Hornby's financial updates to the Stock Market

[paftrain]

The 2HAL is good example of why?. It feels like a better produced model than the similar 2BIL, but is it a model that really needed to be produced - could resources have been spent better on an all new class 91 or 156 (sorry I keep mentioning these two, they are not models I particularly desire, but they do have great potential with regards to number of liveries carried, and in the case of the 156 huge geographical coverage)

Hornby this year have announced an A version rail blue 2HAL, but most shops are still stocking the original version which only came out last summer. To produce/ship & distribute costs Hornby money & if the first version is still sitting on the shelves then what's the point of doing a second one. It is this type of bizarre decision which is costing Hornby money, and so is the mad choice to duplicate the class 71.

Steve

I bought two 2-bils and need a 2-Hal, but Hornby brought out the version with small yellow warning panels, so it doesn't match the first 2-bil. Also a coupling problem, so I still await an all green 2-Hal without any issues. Hornby not thinking again?

[robmcg]

In all the conversation here I see little reference to the second-hand market, both shops and/or Ebay in particular.

 

Much pleasure can be gleaned from browsing the offerings, and I wonder if this has an effect on the choices Hornby, and Bachmann for that matter, have on investment in new tooling and re-releases of existing tooling?

 

Just a passing thought.  I have noted that Hornby have never done a super-detail version of the Flying Scotsman 4472 in LNER form, though they did sister engine 4475 Flying Fox, (and presumably have tooling for many versions of many popular engines 'up their sleeve').  The current R3284TTS RR Flying Scotsman with sound might be a much cheaper way to fill the perceived gap in the market, and those who wish can buy a super-detail Flying Fox and re-name and number it. Currently they sell for about UKP85..

 

Of course I might be unusual ... I buy (and sell) super-detail UK model steam engines and truly enjoy the exquisite modelling Hornby currently achieve.

[Mike Storey]

Our local primary school is a few minutes walk away from the nearest station, and they often take groups into town by train. I wouldn't be surprised if for quite a few of the children it was their first time on a train.

 

It did go wrong once when the train they were aiming at was cancelled, and it turned out that trying to take 60 children on a service bus instead wasn't going to work.

 

Agree. In my time as a passenger manager on the East Coast (in BR sector days), we frequently had school and youth groups travelling, in part due to better marketing/pricing and in part due to increased frequencies. Whilst a lot were long distance, many were outer suburban, especially from Huntingdon, St Neots and Sandy to London. When I was a kid and young teenager, living in North London, we went everywhere by train and tube, as did many of my friends, and I think that is even truer in and around London these days. My daughter lived in Leeds and now in the Calder Valley, and the local trains are packed with children in groups or with their parents, and lots of teens/twenty-somethings. Not in the peaks on weekdays for sure, but at all other times. I am not sure where this feeling that children no longer use trains comes from?

[Kelly]

When helping out on the DEMU stand at the recent Diesel and Electric Show in Telford the other weekend there was a number of children interested in the models on display (both boys and girls). They seemed more interested in the Hornby APT and Networker than anything else on display as they probably looked closer to anything they've seen. What was nice was that the kids were interested and the parents were asking about how to develop that interest and costs, so the costs of second hand/railroad and newer stuff got explained as well as the Dapol kits as a cheap way to get them interested in that side (in the same way Airfix airplane kits could to some extent (some of the Airfix vehicle kits are usable too for model railways after all)).

[Coryton]

I am not sure where this feeling that children no longer use trains comes from?

 

Of course many children use trains. But even in parts of the country with decent public transport, there are certainly plenty of families with a car per adult where none of them would contemplate travelling in any other way - and their children are the ones who never travel on a train.

 

I also know quite a few adults who will happily travel by train on their own, but think that taking children on a bus or train is too hideous an idea to contemplate. Never quite understood it myself, although there do seem to be people who think that under 16 year olds should be banned from trains.

[Classsix T]

Touching on the regional aspect of (steam) prototype selections Hornby has manufactured made above.

Firstly, I can remember, I think when the first super detail jobs came out and a number of years consecutively, being given the impression (possibly influenced by a regionist journo' of the time) that "Margate" was only interested in new tool traction and stock from South of the Thames.

Cobblers probably but that was then and as I was purely Diesel modelling at the time it meant little to me as Lima(!) and Bachmann catered for my needs.

 

Moving on a decade (having added 1959 GE section Eastern region to my portfolio-whoops!) well, I'm sure I'm not alone amongst the Eastern contingent in feeling either:

1) It's about bleeding time.

2) Monsieur 'Ornby, you are spoiling us.

 

I'm firmly in the latter camp, hands in pocket, looking at my feet kicking dust whilst the wishlists bemoan the lack of their own must haves.

 

Personally, they've done me right, and then some, in terms of catering to my desires (didn't necessarily need or desire a K1, bought one anyway). The vast majority of it bought incidentally from my local model shop.

Having supported Hornby enough through Cl60, Cl56, 08 & 09 and a yard of wagons, THEN a renewed vigour on steam era, from my point of view, folks, they've made plenty off me. What they then do with my money, we'll that's their look out.

 

C6T.

[RJS1977]

In all the conversation here I see little reference to the second-hand market, both shops and/or Ebay in particular.

 

Much pleasure can be gleaned from browsing the offerings, and I wonder if this has an effect on the choices Hornby, and Bachmann for that matter, have on investment in new tooling and re-releases of existing tooling?

