Hornby's financial updates to the Stock Market

[RJS1977]

Granted, but in recent times, prices have gone up a lot, whilst wages have remained steady and disposable income has fallen. And of course, when a low-fi model is removed from the range to be replaced with a high-spec version, the price often doubles at a stroke. Yes, I know, better quality, but if you only want a model of a particular type of loco and aren't too fussed about all the extra detail (or even, don't want it - either if you're going to do a conversion/repaint, or give it to a slightly hamfisted youngster), you don't want to be paying double!

 

The reason the pre-China models weren't "just" children's toys is simple - they were the only models available so if an adult enthusiast wanted say an LMS Princess, he bought the Triang one, because it was that or do without.

 

I'm sure exactly the same would apply now if Hornby were to introduce a Railroad version of say a Bagnall 0-4-0F, a Class 387 or 1973 Tube stock(*). Provided the price reflected the lower quality, a model Tube enthusiast isn't going to say "I'm not going to buy it, it doesn't have....."

 

However it's clear from the catalogues and TV ads that the models were clearly aimed at children (or father & son).

 

 

* As well as a stand-alone model it could also be sold as two driving cars (trailing cars sold separately) in a train set with an oval of track, battery controller, toy bus and taxi and cardboard cutouts of a Tube station and say Buckingham Palace, Houses of Parliament, Tower of London etc (or a link to a website where these could be downloaded). It could then be sold through all the network of "tourist shops" found throughout London and beyond, as well as the more usual Argos/Toys R Us/model shops etc.

[RJS1977]

Now here's another idea - back in the day it used to be quite common for a station on a train set oval to represent several different stations as the train went on its journey e.g HST starts out at Paddington, 3 laps takes it to Slough, another 3 to Reading, Didcot, Swindon etc. How about something like a Scalextric lap counter in with the set, which counts the laps and plays appropriate announcements at the correct times? Maybe even designed in such a way that it could be connected to a laptop/tablet/TV set to display photos of the city the train's arriving in.

[Crantock]

Getting back to what is happening on the deals front. 

 

The offer Doc is here http://www.Hornby.plc.uk/wp-content/uploads/2017/06/1.-Rule-2.7-Phoenix-Mandatory-Offer-21-June-2017.pdf and Hornby have dismissed it as undervaluing the company.

 

It is clear this is not an attempt to achieve 100% control:

• They have 50% + but are only offering a small premium (3%ish) versus the 30% you might expect to take private
• There is no threat to de-list if they get 75% indeed a commitment to maintain listing

So basically Phoenix have bought out a dissident and are now making a mandatory offer because the rules require it. The take up is likely to be low. Hopefully they will then have a mandate for Strong and Stable management.  Then again....

[RJS1977]

My observation is that like M&S currently in general/clothing retailing (and C&A, Woolworths and BHS before them) their problem is simply competitors across the toy and model sector are doing better at chasing the declining market.

 

As a comparison - M&S seem to have failed to grasp that they have become a general retailer, albeit specialising in clothes and food, but crucially omitting to sell many of the other items you buy on a supermarket trip. Result the supermarkets that do sell clothes have skimmed off much of the basics from M&S's staple items turnover, underwear and other basics like shirts, trousers, tights etc. Hornby have diversified, but perhaps not widely enough, and new entrants to the market like Bachmann have taken a big slice of the trains market, which the shift into high price items to cater for the "must be more accurate/less toy like" demands have further reduced as a market because of the necessary high price. 

 

Whether they have the right strategy remains to be seen but, were I to be a shareholder in either of them, the noises from Hornby would satisfy me more that the board perhaps has the will to change direction than those from the equivalents at M&S.

 

Then the challenge for the manufacturers is not just to keep chasing a declining market - but to find ways of growing the market. Triang, Airfix/Mainline and Lima did that by making models at more affordable prices than the competition. Growing the market isn't just good for Hornby but for all the other manufacturers and traders in the sector.

[Fireline]

Then the challenge for the manufacturers is not just to keep chasing a declining market - but to find ways of growing the market. Triang, Airfix/Mainline and Lima did that by making models at more affordable prices than the competition. Growing the market isn't just good for Hornby but for all the other manufacturers and traders in the sector.

