Hornby's financial updates to the Stock Market

[papagolfjuliet]

Frankly I would say to all the self informed gloaters .Be careful what you wish for .

 

Is anybody here gloating? Is anybody here wishing for the demise of a firm which I for one think of as almost a childhood friend?

[papagolfjuliet]

I strongly agree with this. How can they expect to sell the very old 4-wheel coach with no more than 7 parts to assemble for £15 is beyond me.

 

 

Especially when all but two of those components are from stock. And that's what I don't understand: a lot of their excellent high spec products are very reasonably priced, but at the same time they're charging top dollar for rubbish.

[Ian Hargrave]

Is anybody here gloating? Is anybody here wishing for the demise of a firm which I for one think of as almost a childhood friend?

Probably not.Except that some of us are doing a passable rendering of a funeral wake.....

[Downer]

What Hornby need is someone going and shaking up the management big style at

Hornby ,someone like Alan Sugar , Mary Portas.

Or maybe Albert Speer.

[57xx]

If I recall correctly, the £15 million share offering was approved when Hornby was relisted on the AIM. Those investors are going to want to know where that money went.

 

Crikey, I never realised they were on AIM. That place really is more akin to a casino with pretty much zero regulation. Never has the phrase "Do your own research" been more apt for anyone thinking of investing in shares on there. Keep your bargepole handy if considering entering the fray...

 

Regarding the question about whether they can just carry on with their head down, yes absolutely. Such plummets (and rises) in share price are very common on AIM and something usually has to be seriously amiss before shares will be suspended. 

[Hroth]

It's all so confusing for us Bears of Little Brain (^Tm, probably), and the arguments are becoming increasingly circular.

 

There's not much anyone who posts in forums like this can do, unless we all pool our pocket money together and try to stabilise the Hornby share value. And that would require some pretty deep pockets...  As I see it, the woes being suffered by Hornby Hobbies are collateral damage from the current panics in the world financial systems, compounded, it must be said, by some self-inflicted problems due to less than tight managerial control of stock, distribution and IT systems, in addition to conflicted sales priorities.  Perhaps we could send the management team an atlas. They might be able to finally locate their nether regions.

 

All we can do is cross all the appendages we have at our disposal and hope for the best and in the words of Corporal Jones, DON'T PANIC!!!

[Big James]

Don't right the model railway part off to quickly. Even if the ship is sinking we don't know that know for a fact if it is the model railway part that is losing them money. For all we know there might be plans in place to buy themselves free and go off as a separate entity it's happened before in business and will happen again. If they do go then the hobby will survive in the short term in the long term though how will we attract new people into the hobby both my nieces and nephews said they wanted a Hornby trainset after going to the bluebell no mention of Bachmann in the slightest. But here's the stinker majority of us southern modellers like me have come to rely on Hornby for our stuff. I've got a couple of the kernow exclusives and a Bachmann N. But almost all my purchases last year that wasn't including the kernow O2 was Hornby.

 

Big james

[PMP99]

It's all so confusing for us Bears of Little Brain (^Tm, probably), and the arguments are becoming increasingly circular.

 

All we can do is cross all the appendages we have at our disposal and hope for the best and in the words of Corporal Jones, DON'T PANIC!!!

 

Agreed.

 

Time now to get back to some actual modelling.

[Dunsignalling]

Frankly I would say to all the self informed gloaters .Be careful what you wish for .If Hornby dropped its train line than the hobby dies unless some takes over the lot .It  is the mainframe of British model trains and all the others ride on its back cherry picking  choice must haves for old farts like me .My grandsons train set is Hornby ,not Bachmann ,DJM ,Dapol or shop commissions. Pull that rug away and the hobby dies .Its a choke point .On a smaller level Markits and Gibson wheels ,Mashima motors and High level have no easy replacement  .i think we need Hornby in toy shops more than Hornby group need us.

When previous makers have gone down, almost all the models re-emerged, in time, from others who bought up the tooling and rights (including Hornby themselves).

 

There's no reason to suppose that the same wouldn't occur if Hornby's present woes were to prove terminal but it's certainly not a desirable scenario.

 

That said, despite the great work that has been going on in product development, I'm not convinced that Hornby (Railways) can thrive under the current Group structure / ownership / management / plc status.

 

The new retail terms effectively forced (or at best encouraged) a retail network that had previously been very Hornby-focussed to promote other firms' products over their own. That was never going to end well and I suspect that it may have cost Hornby more than they gained from direct sales.

