RMweb Premium Physicsman Posted September 25, 2012 RMweb Premium Share Posted September 25, 2012 "Breaking news" on the BBC Business website: "Toymaker Hornby has said it will not make a profit this year, due to disappointing sales of London 2012 merchandise and supply problems"... Not wishing to dig-up the old chestnut, but no surprises here? A much-debated topic and forecast on these pages over the last year or so. Jeff Link to post Share on other sites More sharing options...
reevesthecat Posted September 25, 2012 Share Posted September 25, 2012 I was just thinking that too, seems to have been a profit warning every quarter but perhaps now the olympics have finished Hornby can put all that capacity back into what they do best- model trains! mark Link to post Share on other sites More sharing options...
S.A.C Martin Posted September 25, 2012 Share Posted September 25, 2012 That is probably the least surprising news of the year. I wonder what sold worse - the strangely coloured Javelin sets, or the velodrome scalextric set? This was almost a given in my view. So much of the Hornby made items just left on the shelves. Possibly a good time to get a bargain on Olympics merchandise now though...! Link to post Share on other sites More sharing options...
Andy Y Posted September 25, 2012 Share Posted September 25, 2012 The full text of the warning is as follows: Hornby Plc ("Hornby" or "the Company") Trading Update Business performance The Group's overall business performance is being adversely affected by a number of factors. Macro-economic factors continue to depress consumer spending and retailers continue to buy cautiously. Sales of London 2012 merchandise were lower than forecast. Whilst, prior to the Games, major account listings for our products were strong, and consumer purchases were encouraging, the major retailers had also purchased substantial quantities of London 2012 merchandise from other licensees. Faced with lower than expected sales, the major retailers resorted to deep price discounting. The consequence of this for Hornby was that retailers lost confidence in many categories of London 2012 merchandise, and repeat orders for our products were cancelled. In our Trading Update dated 26th July 2012, we indicated that one of our significant suppliers in China had informed us of plans to rationalise its manufacturing facilities and that this may result in disruption to shipments. This process is ongoing and it is now clear that the disruption to our supplies for the remainder of the financial year will be substantial. We have made solid progress in recent years to diversify our supply base in China and also in India. At its peak our largest supplier represented c.75% of our purchases. Over the past 4 years we have succeeded in reducing this percentage to below 35% as part of an ongoing policy to diversify our supply base. The current disruption is part of a painful process but we believe that, working with all our suppliers, we will be able to work through this process to arrive at a more balanced supply base for the future. In view of the above, the Directors now believe that the Group will not achieve its forecasts for the current financial year and, therefore, anticipate that the Group's results will be approximately break-even for the financial year ending 31 March 2013. The group continues to benefit from a strong balance sheet. Net Debt at 31st August 2012 was £7.8m compared to £14.3m a year earlier. Outlook Against a backdrop of continued depressed consumer spending, a combination of lower than expected sales of London 2012 merchandise and the supply chain disruption referred to above the performance of the Group will be constrained significantly in the current financial year. Looking forward, whilst working closely with our existing vendors in China we continue to develop additional capacity in alternative sources of supply. Against this challenging background we have redoubled our efforts in innovation and product development, building on our core brand strengths and also extending our reach based on newly developed technologies. At the same time we are implementing a rigorous cost control regime in order to align overheads more closely with our future business. In conclusion, whilst we face some significant short term challenges, we are working hard to address these and in doing so, establish a base from which the Group can grow more securely in the future. Link to post Share on other sites More sharing options...
APOLLO Posted September 25, 2012 Share Posted September 25, 2012 From the BBC report This year, the firm said its performance would be "constrained significantly". It said it would try to find alternative sources of products to try to reduce the disruption created by its Chinese supplier, which is rationalising its manufacturing. Seems alot of the problems are out of Hornby's control, over in China. Probably affects Bachman etc also to some degree. Brit15 Link to post Share on other sites More sharing options...
