Hornby's financial updates to the Stock Market

[woodenhead]

Not even Bernard Cribbins could turn this tide when it comes to getting youngsters interested in model railways.

[Guest]

Who would have thought!

Like the Santa train set I even bought one Some people at Hornby evidently know what they are doing even if it doesn't meet the approval of sagely bearded modellers.

[locoholic]

If I was a betting man, I wouldn't put money on the Hornby CEO still being in post in a couple of months time.

 

But of course, the funny thing is that he WAS a betting man, being a director of Ladbrokes!

 

Seriously, though, the top management team at Hornby have proved to be a disaster. The decisions they've taken have led directly to the current mess. If I was a shareholder, I would be looking for some meaningful taking of responsibility at a very senior level, soon.

[Mike Storey]

This "demise of the train set" consensus does not ring true with my experience. My 9 year old nephew has developed a fascination with trains, partly gained from his much older brother (who had long ago given up his layout) and largely from watching Thomas videos and reading the books, from a very young age. Not my doing, and his dad has no interest in trains whatsoever. His dad asked me where to take him to get a birthday present - they live near Ford so I suggested Gaugemaster, who were having one of their open weekends. When they got there, the queues were around the block (so he said) and almost entirely children with their parents (or other appropriate adult) and most were coming out with armfuls of train stuff.

 

Since then, his dad has built him a new layout, and the son now has trouble getting to the layout because his older brother and Dad keep playing with it.....

 

Purely anecdotal of course, but I have heard similar tales from others over the past several years.

[Trains4U]

Like the Santa train set I even bought one Some people at Hornby evidently know what they are doing even if it doesn't meet the approval of sagely bearded modellers.

 

Indeed.  a few customers scoffed at that one, yet we sold out of them.

[fragmeister]

I see quite a few youngsters at my local model shop, and my six year old granddaughter loves playing with my trains (not the expensive ones, obviously, but the rugged 0-4-0Ts that Hornby produce) and I am sure they all learn valuable skills.  I wonder how many reluctant parents there are, worried about the expense and the possibility that their pride and joy will only play with it once and then forget about it, because even the cheapest sets are still more than a PlayStation game.  My philosophy is that children will become interested in almost anything if you only give them a little encouragement.

[NINJA]

Youngsters and model railways, my grandson loved the die cast Thomas the Tank Engine items and ran them about the plastic track, got immense fun out of them. Had all the Thomas the Tank engine DVD's

 

However as the got older instead retaining an interest in railways he graduated to computer games and LEGO.

 

I can quite believe that sales of Train Sets is diminishing

[GordonC]

Not even Bernard Cribbins could turn this tide when it comes to getting youngsters interested in model railways.

 

that cant be true!! ... have you seen how popular Thomas the Tank Engine is? from branded merchandise to thomas days at the local preserved lines

 

If a fraction of that interest can be captured and directed towards model railways then it could only be a good thing for the hobby. Just need to watch the initial costs of starter sets to ensure that doesn't discourage purchases too much.

[Coryton]

Like the Santa train set I even bought one Some people at Hornby evidently know what they are doing even if it doesn't meet the approval of sagely bearded modellers.

 

Well I haven't seen any of these being knocked off at stupid prices. Maybe I missed it, or Hornby/shops are hanging onto unsold ones until next year or...just perhaps...they all got sold.

[DJM Dave]

If I was a betting man, I wouldn't put money on the Hornby CEO still being in post in a couple of months time.

But of course, the funny thing is that he WAS a betting man, being a director of Ladbrokes!

Seriously, though, the top management team at Hornby have proved to be a disaster. The decisions they've taken have led directly to the current mess. If I was a shareholder, I would be looking for some meaningful taking of responsibility at a very senior level, soon.

Totally agree, I mean putting aside the real workers at Hornby, most of us could have foretold this scenario when we had 'that' interview on here and found out about the way they treated the trade.

[Guest]

Well I haven't seen any of these being knocked off at stupid prices. Maybe I missed it, or Hornby/shops are hanging onto unsold ones until next year or...just perhaps...they all got sold.

You can pre-order one for next year. This version is improved with a circle of track of a radius more suited to going round a Christmas tree.

 

http://www.Hornby.com/uk-en/santa-s-express-christmas-train-set.html

[Stevelewis]

Just  an  aside   on  the  youngsters  and  trains  scenario................  I have   garden  railway    digitally  controlled  using  Massoth system  which   has  radio controlled  handsets.

