Hornby's financial updates to the Stock Market

[Coryton]

The good news - for small players - is that Amazon are shooting themselves in the foot with the "Prime" being pushed all over the place. There is utterly no way I am going to be engaged paying a set amount every month just to have free postage (I could not care less about online telly).

 

I once speculated that at some point in the future companies in the UK selling products and services to consumers would continue merging until there were just two left (which of course wouldn't be allowed to merge with each other). At that point they would set things up so that everyone had to commit to one of the other, because the pricing structure would be set up so that to pick and mix would be prohibitively expensive.

 

We could then have fun with couples from families that had committed to different companies etc.

 

Anyway, with Amazon being so powerful and so diverse (TV programmes and selling just about anything imaginable), and insisting on Prime membership not just for free shipping but as a condition for even being allowed to buy some things, it feels as if maybe we're starting to head in that direction.

[APOLLO]

Frightening future (for our young).

 

Brit15

[JSpencer]

On Amazon Prime, watch out if you take up the free trial for a month .  You are automatically billed to renew if you don't cancel it at the end of the month. A particularly sneeky move , I feel .

 

...and the button to cancel is well hidden too.

 

I already had cases while going through an order, whereby it asks if you want prime at every step on the way. And it gives you three choises, 1 as a button I want to try, 1 as button with a poorly phrased text which can trick people into thinking they are saying 'no'  when it means yes. And finally a small bit of text, not in a button, again poorly phrased but meaning "no I don't" option.

 

I told Amazon on Facebook that there prime pushing was making my buyer experience dreadfully awful.

[railroadbill]

I worry that Hornby may end up as one of those companies that veer between all sorts of strategies looking for a panacea/quick fix to their problems. I know there is a conflict in that although a new strategy needs time to take effect there is also no point flogging a dead horse if it is clear something has failed but I do worry a bit that Hornby have been drifting between ideas.

 

They remind me of the electricity company I worked for a few years ago, one of the big six. That company had a very top heavy structure and corporate layers that couldn't be justified in terms of any value they added to the business, the company was really struggling to adapt to changes in the market and made all sorts of shockingly bad investments. Rather than recognise that there were fundamental issues that they needed to address with their cost base, corporate structure and senior management decision making amongst many other things they just kept clutching at straws with a never ending flow of new strategies and change initiatives, none of which were given time to achieve anything. Their share price collapse was actually much worse than that of Hornby, from over 140 Euros to about 5 or 6 Euros when I left. Colleagues thought I was mad to opt out of their share purchase scheme and looked at me like I was mad for saying that their share price was a bubble ready to implode, I'd like to claim some gift of prescience or financial brilliance for that insight but it should've been blindingly obvious to anybody with eyes to see what was going on around them. Maybe I'm being unfair but I just see certain parallels with Hornby over recent years.

At the time of the dot.com bubble burst just after the millennium, the IT company I worked for had a share price of over £14. When it dropped suddenly to below 50p a share, I too was glad I had not put any money in the share purchase scheme....  they were trying to diversify a lot in terms of new systems, services, clients  etc but the writing was definitely on the wall...new ceo didn't make any difference either, a very short term job...

Edited November 23, 2017 by railroadbill

[Mike Storey]

I worry that Hornby may end up as one of those companies that veer between all sorts of strategies looking for a panacea/quick fix to their problems. I know there is a conflict in that although a new strategy needs time to take effect there is also no point flogging a dead horse if it is clear something has failed but I do worry a bit that Hornby have been drifting between ideas.

 

They remind me of the electricity company I worked for a few years ago, one of the big six. That company had a very top heavy structure and corporate layers that couldn't be justified in terms of any value they added to the business, the company was really struggling to adapt to changes in the market and made all sorts of shockingly bad investments. Rather than recognise that there were fundamental issues that they needed to address with their cost base, corporate structure and senior management decision making amongst many other things they just kept clutching at straws with a never ending flow of new strategies and change initiatives, none of which were given time to achieve anything. Their share price collapse was actually much worse than that of Hornby, from over 140 Euros to about 5 or 6 Euros when I left. Colleagues thought I was mad to opt out of their share purchase scheme and looked at me like I was mad for saying that their share price was a bubble ready to implode, I'd like to claim some gift of prescience or financial brilliance for that insight but it should've been blindingly obvious to anybody with eyes to see what was going on around them. Maybe I'm being unfair but I just see certain parallels with Hornby over recent years.

 

I think they were looking for a quick fix, but they definitely are not now. Keeping prices up, looking to invest some more in reducing overheads and improving their products, and in making a strategic investment in a company with production capability, are all long term strategies. 

