Hornby's financial updates to the Stock Market

[Andy Hayter]

Maybe Hornby have worked out what has gone wrong.

 

Jan 2015 - Sales to the tradde as normal.

Mar 2015 - Fire sale to improve cash flow.  Traders upset because they were undercut and customers (direct and via traders) upset because they could have bought much more cheaply.

 

Result - 2016 - traders did not place orders because they expected to be undercut in March and likewise customers have not bought expecting another fire sale and some good deals in March.

[rovex]

What surprised me with their 'last chance to buy' was seeing the lms non corridor stock there. Especially since have only just recently come out. Did Hornby over produce or overestimate the demand for such coaches?

Edited March 17, 2016 by rovex

[Ozexpatriate]

Interesting to note that as of this morning, the 'Last Chance to Buy' section has disappeared from Hornby's website. Change is afoot!

I wouldn't read much more into it than their financial year ends in two weeks. From now until then, the impact of additional revenue is negligible.

[Joseph_Pestell]

Sometimes I think reps know less about real railways (and how that translates into model sales) than the manufacturers themselves do.

 

 

 

Certainly used to be the case in France. Rep could not understand why I would not be interested in a job lot of F7B locos. There were no F7As available to go with them.

 

Likewise, I always refused to take TGV sets when they were released because there were never the trailers to go with them.

[Vistisen]

What surprised me with their 'last chance to buy' was seeing the lms non corridor stock there. Especially since have only just recently come out. Did Hornby over produce or overestimate the demand for such coaches?

Or did it just mean that they were the last few in stock, almost sold out, so it was you last chance to buy?

[Hroth]

I wouldn't read much more into it than their financial year ends in two weeks. From now until then, the impact of additional revenue is negligible.

Or that, if they don't get things sorted out with their bank, that come the end of the financial year the WHOLE site will become "Last Chance To Buy"?

 

I'm keeping everything crossed that it doesn't come to that!

[robmcg]

Or did it just mean that they were the last few in stock, almost sold out, so it was you last chance to buy?

 

The non-corridor LMS carriages are very good models too!  At the the 'last chance' price at least...

 

These are very interesting days, with a plethora of superb models available from Hornby, bargain-hunting is fun if you have the inclination, and to my way of thinking the cash generated by sales in this February-March 2016 period will have a bearing on decisions by Barclays. Whether or not Hornby have a sustainable business plan for the longer term is the bigger question, with issues like cost and reliability of supply from China and Asia generally being unknown to me.

 

My primary interest is UK steam large engines, and I must point out that we have never had it so good.  Think about it. About 2-3 years ago with the demise of Sanda Kan we lost the Britannias, Bulleids, A4s, A3s,  Castles, (for varying lengths of time) and with the Duke of Gloucester and lowered standards it was looking quite grim, yet Hornby got everything back into production with reasonable retail prices.  Many models are sold out from Hornby but available from various retailers, bricks and mortar or web-based. There are numerous other quality models, S15s, Black 5s, many more, all back in production. Bravo!

 

If Hornby does stop trading then these last months will have to be seen as 'the salad days', surely.

[Ozexpatriate]

..., yet Hornby got everything back into production with reasonable retail prices.

With their current financial problems, one has to wonder whether they had in fact set prices that were sustainable in the long term and profitable for them, (though I would suggest that their biggest issues were perhaps not with new model railway releases).

[robmcg]

With their current financial problems, one has to wonder whether they had in fact set prices that were sustainable in the long term and profitable for them, (though I would suggest that their biggest issues were perhaps not with new model railway releases).

 

Fickle UK buyers don't help.  I am among those who look for bargains, and wouldn't buy much at full retail.  Thus Bachmann has scaled back its activity, the H2 LBSC Atlantic being still a far off dream and certainly north of UKP150, while Hornby so far has a full program of new things lined-up

[Traingabbler]

Bachmann worldwide probably has fairly deep pockets. If they bought Hornby Trains, how many of either's models would we see disappear ?

[Grovenor]

Comparing the Bachmann and Hornby stands at Ally Pally today, Hornby really looked the poor relation.

Regards

[Hroth]

Comparing the Bachmann and Hornby stands at Ally Pally today, Hornby really looked the poor relation.

Regards

In what sense?

 

Breadth/timescale of models to be delivered or presentation?  Don't get me wrong, I wasn't there, I'm just interested in why you feel that way.

[John M Upton]

Bachmann - very glossy slick and well presented stand including an exclusive Collectors Club Members Lounge (if going tomorrow (Sunday) remember to take your membership card!).

