Hornby's financial updates to the Stock Market

[Andy Y]

 

As I said earlier, his departure may have been designed to recover the share price.

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Resign clever?

[Joseph_Pestell]

While it may well be that this guy was not an inspired choice for CEO, I think that many of the problems go back further in time.

 

The other big Hornby brand in the UK is (or perhaps was) Scalextric. I hardly ever see that these days in shops. They completely failed to invest in it for years when technological innovations such as DCC could have made it far more fun to play with.

 

Having been involved in the industry at the time Jouef failed and was taken over by Lima/Rivarossi, I can see many similarities in the situation now. Why does history have to repeat itself?

[DJM Dave]

Has Mr. Ames made a hash of it, or has it been circumstances or a failure elsewhere that he either didn't recognise, or wasn't told of earlier?

As I said earlier, his departure may have been designed to recover the share price. I can't see how it will change the company's immediate financial situation, other than restore some of its value.

 

 

 

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In all honesty mate, who's in charge? The top has to take the blame for either not recognizing the problems, or employing the people that possible caused the problems in the first place.

[DJM Dave]

While it may well be that this guy was not an inspired choice for CEO, I think that many of the problems go back further in time.

 

The other big Hornby brand in the UK is (or perhaps was) Scalextric. I hardly ever see that these days in shops. They completely failed to invest in it for years when technological innovations such as DCC could have made it far more fun to play with.

 

Having been involved in the industry at the time Jouef failed and was taken over by Lima/Rivarossi, I can see many similarities in the situation now. Why does history have to repeat itself?

Don't see scalextric in shops?

What shops in what country do you shop in?

[mow]

Is this Warship on sale?

 

http://www.bbc.co.uk/news/business-35576892

[Clearwater]

Surely the big question about Ames was why on earth did they hire him in the first place?  And with a track record like his he would be in line for a major honour if he was a very senior Civil Servant.

Cynically I'd suggest the Hornby ceo role is not a top gig and they had a limited field

[Ron Ron Ron]

In all honesty mate, who's in charge? The top has to take the blame for either not recognizing the problems, or employing the people that possible caused the problems in the first place.

 

I totally agree Dave.

It's entirely appropriate he carries the can, but the suggestion was that he "made a hash of it", when the cause or fault might have been elsewhere, or even outside of his control.

If that were the case, it won't be the first time, or the last that the most accountable person takes the rap for the failure of others, or due to unforeseen circumstances.

We just don't know any of the details and I think it's unwise to speculate.

 

.

 

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[Joseph_Pestell]

It says a lot about what an iconic brand Hornby is that journalists devote so many column inches to a company worth only £17M.

 

It might be a lot better for the company not to be listed on the Stock Exchange and therefore be able to conduct its business less in the spotlight.

[DJM Dave]

I totally agree Dave.

It's entirely appropriate he carries the can, but the suggestion was that he "made a hash of it", when the cause or fault might have been elsewhere, or even outside of his control.

If that were the case, it won't be the first time, or the last that the most accountable person takes the rap for the failure of others, or due to unforeseen circumstances.

We just don't know any of the details and I think it's unwise to speculate.

 

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Hi mate,

I think it's fair to say the following..... Which he would, at the top of the Hornby tree be ultimately responsible for....

 

1) direct selling

2) undercutting stock it's due to 1)

3) limiting stock to stockists in favor of direct selling

4) authorizing ERP system at great cost

5) losing 1m in stock on his watch

6) cutting his lifebloods (stockists) profit margin drastically

7) shutting down the museum

8. shutting margate

9) having staff below him that don't know the market

10) getting rid of someone who did know the market.

 

If I'm wrong on any of these, please feel free to correct me.

Cheers

Dave

[DJM Dave]

Is this Warship on sale?

 

http://www.bbc.co.uk/news/business-35576892

And what gauge it that loco? Looks N or TT to me?

[Trains4U]

 

The other big Hornby brand in the UK is (or perhaps was) Scalextric. I hardly ever see that these days in shops. They completely failed to invest in it for years when technological innovations such as DCC could have made it far more fun to play with.

 

 

erm...

 

http://www.scalextric.com/uk-en/our-ranges-explained

 

Take a look at Scalextric Digital (Available since 2004)

[JohnR]

Is this Warship on sale?

 

http://www.bbc.co.uk/news/business-35576892

That looks like the old Class 29 from Hornby, circa 1979.

[Ron Ron Ron]

The other big Hornby brand in the UK is (or perhaps was) Scalextric. I hardly ever see that these days in shops. They completely failed to invest in it for years when technological innovations such as DCC could have made it far more fun to play with......

 

Don't see scalextric in shops?

What shops in what country do you shop in?

 

Joseph, Scalextric went digital in 2004, long before Hornby's model trains.

Having introduced features like lane changing, fuel loads/management/range and timing facilities, they've since gone on to introduce a Smartphone based race control system.