 

A rejuvenated Hornby Railways, taken private by more product-orientated owners; separated from the rest of the group and with a more collegiate attitude to the rest of the model railway trade/hobby, might be the ideal outcome.

 

Unfortunately, there's no way of knowing, at this stage, if that is even on the menu.

 

John

Edited February 12, 2016 by Dunsignalling

[Guest]

When previous makers have gone down, almost all the models re-emerged, in time, from others who bought up the tooling and rights (including Hornby themselves).

Yep. Whatever happens Hornby have some very good products for which there is a market. Someone would pick them up.

[ruggedpeak]

Let's get down to brass tacks. Let's look at their website. Select the "Diesel & Electric Locomotives" section in their shop.

 

http://www.Hornby.com/uk-en/shop/locomotives/diesel-electric-locomotives.html

 

Whatever system I use to look at it, it comes up with the "Recommended" listing order of models over 5 pages. The first 6 locos listed are mostly discounted long established poor sellers. Not what you put first. The rest of the page is entirely items out of stock.

 

You then have to go half way down page 2 to find anything that is actually available to buy now. Most of that page is out of stock or pre-order. In fact there are only 3 out of 24 locos on page 2 are for sale. Page 3 has only 2 out of 24 models actually available for sale. Page 3 has 13 out of 24 items for sale. You cannot screen out pre-orders, out of stock or sold out from the listings. You have to bother to get to pages 4 and 5 to actually see a reasonable quantity of stuff you can actually buy. The vast majority of potential customers will only want to see what they can buy now. Wading through pages of stuff you can't get to buy will drive them to look elsewhere, probably a non-modelling purchase.

 

For a company that is pushing direct web sales this is appalling. It is liltte wonder they are making a loss when they have made as difficult as possible to actually buy stuff. Anyone browsing for a modern loco will lose interest at the lack of available options probably before the end of page 1, and thus exclude the gifting market for those browsing for a present for husband/brother etc. This is beyond amateurish. There is no point wasting time on Facebook and Twitter if your website is so bad cutomers will lose interest before making a purchase. This is web retail 101, sub-GCSE Business Studies stuff.

 

I know what Lord sugar would say

 

Addendum: I forgot to mention the farce of trying to buy something on both the Airfix and Hornby websites at the same time using my Hornby login earlier i the week. Gave up after about 10 forced re-logins. Found the Airfix item on Ebay, gave up on the Hornby one.

Edited February 12, 2016 by ruggedpeak

[cheesysmith]

The problem at the moment is we, as in hornbys consumers, don't know where the monies are being lost from. The higher end models we do want are being produced, and lately have been coming through in a steady flow (which always wasn't the case in the near past). this from a company's perspective is good (aids cash flow whilst keeping a new product in the buying publics eyes). However, the cheaper end of the market is suffering from some frankly crazy prices being asked for some stuff that should have paid off its tooling cost years ago. These things should have been downgraded to the railroad market, and sold cheap to aid cash flow. But how many of these things have required tooling modifications to fit the molding machines being used in the 3rd parties machines being used in china? This would mean that these cheaper items are now having to pay off a new tooling the same as a brand new model, which kind of negates the point of shipping the tooling half way around the world to make them cheaper.

 

Also, as to the future of the hobby, I don't see a impending doom. It may get smaller than it was, but in my household, I have 3 kids. They have all their own interests, but when daddy has his trains out, they all want to play, and do love trains ( even my son, who has been brainwashed by mummy to not like them, or so he says to her. And the cat who also comes to play whenever they are out, but she doesn't count as a cats future spending on model railways is limited). My kids have been through various fads and different things they are interested in at different times (hello kitty, Dora the explorer, scalelectric, frozen (still, after how many years since the film?), star wars,), but trains like daddies has been constant, if sometimes at a lower level.

 

I'm not worried, because how many times has Hornby rose from the ashes under a new owner. I do feel for the pain it would inflict on its employees and the short term loss of the excellent models they have been making for us, but Hornby do need to find their direction and make sure if they are going to compete in both the cheaper toy train set and the serious model market at the same time that they do have a clear distinction between the two in both product and price.

[DonnyRailMan]

How do you think the Hornby management would fair if they went on & in front of The Dragons Den panel .

[rembrow]

Let's get down to brass tacks. Let's look at their website. Select the "Diesel & Electric Locomotives" section in their shop.