Hornby - The usual now bit tired looking demo layouts with random stuff spinning round plus a long table which seemed to have little more than piles of old stock Hornby Roadshow open wagons from years past being cleared at a fiver a pop.  A far cry from their stand at shows of years past and a scene that screamed 'we are in trouble, give us some cash for this old stuff we can't shift'.

[Ian Hargrave]

Bachmann worldwide probably has fairly deep pockets. If they bought Hornby Trains, how many of either's models would we see disappear ?

 

Your first post,I see.Sincerely hope your subsequent posts are a bit more cheerful than your maiden innings.

[polybear]

Comparing the Bachmann and Hornby stands at Ally Pally today, Hornby really looked the poor relation.

Regards

Very true, but all that Bachmann Gloss has to be paid for by someone....that'll be us, at the end of the day.

Me, I'd be much more interested in after-sales service, where you can still by all the spares ten years down the line.

Brian

[Traingabbler]

Your first post,I see.Sincerely hope your subsequent posts are a bit more cheerful than your maiden innings.

Oh I dunno  ! If Hornby Group goes under (and it is definitely on the cards|) it might be the only way that Hornby Trains can survive. Bachmann UK would benefit from extra scale, and could afford to build on the best models of either. But in the process some would have to be rationalised into oblivion. In which case forums like this might have a say !

[Black 5 Bear]

Oh I dunno  ! If Hornby Group goes under (and it is definitely on the cards|) it might be the only way that Hornby Trains can survive. Bachmann UK would benefit from extra scale, and could afford to build on the best models of either. But in the process some would have to be rationalised into oblivion. In which case forums like this might have a say !

If Hornby do cease trading and Bachmann buy what's left of the company, one things for sure, we as modellers will be much the poorer in more ways than one.

[Ian Hargrave]

Oh I dunno  ! If Hornby Group goes under (and it is definitely on the cards|) it might be the only way that Hornby Trains can survive. Bachmann UK would benefit from extra scale, and could afford to build on the best models of either. But in the process some would have to be rationalised into oblivion. In which case forums like this might have a say !

 

In which case we'd all be in cloud-cuckoo land or living on Fantasy Island.Unless of course you have some inside information ?The plain truth is that all we have is speculation......and that by the shed load.

[andyram]

Interestingly I notice Hawkins are now advertising the new Corgi Thunderbirds range as being in stock only a week or so after it was announced these would be released in May. Could be a good earner for the Company I hope they have enough stock.

[The Stationmaster]

Bachmann - very glossy slick and well presented stand including an exclusive Collectors Club Members Lounge (if going tomorrow (Sunday) remember to take your membership card!).

Hornby - The usual now bit tired looking demo layouts with random stuff spinning round plus a long table which seemed to have little more than piles of old stock Hornby Roadshow open wagons from years past being cleared at a fiver a pop.  A far cry from their stand at shows of years past and a scene that screamed 'we are in trouble, give us some cash for this old stuff we can't shift'.

 

Yes - deep contrasts in presentational style/lack of.  However while all that glistens is not gold many a good heart can be found beating under a less than enticing exterior.  

 

The talk with folk on the Hornby stand was very positive as was their view of the way things are going - obviously the company has its problems and equally obviously they may in some ways impact on us (it would be amazing if they don't) but it seems things on the product front are moving along.  So overall the news is not all bad.

[Traingabbler]

I take an interest in the business side of Hornby - purely academically I hurry to say - (as well as being a late arrival but avid model trains collector) The fact is that the latest company news just isn't very encouraging - although, admittedly, that news is very sparse. If they cocked up their ERP sytem so much (as well as having p-ssed off their customers and distributors so badly and wrecked their own cash flow) the average banker would be distinctly unimpressed. Naturally we don't know the terms of the Barclays Banking covenant, but bankers are under pressure themselves, and given the sprawling nature of the whole Hornby group (and the absurd price it paid for Corgi - admittedly under previous management) as well as the dire history of so many of the best model rail brands (all shuffled around between various owners over the years who eventually go bust and pass the brands on to someone else) I wouldn't be surprised if Barclays didn't want (or might be under pressure to) to break it up. But that depends whether Hornby are pulling themselves round. How the shares are behaving would be a pointer to that, but after their plunge six weeks ago, there are few clues there at the moment.

But given that some on this thread seem to know something of Hornby's distribution thread, I thought they might get hints of what might be happening. And I think my point is a valid one. Bachmann has a history of gobbling up other trains manufacturers if only to rationalise its own manufacturing base at Kader. I'm not bashing for the sake of it. I'm genuinely concerned that, after doing so much in the last two decades or so to bring British model train manufacturing standards up to scratch, Hornby might lose it all.