 

Perhaps Hornby should ring one of those companies for advice... oh, hang on....

[RJS1977]

Triang (the one making cheaper models) still outlasted Hornby Dublo (who made the more expensive ones....).

 

Lima lasted nearly 50 years, and the collapses of Triang, Mainline and Airfix were more to do with other parts of their respective empires than the railway ranges.

[ThaneofFife]

Just like those 70s and 80s models have moved on to todays super detailed models the kids of today have also moved on from "the train set" never to return.....smartphones, I-pads, e-books, I-phones, shoot em up games consoles that's where kids want to be now.    They probably get cyber-bullied if word got out they had a train set ! i dont think talk of encouraging youngsters into the hobby is the force that will (help) save any model railway manufacturer or come to its aid.  Times have changed so much, granted you might grab a few lads when they are young but I predict those numbers to be miniscule so cheaper versions aimed at this virtually non-existent market with little booklets inside train set boxes telling you how could set up a layout in the loft the garage of fold up board in the bedroom aint gonna cut it. 

 

I suggest that some people appear to still think the old Yellow Pages TV advert with the little lad trying to find a Hornby RXXXX signal box by ringing around all the towns numerous Hornby stockist model shops is still relevant.  This is 2017 not 1987.  Lovely times they might have been but we're in a different world completely now.

[Legend]

Just like those 70s and 80s models have moved on to todays super detailed models the kids of today have also moved on from "the train set" never to return.....smartphones, I-pads, e-books, I-phones, shoot em up games consoles that's where kids want to be now. They probably get cyber-bullied if word got out they had a train set ! i dont think talk of encouraging youngsters into the hobby is the force that will (help) save any model railway manufacturer or come to its aid. Times have changed so much, granted you might grab a few lads when they are young but I predict those numbers to be miniscule so cheaper versions aimed at this virtually non-existent market with little booklets inside train set boxes telling you how could set up a layout in the loft the garage of fold up board in the bedroom aint gonna cut it.

 

I suggest that some people appear to still think the old Yellow Pages TV advert with the little lad trying to find a Hornby RXXXX signal box by ringing around all the towns numerous Hornby stockist model shops is still relevant. This is 2017 not 1987. Lovely times they might have been but we're in a different world completely now.

Reluctantly I have to agree. The days of every kid wanting a trainset are well over. However this constant drive for even more detail, and consequently increasing price , while good for some is damaging the hobby. There needs to be a cost effective way of getting people into the hobby so they can enjoy building a reasonable layout in decent time and decent cost.If not, people will just get dejected and never give it a go. An oval of track with a loco and two coaches doesn't do it for most folks these days compared to maybe a simulator on your PC or iPad that gives you more for less. That's where the battleground should be , encouraging more people to give the hobby a go. Many people at exhibitions have the enthusiasm but then look at the costs and what you get for your money Edited June 28, 2017 by Legend

[JSpencer]

The start of the 1980s saw a huge crunch in model trains, production figures became - say - a tenth of what they were compared to the early 70s. Computers are generally blamed for this, but they did not really cotton until the mid 80s.

In a similar way, Cage and Avery birds, another traditional hobby, also started declining rapidly in the 80s and there are not many people left. My father was a champion canary breeder, but I could never bite that bug.

 

Model Trains is a creative hobby, but not generally seen as art, the education systems focus more on intellectual areas than crafts these days causing too many people wanting to be managers and fewer wanting to use their hands to make something. In fact the latter has been seriously devalued.

 

New people coming to the hobby are probably mostly 40 somethings. But how many are starting from new and how many due to nostalgia of a childhood Train set? Prices are sometimes a hard enough thing to explain to some die hard railway modellers, for newcomers it must be a shock. Model shops and shows are a key to new blood, but these are thinning out too these days.

[Coryton]

 Model shops and shows are a key to new blood, but these are thinning out too these days.

 

Model shops yes, but shows?

 

I certainly haven't got that impression.

[john new]

The correlation of model making to an interesting prototype to model also needs to be made. The railways used to appear interesting and reached most places where people lived. Judging by what happens locally when a special train appears locomotives (steam and diesel) remain a draw, multiple units aren't to the same extent. 