 

I have  2  sets of  youngsters  visit and   me  during  the  summer  months  ( such  as  they  were  between  the  gales    rain)  on their  visits,  I let  them all  control  the  trains, I was  surprised  how extremely  quickly  they  learned  to  control the  system,  that  includes  both  locos   and  digital  points within  minutes the  they all were able to  run  the  trains,  stop at  the  station, pass 2  trains in the  passing  loop  etc  I must  admit  being  a  little apprehensive at  first at  letting  them  loose  with £6 - 700 locos!

 

However  I noticed  that  after   a comparatively short  length of  time  their interest  waned  and  the  smart phones  were  exchanged  for  the  Massoth  hand held and  the online  games  were  resumed.  Leaving  me  to shunt  the  trains back into storage  shed

 

Interestingly  they  are  train  aware  and  do make  the occasional train journey  both in the UK & Overseas.

 

It  does seem to  me  that  the   Smart phone/computer etc  has  a  far  greater  influence  on the  young generation than  anything  else,  several children walk  past out house on their  way to  schools,  probably  around  8 out of 10 are using  their  phones!

[Hroth]

Well I haven't seen any of these being knocked off at stupid prices. Maybe I missed it, or Hornby/shops are hanging onto unsold ones until next year or...just perhaps...they all got sold.

Argos had R1179 (the 2015 Santa Set) at £49.99 before Christmas, so you missed the "stupid price" offer!

 

Yep, I got one too and Argos sold out of their stock well before Christmas. R1179 had a 3rd Radius OVAL of track. The 2016 edition is listed as having a 1st Radius CIRCLE, which is more suited for a Christmas layout and its on pre-order at £49.99.  You can still get R1179 but its £69.99.

 

I don't think R1185 will end up being discounted much (a fiver perhaps) below its pre-order price, but if you're a club member, the club discount brings it down to £44.99 anyway!

 

When it came out, I thought it was pretty much a waste of space. However, it has a place in the Hornby scheme of things, even if some folk regard it as being a bit infra dig!

[woodenhead]

that cant be true!! ... have you seen how popular Thomas the Tank Engine is? from branded merchandise to thomas days at the local preserved lines

 

If a fraction of that interest can be captured and directed towards model railways then it could only be a good thing for the hobby. Just need to watch the initial costs of starter sets to ensure that doesn't discourage purchases too much.

Children are still interested, but not as interested as in the period between the 60s and 80s - I would hazard that toy trains began to wane in popularity amongst children as the numbers of child trainspotters also tailed off.

 

Wall Street Journal article, its not just a problem here:

http://www.wsj.com/articles/end-of-the-line-for-model-trains-aging-hobbyists-trundle-on-1455157546?mod=e2fb 

Edited February 12, 2016 by woodenhead

[ruggedpeak]

Well I haven't seen any of these being knocked off at stupid prices. Maybe I missed it, or Hornby/shops are hanging onto unsold ones until next year or...just perhaps...they all got sold.

You missed it! I got one from Argos. IIRC it was reduced pre-Xmas to either £29.99 or £39.99, so it was rude not to. Fun wagons for shunting puzzle, extra track and controller for knockabout small layouts and small chassis for kits all at a bargain price. Still available from Hornby at £69.99 though!

 

The 2015 version is being sold off. The 2016 version is the same but without the TrakMat and only a circle of track rather than an oval, costing £20 left. Sub £50 it is almost an impluse buy, unlike when at £69.99 for the old version. Makes sense as I don't think it is bought as a proper "train set" but as a fun Xmas decoration. Rivet counters may scoff but it is the sort of thing that keeps the cash coming in if done well.

Edited February 12, 2016 by ruggedpeak

[trevor7598]

Back in 2012 Hornby produced merchandise for the London Olympics. One item that appealed to me was the

1948 pack consisting of an ER. N2 and two teak coaches. It was the coaches I was particularly after (grey roofs

and BR numbers ).

Then I found out the price !, £208.00 ! who did they think they were kidding, this pack did not even contain a

circle of track. I later saw many of these packs heavily discounted or split up.

 

More recently we were told of Design Clever (or cheap and nasty if you prefer ). This did their brand much harm

within the hobby.