 

In fact, IIRC Hornby's own DCC systems were designed by the same Cambridge based company who worked on their Scalextric digital system and borrowed from that work. (probably why its cr**)

I have a feeling that the same Chinese based manufacturer still makes all their digital products for both brands.

 

As for shops, I'm with Dave.

As far as I have seen, Scalextric has a far bigger profile in toy shops than Hornby Trains and has done for many years.

In fact the trains are almost non-existent or totally non-existent in many retail toy outlets.

 

I've no idea how popular the slot car brand is today, or how big the sales are, but during the 1990's and prior to the renaissance of Hornby Trains following the move to Chinese production, Scalextric was the bigger brand in the group.

The previous CEO said publicly that Scalextric was propping up the model train business, which would have folded without it.

 

Of course times change and I suspect slot car racing is less popular than it once was.

I wouldn't be surprised that as a toy, it's also fallen out of favour too.

 

 

 

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[ParkeNd]

That looks like the old Class 29 from Hornby, circa 1979.

I would guess it's just an agency photo which emphasises the toy aspect of Hornby - the hand on the roof is more important to the context than the loco being Hornby's latest issue.

[Ian J.]

Has Mr. Ames made a hash of it, or has it been circumstances or a failure elsewhere that he either didn't recognise, or wasn't told of earlier?

As I said earlier, his departure may have been designed to recover the share price. I can't see how it will change the company's immediate financial situation, other than restore some of its value.

.

 

Well, if Mr. Ames was brought in to help turn Hornby around and make it successful again, then I can say that regardless of what external conditions might have been prevailing he doesn't appear to have actually helped keep Hornby on an even keel. A good CEO should be able to help a company weather a storm and not hole it so that it takes on water, which certainly appears to have happened some time in to Mr. Ames' captaincy.

Edited February 15, 2016 by Ian J.

[MGR Hooper!]

However, I don't think Hornby's problems have much to do with what models or liveries they are producing.

That may be the case...but as I said above you have some people in the organization who say electrics don't sell well at all and hence they won't do a re-tool for any. And yet on the other hand you have some who say with very confidently that the electrics are so good that they fly off the shelves. It may not be the problem on a whole but it is one problem.

 

Ofcourse I did have a chat with a very notable Hornby rep few days ago who assured me that there will be a clearer distinction between the main range and RailRoad range in 2017-18 onwards.

[highpeakman]

The removal of the CEO won't change the immediate precarious financial situation Hornby find themselves.

The underlying problems are still there and the losses are mounting.

If a newly appointed CEO is given the remit to change course and adopt different strategies to those currently in place, any benefits of such a change will take time to filter through and no doubt cost money to implement.

How much time will they be given and what short term remedial action will be required of them by the banks?

 

The departure of the CEO would be expected to cause a rally on the share price and thus restore some value in the company.

That's useful, if not essential to the major creditors if that value has to be realised in securing or recovering the debts.

If restructuring, or selling off bits, or all, of the company is going to be considered, then anything that will pump up the share price is useful.

 

I expect the annual report will be full again of "Jam tomorrow", just like the last 7 years.

 

 

 

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Agreed.

 

They need to appoint someone who understands this particular market place, not just a "Retailer" in the overall sense. I include all of the brands, not just trains, in that. As I have mentioned before, Hornby straddles the toy and model markets but both use, to a large extent, the same types of retailers. Winning back the trust of these front line guys is crucial to recovering the mess that they have made so far.

 

They will also need a good CFO to manage the money while the market is restored. That's not going to be easy.

 

Whether it is possible to do that without radical organisation change and selling off some of the parts that make up the group is another matter.

 

When "regrouping" it is often necessary to concentrate on particular sections of your business and discard or sell the rest. 

 

Should Hornby be just a model train supplier including the European brands as well and discard the other products? Or should it keep the other brands in the UK or discard/sell the European brands concentrating the market in the UK?

Someone at Hornby has to decide where their future business effort should be made.

Edited February 15, 2016 by highpeakman

[Ron Ron Ron]

Hi mate,

I think it's fair to say the following..... Which he would, at the top of the Hornby tree be ultimately responsible for....

 

1) direct selling

2) undercutting stock it's due to 1)

3) limiting stock to stockists in favor of direct selling

4) authorizing ERP system at great cost

5) losing 1m in stock on his watch

6) cutting his lifebloods (stockists) profit margin drastically

7) shutting down the museum

8. shutting margate

9) having staff below him that don't know the market

10) getting rid of someone who did know the market.

 

If I'm wrong on any of these, please feel free to correct me.

Cheers

Dave

 

I'm not disagreeing with you.

However, I think it's fair to say, that some of the 10 points you've listed, although unpopular here, may have actually been beneficial and have been working, or had the potential to work in the company's favour. Even if only as temporary fixes.

We don't know all the facts and even the annual report won't reveal the detail.

On the other hand, the whole lot may have been a disaster. We know some of it definitely has been.

