Silver Sidelines has done similar, and I mess around with editing so nobody would believe me anyway, but here goes, the basic pics of 46229 new tooling and 46236 old tooling, pretty much straight from the camera.

 

 

 

The new model is an improvement in many ways.  The old one wasn't bad, either, one of them, LMS 'City of Glasgow' was my first Hornby purchase when returning to the hobby in 2004! 

I know it isn't strictly about the stock market update, but it IS to do with the ongoing viability of Hornby, to my mind. 

 

cheers,

Edited December 22, 2017 by robmcg

[Legend]

Good pics Rob. To be honest I’d struggle to tell the difference especially from a few feet away or on a layout when it’s running. And this demonstrates the problem for Hornby . Competition isn’t just all the new entrants that can come in with commissions and a lower cost base, but the masses of good second hand models around. While the price of second hand is rising they are still a long way short of the cost of new ones . As we head toward the £200 mark many will simply buy second hand instead. It’s not so much cost but perceived value. £200 for something you may run 2 or 3 times a year.