[The Stationmaster]

I take an interest in the business side of Hornby - purely academically I hurry to say - (as well as being a late arrival but avid model trains collector) The fact is that the latest company news just isn't very encouraging - although, admittedly, that news is very sparse. If they cocked up their ERP sytem so much (as well as having p-ssed off their customers and distributors so badly and wrecked their own cash flow) the average banker would be distinctly unimpressed. Naturally we don't know the terms of the Barclays Banking covenant, but bankers are under pressure themselves, and given the sprawling nature of the whole Hornby group (and the absurd price it paid for Corgi - admittedly under previous management) as well as the dire history of so many of the best model rail brands (all shuffled around between various owners over the years who eventually go bust and pass the brands on to someone else) I wouldn't be surprised if Barclays didn't want (or might be under pressure to) to break it up. But that depends whether Hornby are pulling themselves round. How the shares are behaving would be a pointer to that, but after their plunge six weeks ago, there are few clues there at the moment.

But given that some on this thread seem to know something of Hornby's distribution thread, I thought they might get hints of what might be happening. And I think my point is a valid one. Bachmann has a history of gobbling up other trains manufacturers if only to rationalise its own manufacturing base at Kader. I'm not bashing for the sake of it. I'm genuinely concerned that, after doing so much in the last two decades or so to bring British model train manufacturing standards up to scratch, Hornby might lose it all.

 

But - as ever - apart from knowing something of the problems with direct selling and trade terms etc we know nothing of the financial picture within the company other than headline numbers.  We don't know where things have gone wrong financially or where they have gone right so we haven't got the first idea, apart from observations made by people in the retail trade or what we actually see which brands are well managed and which brands are millstones round the group's neck (assuming any of them are?).  

 

We can, simply from observation, work out where some things have not been handled perhaps as well as they should have been from the financial viewpoint but again we do not know the background to that or why what we think might have happened was done that way nor do we know how that might be changed in the future.

 

We are, I think, all concerned for the future of the company and the people who work for it - especially perhaps those who have been serving us so well of late but we are all stabbing in the dark about the groups relationship with its bankers and its financial management. 

[Legend]

Well at Glasgow I gave Bachmann barely a glance because there was not much new on it. Certainly that was the week before they announced their 2017 range but let's face it, other than a few train packs there really wasn't much more to add. On the other hand Hornby was attracting lots of youngsters watching their trains whizz round and I did eventually find test shots of their Merchant Navy on the second day. I don't really think you can make comparisons.

 

Not sure I like the idea of a Collectors Club lounge , is it like BA lounges , complimentary champagne?

[Clearwater]

I agree with the comments about the differences between the stands when I visited earlier. I quite liked the lounge. Having seen how Bachmann set up previously, I suspect that what is used as the lounge was previously dead space (or used for retail storage). They gave us a bottle of water and were kind to my son, who was a bit tired at that point. Made a nice break from the outside. Plus got a good look at the thonpson EPs which are closely coupled and look superb.

 

The Hornby stall is, by contrast smaller (and probably cheaper). It does look tired. Biggest difference to me is in the staffing. The Bachmann staff all wear easy to read name tags and, when i went through, was manned by the previous and current MD. in contrast, H staff, whilst knowledgeable didn't have name tags and I doubt were as senior as the Bachmann staff

 

I had a quick conversation with one of the Hornby guys which was quite high level however seemed to suggest that we shouldn't expect much new stuff in 2017 given timeframes on tooling. My personal view is as follows

- items announced and in tooling such as q6 (samples on stand) and b12 (earlier stage samples) will appear roughly as scheduled. On a marginal cost to complete basis, the projected return must look strong and with money already spent, substantially deriske

- announced but earlier stage - eg MN. Sample was still the 3D print but not that prominently displayed. Suspect will be delayed

- 2017. Catalogue based largely on reliveries of existing tools. Big emphasis of maximising profitable lines rather than introducing new stuff.

- some reliveries trumpeted a la Gresley collection to get a premium

- some promise of 'jam' tomorrow

 

David

 

Edit: as an aside I've never been that impressed with BA's champagne...

Edited March 20, 2016 by Clearwater

[Gilwell Park]

Hi. Not being in the Bachmann Collectors Club I could not make use of the lounge so could not talk to anybody but no such problems on the Hornby stand where I had a good chat and could listen to others. To sum up Bachmann stand very swish but Hornby much more fit for purpose. Roger.