 

The recent Great Central Rly show may just perhaps be the first one that might reverse the trend; get people to a model making show where there is a related prototype alongside that has wide appeal.

 

There are enthusiasts of the modern railway, true, but in much smaller numbers than in the glory days of the trainspotter - the 1950s.

[JSpencer]

Model shops yes, but shows?

 

I certainly haven't got that impression.

 

Shows promote clubs, clubs then need to be open enough to entice new members and potential new modelers.

 

If the club is closed and does not support a young section then yes, there is no real motivation to start the hobby. If the club is open, the cost will seem less daunting, new members can see what other members have and specialize in something different (or add to an existing theme). Club members are then on hand to share their skills.

[GordonC]

loozing at some releases I can't help wondering who they're aimed at. for example the recent railroad Hornby class 90 in Mainline livery. is it aimed at kids? £90 is surely off putting for that. young kids now will probably rarely see a train involving locos nevermind have seen one in that livery. is it aimed at older modellers? it's a pretty high price for what is essentially a 25 year old model that was at the toy end of the spectrum when it came out and keen modellers are more likely to be waiting on the Bachmann one if it's ever released.

[Clearwater]

Shows also show parents the difference between a train set and a layout. The technically minded non enthusiast looks at a baseboard/kit/scenery and thinks "I could do that and find it interesting and the kids will like playing trains"

[Francis deWeck]

Airfix did some 1/350 modern RN warship kits, a Type 45, an Invincible class carrier and a Trafalgar class hunter-killer sub. They were nicely done but don’t seem to have set the world on fire. Merchant ship kits don’t seem to sell well anywhere for some reason, although there is a small but committed hobby of 1/1200 waterline ship collecting.

I think they decided to concentrate on military aircraft as that's where the sales are. Most kit manufacturers seem to concentrate on either military aircraft or military vehicles and figures.

Unfortunately, Airfix/Hornby have stated  at IPMS Telford (not a public statement) that they won't model a ship they can't step on, which precludes the historic ships which they held in their old catalogue. Subsequently, a little known firm called Trumpeter has taken over the historic ship modelling production, including those of the Royal Navy. Other firm such as Aoshima and Hasegewa, and, to a certain extent, Tamiya still model naval ships. The only European model ship builders are (1) Revell of Germany, but their production range is limited in scope and numbers and (2) Heller of France, which has been restarting production.

[phil_sutters]

 Subsequently, a little known firm called Trumpeter has taken over the historic ship modelling production,

 

Trumpeter have been around a long time in the military, naval and aviation kit market. I haven't done a military modelling for about 12 years and they were around when I did. They weren't in the high definition bracket, like Tamiya, but then their prices reflected that. They may well have upped their game since I knew them. As well as marketing under their own name, they manufacture for other brands, as many Chinese firms do. Wonderland Models seem to be one of their biggest UK stockists. Hannants is another.

[Legend]

Unfortunately, Airfix/Hornby have stated  at IPMS Telford (not a public statement) that they won't model a ship they can't step on, which precludes the historic ships which they held in their old catalogue. Subsequently, a little known firm called Trumpeter has taken over the historic ship modelling production, including those of the Royal Navy. Other firm such as Aoshima and Hasegewa, and, to a certain extent, Tamiya still model naval ships. The only European model ship builders are (1) Revell of Germany, but their production range is limited in scope and numbers and (2) Heller of France, which has been restarting production.

 

A bit puzzling. They can step on a Type 23, P&O Liner , Royal Caribbean Liner etc  but I don't see any models ?

[Francis deWeck]

A bit puzzling. They can step on a Type 23, P&O Liner , Royal Caribbean Liner etc  but I don't see any models ?

I think the subject of this discussion was 'historic' ship models, and there is something of a clue in that Trumpeter have stepped in and are covering a wide range of ship types, some 'modern', many historic, so this has caused Airfix to lose interest. Not to mention the fact that their recent models didn't get high approval ratings, although I have no idea as to the sales success. Commenting further, it would appear that ship modelling is less popular than other fields in the UK, in particular aircraft and armour, the former is of course Airfix's principal (I nearly said Main Line!) line.