 

I was worried that they had changed tack so soon after having promoted their previous strategy of retrenchment. It is not clear who realised that had no long term future - was it the Hornby board, or was it Mr Davies, who made them an offer they could not refuse? Either way, I hope they, and the shareholders, have the patience to give this strategy time to work, and not bottle it again too quickly.

[34theletterbetweenB&D]

Speak for your own region.   The Southern/Southern Region (for instance) is still short of several representative classes (although I am sure some other regions supporters seeing the spate of recent releases won't believe it, but the Southern started from a very low level of representation.  

 

I am sure some other regions might also disagree with you.

Brutally, there's a clear North-South divide, in the C20th steam period coverage. If your railway interest is South of a line drawn Manchester - York; then while there are still significant gaps, a fairly credible representation can be achieved by a careful selection from RTR, and some thought about location. North of that line though, there are vanishingly few of the items that would be required to make it clear that we are in CR, HR, LNWR, L&Y, NBR, NER territory - to name a few.

 

Is it known that these regional territories have insufficient following to make model productions commercially viable? It cannot be the prototype attractiveness, for there are many lovely items to be found there, and the scenery is grand...

[NIK]

Absolutely. Particularly the 4 SUB, but also the 2 HAP, for which the gestation time is beginning to exceed that of the average elephant, despite 90% of the tooling having already been made, as part of two other, extant models. But perhaps you were referring to boiled water varieties?

 

Hi,

 

I'm not sure 90% of the tooling has been done for the 2-HAP.

 

A BR MK1 2-HAP is based on a 2H trailer and a 2-EPB power car?.

 

If so I heard a while ago the Bachmann 2-EPB body profile (based on photo/ruler measurements of prototype) doesn't match the Bachmann 2-H body profile (laser scan of prototype).

 

I'm guessing that with laser scanning having been used a number of times Bachmann will laser scan what remains there may be of a 2-HAP before designing the body tooling (I would guess they will produce two new body tools to suit their latest requirements be it coach lighting/ ease of access/electrical connections/other lighting functions like individually controlled cab lights etc/new connectors).

 

There's a theory that the subtle dimples noticed on the cab roofs of the Dapol OO class 73 were due to the laser scanner measuring the sagging of the fibre glass domed end to the roof where it met the cab. So maybe scan data of a real loco etc could do with a railway engineers eye run over it to make sure an accurate model isn't made of a loco subtly changed over decades of ageing.

 

Regards

 

Nick

[JSpencer]

Hi,

 

I'm not sure 90% of the tooling has been done for the 2-HAP.

 

A BR MK1 2-HAP is based on a 2H trailer and a 2-EPB power car?.

 

If so I heard a while ago the Bachmann 2-EPB body profile (based on photo/ruler measurements of prototype) doesn't match the Bachmann 2-H body profile (laser scan of prototype).

 

I'm guessing that with laser scanning having been used a number of times Bachmann will laser scan what remains there may be of a 2-HAP before designing the body tooling (I would guess they will produce two new body tools to suit their latest requirements be it coach lighting/ ease of access/electrical connections/other lighting functions like individually controlled cab lights etc/new connectors).

 

There's a theory that the subtle dimples noticed on the cab roofs of the Dapol OO class 73 were due to the laser scanner measuring the sagging of the fibre glass domed end to the roof where it met the cab. So maybe scan data of a real loco etc could do with a railway engineers eye run over it to make sure an accurate model isn't made of a loco subtly changed over decades of ageing.

 

Regards

 

Nick

 

The two basic bodies match up well enough. But the electronics will need sorting (different in both models) and I'm not sure if the 2H body will fit the EPB chassis.

 

Given the 2-HAP was faster than a 2-EPB, there are doubtless some chassis differences to be tooled up.

 

However Bachmann's biggest problem will be ensuring that IF any tooling parts are used from the existing pair of models, they that get clearly marked up and put away properly. Otherwise we could up seeing future 2H, 2-EPBs and 2-HAPs being a hybrid of parts like the Hall class and modified Hall class ended up being. It might be better just to do all new tooling dedicated to the 2-HAP (though reuse some previous CAD work) and leave the other 2 classes alone.

 

Hmmm.... how did we stray onto a Bachmann EMU potential issue in a Hornby thread?

[JSpencer]

Hornby boomed when they could offer high detailed models at cheap prices in the years between 2000 and say 2010.

 

Things then got complex with their main supplier going bust and being taken over by the owner of its main competitor followed by the drastically increased prices years.