 

http://www.Hornby.com/uk-en/shop/locomotives/diesel-electric-locomotives.html

 

Whatever system I use to look at it, it comes up with the "Recommended" listing order of models over 5 pages. The first 6 locos listed are mostly discounted long established poor sellers. Not what you put first. The rest of the page is entirely items out of stock.

 

You then have to go half way down page 2 to find anything that is actually available to buy now. Most of that page is out of stock or pre-order. In fact there are only 3 out of 24 locos on page 2 are for sale. Page 3 has only 2 out of 24 models actually available for sale. Page 3 has 13 out of 24 items for sale. You cannot screen out pre-orders, out of stock or sold out from the listings. You have to bother to get to pages 4 and 5 to actually see a reasonable quantity of stuff you can actually buy. The vast majority of potential customers will only want to see what they can buy now. Wading through pages of stuff you can't get to buy will drive them to look elsewhere, probably a non-modelling purchase.

 

For a company that is pushing direct web sales this is appalling. It is liltte wonder they are making a loss when they have made as difficult as possible to actually buy stuff. Anyone browsing for a modern loco will lose interest at the lack of available options probably before the end of page 1, and thus exclude the gifting market for those browsing for a present for husband/brother etc. This is beyond amateurish. There is no point wasting time on Facebook and Twitter if your website is so bad cutomers will lose interest before making a purchase. This is web retail 101, sub-GCSE Business Studies stuff.

 

I know what Lord sugar would say

 

The issues you raise about the Hornby website are valid, but is it the full picture. Last week I was looking for a Class 43 in Midland Mainline livery, sold out by my locals and sold out on the Hornby website, which is one of those models on page 1 of the D&E that you mention. Browsing through e-bay there were several retailers selling, but surprise surprise Hornby Hobbies has an e-bay store and there were 2 in stock, yet the main website had none. I didn't know that Hornby traded on e-bay, so how many other 'out of stock' items are available on their e-bay store. I have to ask, doesn't this dilute their own website and I personally find it surprising that a large player in this market would be scrabbling around on e-bay, when it wants to promote its own on-line sales site. Surely a mixed and blurred corporate message.

[Coryton]

I strongly agree with this. How can they expect to sell the very old 4-wheel coach with no more than 7 parts to assemble for £15 is beyond me.

Also many of the railroad items in concession shop street cost more than their better Bachmann equivalents in Model shop street.

 

I am hardly going to buy the very old Lima tooling class 42 at £80 in WHSmiths when I can get the far better Bachmann/Mainline version for the same or the vastly superior class 43 for a small % more.

 

Edit - I would also add that I never saw the point of concessions except as confusing and badly managed PR exercise with your traditional B2B customers.

 

You wouldn't buy a 4-wheel coach at £15 or the old Lima 42 for £80 and neither would I.

 

But, although there is a strong view here that the management at Hornby have made some bad decisions, I would put it to you that Hornby wouldn't still be selling the coaches at £15 if they weren't selling to someone.

 

It is curious how the Annie and Clarabel coaches, which presumably have to cover license costs and I think even have metal wheels, go for less though.

[Clearwater]

As an aside, when we consider Hornby's model rail business to a third party, we shouldn't forget the value of any production slots they have contracted. That seems to be the bottleneck for many firms bringing product to market. Also a likely suitor could be someone who also uses those same Chinese factories...

 

David

[Coryton]

Also, as to the future of the hobby, I don't see a impending doom. It may get smaller than it was, but in my household, I have 3 kids. They have all their own interests, but when daddy has his trains out, they all want to play, and do love trains ( even my son, who has been brainwashed by mummy to not like them, or so he says to her. And the cat who also comes to play whenever they are out, but she doesn't count as a cats future spending on model railways is limited). My kids have been through various fads and different things they are interested in at different times (hello kitty, Dora the explorer, scalelectric, frozen (still, after how many years since the film?), star wars,), but trains like daddies has been constant, if sometimes at a lower level.

 

I would agree with that.

 

And there will still be a hobby so long as there are people who want to pursue it.

 

To be a little daft, even if the hobby shrank so much that all the magazines closed down and manufacture completely stopped (and I don't for a minute believe that is likely), it's hard to see web forums vanishing, and there is such a pool of track and rolling stock etc. already in the country that would flood what would be a tiny second hand market and thus be available at low prices for anyone who wanted it. I suppose modern mechanisms (like Hornby throw-away motors) might be an issue but there would be plenty of sources of spare parts...