[Mike Storey]

Just like those 70s and 80s models have moved on to todays super detailed models the kids of today have also moved on from "the train set" never to return.....smartphones, I-pads, e-books, I-phones, shoot em up games consoles that's where kids want to be now.    They probably get cyber-bullied if word got out they had a train set ! i dont think talk of encouraging youngsters into the hobby is the force that will (help) save any model railway manufacturer or come to its aid.  Times have changed so much, granted you might grab a few lads when they are young but I predict those numbers to be miniscule so cheaper versions aimed at this virtually non-existent market with little booklets inside train set boxes telling you how could set up a layout in the loft the garage of fold up board in the bedroom aint gonna cut it. 

 

I suggest that some people appear to still think the old Yellow Pages TV advert with the little lad trying to find a Hornby RXXXX signal box by ringing around all the towns numerous Hornby stockist model shops is still relevant.  This is 2017 not 1987.  Lovely times they might have been but we're in a different world completely now.

 

There has been recent evidence that the sales of gaming consoles has significantly slowed down, across all brands, and that many parents are reporting that their children have tired of them, preferring to do something "real" in the house, garden or park. Sales were driven by children to mid teens, but now seem to be mainly in the mid teens to late twenties group, having become much more sophisticated and thus expensive. Ring any bells?

 

Sales of e-book tablets and downloading of e-books have actually gone down over the past year, whereas purchase of real books has suddenly gone up, after years of decline.

 

Both of these phenomena might not indicate a new interest in physical hobbies, such as ours, just yet (although there is some suggestion that many more parents are trying to push this), but they do suggest that our Armageddon predictions are subject to the same twists and turns that all such predictions over human behaviour are invariably subject. Many of us predicted the doom of our hobby in the 1980's, and indeed there were many reasons to think that. Look what happened. Never give up, never surrender.......  

[Ron Ron Ron]

There has been recent evidence that the sales of gaming consoles has significantly slowed down, across all brands, and that many parents are reporting that their children have tired of them, preferring to do something "real" in the house, garden or park. .....

 

 

That slow down in sales is in large part due to more people migrating to playing games on smartphones and tablets.

The cost of the games on those (lighter) platforms is far cheaper than the exorbitant cost of games designed for use on consoles.

There's also the savings made by not needing to buy an expensive console system, costing anything from £200 to £300, as the smartphone/tablet platform is FREE (i.e. they already own it).

 

 

.

[Mike Storey]

That slow down in sales is in large part due to more people migrating to playing games on smartphones and tablets.

The cost of the games on those (lighter) platforms is far cheaper than the exorbitant cost of games designed for use on consoles.

There's also the savings made by not needing to buy an expensive console system, costing anything from £200 to £300, as the smartphone/tablet platform is FREE (i.e. they already own it).

 

 

.

 

That may well be the case, but it seems at odds with the huge and expensive improvement in games graphics which are lost on a smaller screen. It would seem that the global e-games industry are struggling as much as the model railway sector in assessing the market?

[DonnyRailMan]

Should Bachmann or Athearn be waiting in the wings for a swift purches of the Hornby name then.

[jjb1970]

I think there is a space for good but lower cost models, sitting between full fat main range models and antiquated ex-Lima or pre-China Hornby tooling. That's a space Hornby did have a go at filling with their new generation Railroad models like the Hall, P2 and Tornado and I thought they did a very good job. OK, the models are compromised and not as good as full fat models, but they're superb runners and proper scale models which are good enough for many. I'm not sure if they have any plans to continue developing the Railroad range with further new tooling but I think it'd be a shame if they abandoned it as it was a good effort to provide good models at a more affordable price point. That's a space that Piko have successfully exploited in Europe with their HO Hobbyline, while there Expert models are a successful attempt to offer models which are high end models but priced below main range alternatives.

That said, the fact that Hornby have reverted to full fat models aimed at the top end of the market has to say something about the market. Their recent models have been superb and some of them like the Peckett and air smoothed merchant navy flew off the shelves.

[The Stationmaster]

Should Bachmann or Athearn be waiting in the wings for a swift purches of the Hornby name then.

 

Have either of them got the odd 25 million quid to spare?

[Legend]

Should Bachmann or Athearn be waiting in the wings for a swift purches of the Hornby name then.

I really hope not. The consequent lack of competition would just drive prices higher. Absolutely not good for the consumer.