 

The market shifted to:

1/ those people wanting cheaper models and being prepared to sacrifice details (P2, DoG etc)

2/ those people prepared to pay a modest some for good model without opening vants and sprung buffers but with seperate handrails (D16 falls into this)

3/ those people wanting high end details (the new Duchess and H)

 

Hornby have tried all 3 with mixed results. I can see why they feel lost sometimes.

[GordonC]

That is one way of looking at it, but many of us will not agree, remembering how it really was in the 1970's, supposedly in some kind of paradise.

 

As for people using trains, keep up at the back. More people are using trains now since the 1920's, especially younger people. We took for granted what we travelled in, when in our yoof. And yet, many of us have chosen to model that in a later life, through a rose-tinted spectacle possibly, but many on here will consider what I am gong to model as having no interest, no variety and no place in the true modelling nirvana. But here I am, having amassed a large quantity of supposedly boring multiple units and very narrow classes of dieseasels, but I know I am far from alone.

 

Your most valid point is that of diminishing spending power. And yet... we have an explosion in new entrants and few of them, if any, are attacking the cheapo market. So perhaps there is the gap that Hornby can fill, to bring the point back to the OP's thread? Indeed, Piko are showing how that might be done, in a European market that, if we are to believe the Rees-Moggs, is a dying economy. Fake news.

 

... but with the vast majority of trains people will travel on now being multiple units ... and a fair proportion of those being EMUs ... how many of those can be purchased as models? even from any era? DMUs are a bit more available

[Mike Storey]

... but with the vast majority of trains people will travel on now being multiple units ... and a fair proportion of those being EMUs ... how many of those can be purchased as models? even from any era? DMUs are a bit more available

 

 

More and more as time moves on, and far, far more than when I started to buy any. Does that help?

Edited November 23, 2017 by Mike Storey

[DonnyRailMan]

Hornby boomed when they could offer high detailed models at cheap prices in the years between 2000 and say 2010.

 

Things then got complex with their main supplier going bust and being taken over by the owner of its main competitor followed by the drastically increased prices years.

 

The market shifted to:

1/ those people wanting cheaper models and being prepared to sacrifice details (P2, DoG etc)

2/ those people prepared to pay a modest some for good model without opening vants and sprung buffers but with seperate handrails (D16 falls into this)

3/ those people wanting high end details (the new Duchess and H)

 

Hornby have tried all 3 with mixed results. I can see why they feel lost sometimes.

..............................................................................................

The thing is they want more than a bowl of rice a day for wages now. China sucked everyone in with a low price of producing items and it will cost the likes of Hornby a small fortune to withdraw from China.

[Mike Storey]

 

Hmmm.... how did we stray onto a Bachmann EMU potential issue in a Hornby thread?

 

I have absolutely no idea, but now we are on the subject, what about xxxxxxxxxxxxxxxxxxxxxxxx and xxxxxxxxxxxxxxxxxxxxxx? [Disallowed by Moderator]

[Legend]

Hornby boomed when they could offer high detailed models at cheap prices in the years between 2000 and say 2010.

 

Things then got complex with their main supplier going bust and being taken over by the owner of its main competitor followed by the drastically increased prices years.

 

The market shifted to:

1/ those people wanting cheaper models and being prepared to sacrifice details (P2, DoG etc)

2/ those people prepared to pay a modest some for good model without opening vants and sprung buffers but with seperate handrails (D16 falls into this)

3/ those people wanting high end details (the new Duchess and H)

 

Hornby have tried all 3 with mixed results. I can see why they feel lost sometimes.

Absolutely agree . I think they can still produce all three but they need to have clearly delineated ranges with a clear idea as to who the ranges are aimed at and price points. That’s why I’m concerned at Simon Kohlers reappearance . He didn’t sort this out while he was there . In fact he presided over a big mess in marketing . The Hall that was both Railroad and Main range is a clear example of this. It is always difficult from Simons postings in MREmag and formerly in Simon says to figure out exactly what the Marketing Manager did in Hornby .

 

So they need a clever marketing plan delivering specific ranges at defined price points.

 

I’m much happier at the appointment of Lyndon Davis. If he can get their cost structure more in line with a small/medium sized company. Then that should get them out of the financial mess. He’s got the experience. He can sort this out.

 

My suspicion is that Oxford and Corgi will merge . Airfix will continue as is as it seems to be doing OK . Hornby needs that tailored marketing plan above , but can still deliver handsome profit if they get that cost base right and the marketing correct (that’s my major doubt) . Scalextric shrinks to a few sets and accessories, as it appears the bottom has dropped out its market(similar to traditional trainsets) . Oxford Rail disappears.