RMweb Premium Physicsman Posted September 25, 2012 Author RMweb Premium Share Posted September 25, 2012 The share price has fallen 40% in early trading, so I hope the company is robust enough to survive this. If only they'd listen!! Jeff Link to post Share on other sites More sharing options...
mow Posted September 25, 2012 Share Posted September 25, 2012 So when is Frank Martin going to walk the plank? "Its shares fell more than 40% to 50 pence in the first few minutes of trading." http://www.bbc.co.uk...siness-19710155 Link to post Share on other sites More sharing options...
The Lurker Posted September 25, 2012 Share Posted September 25, 2012 A fall in the share price does not affect the company per se. What it does do is make the company more susceptible to take over. Link to post Share on other sites More sharing options...
mow Posted September 25, 2012 Share Posted September 25, 2012 Indy coverage. http://www.independe...es-8174655.html “Retailers lost confidence in many categories of London 2012 merchandise and repeat orders for our products were cancelled,” customers saw a pig in poke. The stuff on supply chain was supposed to be fixed according to the last profit warning IRC, but there are still 'issues'. http://www.telegraph...es-stutter.html Hornby had gone on an acquisition spree, but doesn't seem to have worked out where its strengths now lie. Link to post Share on other sites More sharing options...
RMweb Premium finelines Posted September 25, 2012 RMweb Premium Share Posted September 25, 2012 I wonder how many other companies are reaping the whirlwind of moving production to China. Losing control of your own production is a recipe for disaster. Roger Link to post Share on other sites More sharing options...
mow Posted September 25, 2012 Share Posted September 25, 2012 A fall in the share price does not affect the company per se. What it does do is make the company more susceptible to take over. It does if the managers and staff hold shares or have share options. Link to post Share on other sites More sharing options...
dave flint Posted September 25, 2012 Share Posted September 25, 2012 Even made radio 4's 9 o'clock bulletin. I like this blame being placed on retailers deep discounting and not buying. Given that the stuff hasnt been selling then what do they expect ? Even modelzone have been flogging off the Olympic velodrome scalextric at a big discount but no one seems interested. Sorry Hornby, perhaps you gambled for a quick buck but failed because the consumer didn't like what you produced ? Link to post Share on other sites More sharing options...
Big James Posted September 25, 2012 Share Posted September 25, 2012 I went in Sainsbury's and they still got bundles of Olympic merchandise left. Mostly deeply discounted to the point where they can't be possibly making a profit on it. Big James Link to post Share on other sites More sharing options...
mow Posted September 25, 2012 Share Posted September 25, 2012 Olympic games stuff was being discounted within 4 days of the start. Link to post Share on other sites More sharing options...
Trains4U Posted September 25, 2012 Share Posted September 25, 2012 I'll say the same as I did in February... http://www.rmweb.co.uk/community/index.php?/topic/51105-Hornby-profit-warning/page__st__100&do=findComment&comment=598976 Link to post Share on other sites More sharing options...
Littlethorpe Posted September 25, 2012 Share Posted September 25, 2012 I can only agree with all the comments expressed so far. I have shares in Hornby and have really only held on to them out of sentiment rather than common sense. I trust that they have enough cash set aside to pay the dividend due later in the year. I live in Kent and know personally of one company that would love to take on some of their manufacturing, whether it makes economic sense for Hornby I don't know. Hornby will also have lost business from modellers such as myself who have moved to N Gauge. Whereas I used to spend a few hundred pounds per annum on Hornby products I now spend nothing. I know N Gauge is maybe only 15% of the Model Railway market but it probably makes more sense than some of the markets that they have entered. An N Gauge r-t-r Shark for example, now there's a thought... Link to post Share on other sites More sharing options...
RMweb Premium Physicsman Posted September 25, 2012 Author RMweb Premium Share Posted September 25, 2012 It will be interesting to see what happens. Will the company blame the weather - maybe they have leaves on their setrack lines? Or the good-old credit crunch... Irrespective, I hope the experience prompts a change in outlook. As for a takeover...who would be interested? And would it be good for us? Jeff Link to post Share on other sites More sharing options...
micklner Posted September 25, 2012 Share Posted September 25, 2012 Well it may explain why Hornby cancelled new " items due to lack of preorders" . It would appear that they cant get them made. Or they never had the money to invest due overextending themselves making Olympic junk. A return to Margate perhaps? with the present economy and China labour price increases, probably not much dearer to make now in the UK. I doubt they would have a problem recruiting staff either. Link to post Share on other sites More sharing options...