 

Of course anybody wanting to model anything new might have to resort to real modelling, but there would be plenty of material to repaint and hack around to do so.

[petethemole]

You wouldn't buy a 4-wheel coach at £15 or the old Lima 42 for £80 and neither would I.

 

But, although there is a strong view here that the management at Hornby have made some bad decisions, I would put it to you that Hornby wouldn't still be selling the coaches at £15 if they weren't selling to someone.

 

It is curious how the Annie and Clarabel coaches, which presumably have to cover license costs and I think even have metal wheels, go for less though.

My local model shop has these coaches split from sets at £3.50 each in a box on the counter, along with the long open wagons on the same chassis. They don't seem to sell many.

[cambo74]

Or look at it another way - go buy some Hornby shares now .................

[jetmorgan]

What Hornby need is someone going and shaking up the management big style at

Hornby ,someone like Alan Sugar , Mary Portas.

Or Gerald Ratner................Oh lawd!!!....actually NOOOOOOOO!!!

[rob D2]

Self informed gloaters - people who read profit warnings more like !

 

I don't believe all this " if Hornby goes , the hobby gos " stuff.

 

Most of hornbys income is from men aged between 45-105 I'd wager, not through new entrants. I go to toys r us a lot as I have two kids - sadly the pile of train sets doesn't diminish much. And I know of NO kids my kids know that have or want a train set , and I bet 99.9% have never heard of Hornby.

 

I think people enter this hobby through older relatives with an interest or through having an interest in the real size trains of today ( which is why contemporary stuff is still popular ). Other than that I'm afraid you won't compete with ' minecraft ' on the iPad.

 

It's not 1980 anymore I'm afraid.

[bike2steam]

What Hornby need is someone going and shaking up the management big style at

Hornby ,someone like Alan Sugar , Mary Portas.

Better still - someone with knowledge of the hobby.

[The Stationmaster]

When previous makers have gone down, almost all the models re-emerged, in time, from others who bought up the tooling and rights (including Hornby themselves).

 

There's no reason to suppose that the same wouldn't occur if Hornby's present woes were to prove terminal but it's certainly not a desirable scenario.

 

That said, despite the great work that has been going on in product development, I'm not convinced that Hornby (Railways) can thrive under the current Group structure / ownership / management / plc status.

 

The new retail terms effectively forced (or at best encouraged) a retail network that had previously been very Hornby-focussed to promote other firms' products over their own. That was never going to end well and I suspect that it may have cost Hornby more than they gained from direct sales.

 

A rejuvenated Hornby Railways, taken private by more product-orientated owners; separated from the rest of the group and with a more collegiate attitude to the rest of the model railway trade/hobby, might be the ideal outcome.

 

Unfortunately, there's no way of knowing, at this stage, if that is even on the menu.

 

John

While I agree with much of what you say I seriously wonder if a model railway company (alone) could actually survive as such in the way Hornby presently operates?  It would need hefty capitalisation in relation to sales in order to produce models at the present rate and standard and that effectively means a 'hobby capitalist' who has the money available and is happy to accept a relatively poor, and potentially slow, rate of return.

 

The alternative is the model railway plus various other parts of the business (say Airfix, Humbrol and Scalextric) where again there will be a hunger for capital but at least the market base would be broader - hiowever I'm saying all of this without knowing where Hornby has incurred its losses and failed to meet targets (although I can guess).

 

What the company appears to need is a much slimmer and cheaper senior management tier more in tune with what it can support plus a market knowledge based innovative management to exploit the design and product development skills it has and which have been so good for our part of the hobby (but at what rate of return I ask?).

 

What we might get in any restructuring could well turn out to be nothing like that - we must cross our fingers and hope that it isn't but I know where my knife axe would be aimed.

[Guest]

It's not 1980 anymore I'm afraid.

It kind of is.

Just change iPad to ZX Spectrum*

 

 

 

*Alright, 1983-ish

[Retro_man]

"How can they expect to sell the very old 4-wheel coach with no more than 7 parts to assemble for £15 is beyond me."

 

 

When we started our model train business 10 years ago I thought exactly the same thing and I did not stock the 4 wheel coaches or Smokey Joe and several other 'toy' items.

After getting a few requests for the above I started stocking them and since then I have sold more 4 wheel coaches than any other single Hornby coach. Sales of Smokey Joe are only exceeded by Flying Scotsman and Mallard.

 

Who would have thought!

 

Steve