 

I really hope they make a success of it. While we could live without Hornby , the hobby would not attract the same new entrants.Hornby is the only one that produces a full range track accessories power etc . Without it the market will become specialist with retailers commissions and pre ordering, and the hobby will be the poorer for it

 

So I wish them well

Edited November 23, 2017 by Legend

[robmcg]

Unlike many commentators here I think Hornby's actions in the last 15 years have been good on the whole, the Olympics thing wasn't good, nor were product delivery delays around the Gathering, but I would like to defend Simon Kohler.  I think he does know his market, and was aware of the risks of a single (Sanda Kan) factory, and those issues were not his brief, marketing good products was.

 

I think we have never had it so good, and I actually think the DoG was a damn fine model too. As was/is the Star.

 

It has been a tumultuous few years with some questionable appointments, and what looks to me like successful survival and avoidance of a buyout/asset-strip, the Hornby name being still backed up by brilliant products and a hugely different retail environment around which SK has very good knowledge. SK also understands enthusiasm, and to be honest I don't know where he gets the patience!

 

There are good people in Hornby now, with a load of skills and enthusiasm. Thumbs up from me at least.

Edited November 23, 2017 by robmcg

[jjb1970]

On service/quality. However that doesn't work, in my view, for commodity like products.

I agree. Physical bricks and mortar shops (noting that some of the big web retailers do have a physical presence) need to offer something to entice customers through the door and since in many cases it is difficult for them to undercut web stores on price or product range then that leaves high quality service as the hook. The problem I find is that many physical shops that serve my interests (books, cycling, models and a little bit of hi-fi) just don't offer enough to offset the attractions of on-line shopping.

[Coryton]

I agree. Physical bricks and mortar shops (noting that some of the big web retailers do have a physical presence) need to offer something to entice customers through the door and since in many cases it is difficult for them to undercut web stores on price or product range then that leaves high quality service as the hook. The problem I find is that many physical shops that serve my interests (books, cycling, models and a little bit of hi-fi) just don't offer enough to offset the attractions of on-line shopping.

 

Web sites are good when you know what you want (or sometimes for finding a bargain) but not so good for just browsing and finding things you didn't know about. This will probably change - at some point you will probably be able to wander round a virtual shop on-line - but we're not there yet.

 

I also enjoy being able to chat to the staff in a model shop and - sometimes - other customers.

 

So for me it's worth paying a little more so that I'm doing my bit to keep the shop going.

 

For small things it's generally cheaper than getting on-line anyway as I don't have to pay postage, and also faster.

 

Of course I'm lucky to have model shops close enough to visit in my lunch break.

 

(Edited to remove duplicated text)

Edited November 24, 2017 by Coryton

[phil gollin]

Brutally, there's a clear North-South divide, in the C20th steam period coverage. If your railway interest is South of a line drawn Manchester - York; then while there are still significant gaps, a fairly credible representation can be achieved by a careful selection from RTR, and some thought about location. North of that line though, there are vanishingly few of the items that would be required to make it clear that we are in CR, HR, LNWR, L&Y, NBR, NER territory - to name a few.

 

Is it known that these regional territories have insufficient following to make model productions commercially viable? It cannot be the prototype attractiveness, for there are many lovely items to be found there, and the scenery is grand...

.

 

You are splitting things down to pre-grouping levels.  IF you do that for anywhere there are REPRESENTATIVE models missing for all parts of the country.

 

I grew up on the West Croydon to Wimbledon, via Mitcham Line  -  NO ONE has done a 2-WIM EMU, or even the Edwardian steam push-pull units !  According to you I should be horrified!

 

Actually as a lot of the track bed was originally the Surrey Iron(stone) Railway (one of the earliest "railways" - 1802 to 1848 ) I should feel particularly hard done by as there are no suitable wooden carts and horses.

 

.

Edited November 24, 2017 by phil gollin

[phil gollin]

... but with the vast majority of trains people will travel on now being multiple units ... and a fair proportion of those being EMUs ... how many of those can be purchased as models? even from any era? DMUs are a bit more available

.

 

In my long commuting life I have probably taken well over 20,000 rail journeys (from school days onwards).  The vast majority of those in 2/3 types of EMU ; 2-EPB/4-EPB and Class 455 (although I did spend 6 months commuting by HST between Reading and Paddington).  (That ignores well over 15,000 trips using London Underground tube trains.)

 

Of those, only one type of 2-EPB has been modelled.

 

The same, I am sure, can be repeated by many modellers with variations on their particular travels. 

 

.