 

Ron

 

 

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[Ron Ron Ron]

...Should Hornby be just a model train supplier including the European brands as well and discard the other products?

Or should it keep the other brands in the UK or discard/sell the European brands concentrating the market in the UK?

 

I did notice that according to the recent announcements, although below expectations, at least the European sales have been growing in the last few months, whereas the UK sales are said to have fallen significantly.

 

 

 

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[highpeakman]

Hi mate,

I think it's fair to say the following..... Which he would, at the top of the Hornby tree be ultimately responsible for....

 

1) direct selling

2) undercutting stock it's due to 1)

3) limiting stock to stockists in favor of direct selling

4) authorizing ERP system at great cost

5) losing 1m in stock on his watch

6) cutting his lifebloods (stockists) profit margin drastically

7) shutting down the museum

8. shutting margate

9) having staff below him that don't know the market

10) getting rid of someone who did know the market.

 

If I'm wrong on any of these, please feel free to correct me.

Cheers

Dave

 

He would ultimately be responsible for all of those however they may not all be bad things to do although the methods used may not have been the best.

 

While I am no supporter of the way things have happened it is easy to criticise from the outside.

 

Shutting Margate and the museum may make financial sense.

Trimming retailers margins, to a limited extent, could also make sense but not if badly handled.

Introducing ERP may have been a good idea but, as I know from experience, it is often a case where the "tool" becomes the manager and not a tool of the manager.

Losing £1M could be "adjustments" dating back some time.

Undercutting stock is panic.

Direct selling could be OK if done carefully and watching the effect on your retailers - if they aren't shifting particular stock then direct sell it.

 

Having people who don't know the market is just reckless.

[Hroth]

...

 

Ofcourse I did have a chat with a very notable Hornby rep few days ago who assured me that there will be a clearer distinction between the main range and RailRoad range in 2017-18 onwards.

Any clearer than the completely different box designs/logos they currently use?

 

I hope it isn't that Railroad products will be sold in blister packs like the Lima models displayed at the Nuremburg Toy Fair, or that they've managed to repurpose the Triang tools that were lurking at the back of the Margate factory.

 

The mind boggles...

 

As an aside, I was thinking about the description "full-fat" used by some to indicate that a model is top of the range.  Perhaps Hornby could divide their models into three parts (like Ancient Gaul) and call them Skimmed Hornby, Whole Hornby and Jersey Hornby.  With Green, Blue and Gold stars on the boxes. We'd know where we stand there!

 

Think I'll have a lie down...

[mevaman]

To be honest, I would be happy if Hornby were to be liquidated.

 

This would leave a saturated market (as most mainstream stock has already been produced) open to inniovative suppliers such as Rapido, DJM, Oxford, Phil Sutton, Kernow and Hattons. In my view, Hornby have smugly thought that their brand name guaranteed market domination. They have been arrogant, particularly in the way that they have treated retailers. Their attempts to sell direct have been woeful and have not matched the retailers who have been doing it for years.

 

For those of us of elder years, like Woolworths, the brand name has meant something. However, also like Woolworths, they will become a fond memory.

[Coryton]

The Hornby brand name must be worth a few bob, since it is the only one in the UK that non-fans recognise, so that will survive whatever happens next. The tooling is the worry for hobbyists. The people we can only wish the best of fortune.

 

Kevin

 

It's hard to imagine the brand disappearing whatever happened...but could it end up being used to sell the sort of cheap battery powered plastic track "train sets" that appear around Christmas?

 

Any clearer than the completely different box designs/logos they currently use?

 

I hope it isn't that Railroad products will be sold in blister packs like the Lima models displayed at the Nuremburg Toy Fair, or that they've managed to repurpose the Triang tools that were lurking at the back of the Margate factory.

 

 

I think the problem isn't that it's unclear from the box which is and isn't Railroad. The problem is that you can't easily tell the quality or tooling age of a model from which range it's been put in.

 

Hornby Pacer anyone?

 

Some of the Railroad wagons are still using Triang tooling, aren't they?

Edited February 15, 2016 by Coryton

[Coryton]

To be honest, I would be happy if Hornby were to be liquidated.

 

This would leave a saturated market (as most mainstream stock has already been produced) open to inniovative suppliers such as Rapido, DJM, Oxford, Phil Sutton, Kernow and Hattons. In my view, Hornby have smugly thought that their brand name guaranteed market domination. They have been arrogant, particularly in the way that they have treated retailers. Their attempts to sell direct have been woeful and have not matched the retailers who have been doing it for years.

 

For those of us of elder years, like Woolworths, the brand name has meant something. However, also like Woolworths, they will become a fond memory.

 

In this scenario presumably Bachmann goes the same way?

 

I wonder how easy it would be to find a factory able and willing to produce model railway rolling stock if it weren't for demand from the large manufacturers though.

[Andy Y]

An open question for any of the retailers around here if I may.

 

When did you last see anyone above sales rep level?