RMweb Premium Physicsman Posted September 25, 2012 Author RMweb Premium Share Posted September 25, 2012 I'll say the same as I did in February... http://www.rmweb.co....100#entry598976 Just re-read your previous post, Gareth. Spot on comments from a man in-the-trade and at the sharp end!! Jeff Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted September 25, 2012 RMweb Gold Share Posted September 25, 2012 I'm sorry to say it, but are any of us surprised? Hornby can knock out some tremendous product when they try and they can charge good - hopefully profitable - prices for it but at the same time they seem to like to throw sand in the faces of their mass market buyers by over-charging for stuff that is so long in the tooth junior dinosaurs probably played with it. They really do not seem to have got their heads around marketing and the Olympics fiasco is just one, very painful for them, further example - the stuff was being discounted within weeks of appearing in the shops and masses of various, often tacky, 'Olympic souvenirs' still litter the reduced price zones in supermarkets and elsewhere. Alas mismanagement and poor marketing is not a good bedfellow for major production hang ups - but in many respects they are the victims of themselves, whatever we might do to try keep buying the worthwhile stuff. (and will the B17 ever appear I wonder, even SK seemed keen to avoid that subject when I asked him about it as 'Steam' Link to post Share on other sites More sharing options...
S.A.C Martin Posted September 25, 2012 Share Posted September 25, 2012 The less said about the B17 the better I fear... Hornby have been the victim of their own business plan, no more and no less. The huge range of Olympics tie in was eye wateringly expensive for what it was (seeing the Fencing statuette at original RRP, for example, now slashed to 30% of its original price in some stores), and they seem to have over produced and under developed everything. I still don't get the Olympics branded Javelin trains. Blue Javelin Trains with some form of Olympics tie in with the play mat perhaps, or the use of some of the Olympics branded minis/buses bundled in with it, maybe. But these specific trainsets are such an anachronism that nobody was buying them. As for the cancelled items - I can say categorically that every single LNER influenced man was going to get the wallet out for Book Law - the only A3 with a non corridor tender to be in the catalogue, in the livery everyone wanted (apple green). This model was cancelled at the start of this year, supposedly on low pre-orders. Perhaps the truth is a little different, and it is still a supply problem? When you see Dapol go from strength to strength and Bachmann too, you can only think that despite the clear high calibre of models Hornby can make, they have lost the plot somewhat and are now going to be playing catch up from this point on. Link to post Share on other sites More sharing options...
bmthtrains - David Posted September 25, 2012 Share Posted September 25, 2012 Sadly I'd been expecting this after seeing the velodrome scalextric set reduced from £90 to £20. Ouch! David Link to post Share on other sites More sharing options...
RMweb Gold TheSignalEngineer Posted September 25, 2012 RMweb Gold Share Posted September 25, 2012 I for one am not going to pay highly inflated prices for a model that was regared as state of the art in 1977 and has changed very little since. I got a s/h one from a well known auction site for 1/3 of list price and will spend about a tenner on improving it. There are, however, a few of the Hornby models that I have bought or will continue to buy but look for the best deal before considering paying the Hornby list price. Link to post Share on other sites More sharing options...
meld Posted September 25, 2012 Share Posted September 25, 2012 BBC Business news Update @ 10:55 ........... Hornby Share price is 79p curently up 2.6 ... but the rest is just a re-run of the comments from earlier ... HTH Mike Link to post Share on other sites More sharing options...
thirty2a Posted September 25, 2012 Share Posted September 25, 2012 who saw any adverts for Hornby during the Olympics? or any other time for that matter, must have a bearing. Link to post Share on other sites More sharing options...
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