[The Stationmaster]

I agree. Physical bricks and mortar shops (noting that some of the big web retailers do have a physical presence) need to offer something to entice customers through the door and since in many cases it is difficult for them to undercut web stores on price or product range then that leaves high quality service as the hook. The problem I find is that many physical shops that serve my interests (books, cycling, models and a little bit of hi-fi) just don't offer enough to offset the attractions of on-line shopping.

 

An answer of course is for the 'bricks & mortar shops to go into online selling and let's face it that is what many of them have done.  Some, barely a handful, have offered bargain basement prices by running large heavily staffed mail order/online selling while others have basically exploited the medium to improve their marketability and maintain and build their reputation.  And some of them at the same time also manage to be very much in the 'good old' local model/model railway shop mould wit wide ranging stocks and attractive 'High Street' window displays to draw in the casual customer.

 

My nearest, good quality, 'local' model shop is 32 miles away so I don't visit it as often as I should - but it provides excellent service and also stocks books.  My other 'local' shop is several counties away so visiting it amounts to a day out, but it's worth it, and I can also deal with them by mail order of course.  Neither shop all that I might want so my other alternative is buying at exhibitions - and there are plenty of them within reasonable reach over the course of the year and, like a shop, I can see the things I might be interested in, talk about them with the manufacturer/supplier and get good service.

[Mike Storey]

.

 

In my long commuting life I have probably taken well over 20,000 rail journeys (from school days onwards).  The vast majority of those in 2/3 types of EMU ; 2-EPB/4-EPB and Class 455 (although I did spend 6 months commuting by HST between Reading and Paddington).  (That ignores well over 15,000 trips using London Underground tube trains.)

 

Of those, only one type of 2-EPB has been modelled.

 

The same, I am sure, can be repeated by many modellers with variations on their particular travels. 

 

.

 

Sorry, but not true now. See Bratchell Models - Class 455 is now available as are Classes 318, 319, 320, 321 and 456.

 

Other variants on the CEP, EPB and so on, are available from Southern Pride (or Britannia Pacific), as kits or RTR.

 

Hornby have the VEP, the Networker, and the several rather good earlier EMU's. Bachmann have the 2 EPB, the CEP, the 4 TC and sometime soon the 2 HAP, plus others I have no doubt forgotten.

 

As I said earlier, many, many more EMU's are available, whether  as RTR or as a decent kit, even than in MTK days. 

[phil gollin]

Sorry, but not true now. See Bratchell Models - Class 455 is now available as are .... 

.

 

I'm sorry, if you think those are worth buying, please do so.

 

.

[34theletterbetweenB&D]

.You are splitting things down to pre-grouping levels.  IF you do that for anywhere there are REPRESENTATIVE models missing for all parts of the country.

 

I grew up on the West Croydon to Wimbledon, via Mitcham Line  -  NO ONE has done a 2-WIM EMU, or even the Edwardian steam push-pull units ! 

 If you had read for comprehension you would have noticed that even in the better served half of the UK I observed : while there are still significant gaps, a fairly credible representation can be achieved by a careful selection from RTR, and some thought about location.

 

Now, clearly the location you mention is one of those where there is a significant gap in RTR provision. But there's probably somewhere fairly nearby that you can model with a degree of credibility from RTR. Try that North of the Manchester-York boundary.

[Mike Storey]

.

 

I'm sorry, if you think those are worth buying, please do so.

 

.

 

Ah, that is a rather different point!

[Andy Hayter]

 

 

 

You are right Gerald but at the same time wrong.

 

Strictly and legally it is only the US and Canadian companies that are under chapter 11 protection.  However what happens is that suppliers to the group as a whole get cold feet.  If the parents do go into liquidation (which is several steps further on from Chapter 11), then the whole group can fail and so suppliers elsewhere have to take a view - risk that the Chapter 11 will work out and the companies come out of their financial difficulties, or take financial precautions which may be walk away, demand cash before delivery of goods or services, reduce payment terms (from say 90 to 30 days) etc..  All of this can put extra financial pressures on the supposedly non-affected parts of the company.  [i write this as someone who worked for a European company whose US arm filed for Chapter 11 protection.]

 

If Hasbro and Mattel need TRU as much as they need them then that really is to the good of the group as a whole.  Supplies from these companies to European TRU outfits are likely to continue unabated.  Other suppliers may however take fright - and I would not necessarily discount Hornby being one of them.    

 

Sadly it looks as if my prediction of possible outcomes is coming to pass for Toys are Us.

 

https://www.msn.com/en-gb/money/news/fears-grow-for-toys-r-us-future-over-ppf-demands/ar-BBGWLXw?li=AA54rU&ocid=spartanntp

 

The pensions arena are taking fright and the UK arm is now under threat.