 

It is mainly the above two horrors that have stuck in my mind, and although both examples are now history,

how much have they contributed to today's financial position.

 

To be fair Hornby have got back on track with quality, and in some cases price,and have relieved me of 

over £400.00 recently. I wish them well but please market more carefully. Your customers are not fools !.

 

 

 

 

 

 

 

[GreenDiesel]

I've been following this news and this thread with interest, although I haven't had a chance to read all of the replies.

 

Does anyone know how other model railway companies are doing, i.e. Bachmann (which includes Farish), Dapol, etc.? It almost sounds like Hornby's problems are mismanagement at their end. 

 

Thanks,

Rob

[ColHut]

To be fair, I really wondered what financial state they had to be in to be flogging 'excess' museum stock last year. I just assumed then that they were on their knees.

 

I hope they pull through.

 

Regards

[The Nth Degree]

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.

From my reading of the statement and the previous AR&A, I think your opening para may not be true – and I'm using 'may' because nobody knows how the model railway businesses are performing except Hornby PLC and Hornby Hobbies Ltd.

 

Hornby PLC are the organisation in trouble – they are the company who have borrowed heavily to invest (ahem...) in the Group's reorganisation, etc. All they do is take money from each of the businesses (and those who lend it to them) and spend it. They effectively earn nothing themselves. The individual businesses within the PLC are performing OK, but not great, with the possible exception of Scalextric, who are tanking from what I read yesterday.

 

I'm thinking that Hornby Hobbies Ltd, and the rest of the model railway brands would be a successful small company on its own, so too with the Airfix/Pocher/Humbrol mini-group. It seems that by trying to streamline the organisation, plus the disorganisation that followed, has created a less-than-expected return on its investment for this accounting period. With such tight margins, any small miss-hap will have disastrous effects on the bottom line, as they appear to have done here.

[BritishRail60062]

I hope things will turn for the better and a positive outcome will ensue once Hornby get on top of the matter.

[jetmorgan]

Back in 2012 Hornby produced merchandise for the London Olympics. One item that appealed to me was the

1948 pack consisting of an ER. N2 and two teak coaches. It was the coaches I was particularly after (grey roofs

and BR numbers ).

Then I found out the price !, £208.00 ! who did they think they were kidding, this pack did not even contain a

circle of track. I later saw many of these packs heavily discounted or split up.

 

All the merchandise to do with the 2012 Olympics was exorbitant and then heavily discounted. I bought a dozen Olympics T-shirts after the games, they were going for £25.99 before the games and after...£1.99

[locoholic]

Children are still interested, but not as interested as in the period between the 60s and 80s - I would hazard that toy trains began to wane in popularity amongst children as the numbers of child trainspotters also tailed off.

 

Wall Street Journal article, its not just a problem here:

http://www.wsj.com/articles/end-of-the-line-for-model-trains-aging-hobbyists-trundle-on-1455157546?mod=e2fb 

The WSJ article refers to retirement homes with their own model railway. That sounds so attractive, until you start to imagine all the arguments about whether it should be OO, EM or O gauge, DCC or analogue, etc. etc.

 

Could be the way forward for Hornby, though - joint ventures with McCarthy & Stone?!

[TEAMYAKIMA]

To have 'Hornby goes bankrupt' splashed all over the press and TV would be a PR disaster for the hobby as a whole.

 

Even if the hobby could survive without Hornby, and it certainly could, the perception amongst many potential modellers would be that the hobby is in terminal decline ..... and no-one wants to be associated with anything seen to be in decline

[Trains4U]

To have 'Hornby goes bankrupt' splashed all over the press and TV would be a PR disaster for the hobby as a whole.

 

Even if the hobby could survive without Hornby, and it certainly could, the perception amongst many potential modellers would be that the hobby is in terminal decline ..... and no-one wants to be associated with anything seen to be in decline

 

If the current incarnation should fail, the outcome will almost certainly be   "Hornby PLC subject to takeover"

 

I doubt the brand will be allowed to fail in that manner.

[TEAMYAKIMA]

If the current incarnation should fail, the outcome will almost certainly be   "Hornby PLC subject to takeover"

 

I doubt the brand will be allowed to fail in that manner

 

I'm sure you're right, but I doubt if the national press will give the whole picture - my guess for the headline would be  'Hornby hits the buffers!' ... many won't read the small print about management mismanagement.