 

Just a passing thought.  I have noted that Hornby have never done a super-detail version of the Flying Scotsman 4472 in LNER form, though they did sister engine 4475 Flying Fox, (and presumably have tooling for many versions of many popular engines 'up their sleeve').  The current R3284TTS RR Flying Scotsman with sound might be a much cheaper way to fill the perceived gap in the market, and those who wish can buy a super-detail Flying Fox and re-name and number it. Currently they sell for about UKP85..

 

Of course I might be unusual ... I buy (and sell) super-detail UK model steam engines and truly enjoy the exquisite modelling Hornby currently achieve.

 

Of course there's a place for secondhand (I've built up quite a fleet that way) - but that doesn't mean there isn't also a place for more budget-priced locos and rolling stock as well. There are however a number of downsides:

 

1) Depending on the source, it's not always guaranteed that the model works well/is complete. Particularly on e-bay it isn't always easy to tell if a loco works, or if the other side of it is damaged. Most non-runners can probably be repaired but it's not necessarily a job for the novice,particularly if spares have to be sought out. Not really the sort of thing to put under the tree for little Johnny on Christmas morning.

 

2) Second-hand models by nature are usually at least a few years old, often 20, 30 or even more. This obviously limits the range that can be obtained, making it harder for Johnny to obtain a model of the train that goes past his school every day.

 

3) Prices of new models generally acts as a lid on the second hand prices. As new prices have risen, secondhand prices have gone up too.

 

I certainly don't believe we shouldn't have any super-detailed models, but I can't help thinking the pendulum has swung a little too far in that direction.

[antrobuscp]

On the mixed subjects of Hornby, the retail trade, children coming into the hobby - I went to Hattons place at Widnes for the first time on Saturday - much easier and quicker for me than Smithdown Road. Very small temporary sales area which was filled when I arrived with 3 staff and a family with a youngster looking to his first model layout. One of the staff in particular was dealing with them, advising on the wiring, the precise track pieces required(they were setting up on a track mat), and making sure it all came together. Advice was offered and taken, and the goods were produced and tried in place. All as it should be, from a so called "box shifter", and Hornby should know better than to seem to be trying to sabotage their retailers. This is not the only way into the hobby, but it sure is one of them.

 

Colin

[Legend]

Hornby's financial troubles aren't related to not doing enough of the 'right' D&E models, or doing too many niche steam locomotives, or confusing the positioning of their branding alternatives.

 

In my opinion they are much more related to fundamental business management decisions about how the company is run, in terms of banking, manufacturing operations, sales and investments in 'special projects'.

Absolutely agree. Clearly they have to negotiate their banking position as top priority, but maximising revenue in the short term would also be helpful

[Legend]

You think the brand-new, super-detailed HST should be in the Railroad range? One of the best D&E models they have...?

I can actually see quite a lot of joined-up thinking in much of their range - or, at least, the ex-GER bits I'm mainly interested in. Each new product year brings models that fit with what has gone before.

I can see how that may not work for people with other interests. Though I think it's a bit odd that we expect Hornby to provide every single model that should work together, while not holding any other manufacturer to the same standards. Even the mighty Hornby is a relative minnow. And I'm happy to mix their product with Bachmann and Heljan locos to achieve the effect I want.

Paul

Err no. They have a Limby HST which could be used in Railroad, leaving the main range one for those that have £200 + to spend

[Coryton]

Err no. They have a Limby HST which could be used in Railroad, leaving the main range one for those that have £200 + to spend

 

And, if they still have the tooling in decent condition, the old Hornby HST...

[andyram]

I've just seen that the Hornby web site has last year's Christmas set in stock for £70, while you can pre-order the new version (circular not oval loop) for £50.

 

I thought they were sold out. Maybe they found some more in their stocktake...but I find it very odd that they were selling off Mk 1 coaches cheaply in their "last chance to buy" section, but don't see the need to discount last year's Christmas set...

The Hornby Christmas set has been available at several concessions for the last 14 months. Since January 2015 it has been discounted to £50 from the RRP of £70. They have never truly sold out.

[Fenman]

Err no. They have a Limby HST which could be used in Railroad, leaving the main range one for those that have £200 + to spend

Isn't it already?

 

I hadn't understood the OP to mean that since he only referred to "the HST", but your interpretation makes much more sense.

 

Paul

[Kelly]

Models that we today would think of as horrible have their place in the marketplace perhaps. Simple 'toy' models in  the Railroad (or maybe Railroad Jnr?) range taken from the older airfix/Dapol/tri-ang moulds might be a good budget entry, perhaps? even some of the Railroad range can be a bit towards the expensive or fragile side of things for a kid to play with perhaps. Parents these days will worry about small parts breaking off of toys etc, so models without such parts would be good in that regard. It is certainly an option Hornby could exploit with their vast back catalogue. Of course that assumes the moulds are a) intact/usable b) able to be sent to China to be produced (some aren't as has been stated by Simon Kohler in relation to the APT model) c) economical to get them set up for production again.

[Wheatley]

ed 66 plant, on 28 Feb 2016 - 13:53, said:

Please tell me how your picture of TWATT is at all relevent to this topic--it isn,t funny,smart and seems entirely  innapropriate and extremely rude.I would hold this view irrespective of who might be your target.

Ed

Have you got something against place names ? It's a perfectly harmless Norse word, no more offensive than York or Scunthorpe.

[cheesysmith]

Can I just say about the comment passed about my avatar LOL. Ps- is there something wrong with a pregnant goldfish?

 

On a serious note, we don't know where the failings of Hornby have been. Which section of the market, be it trains/air fix/ others.

 

A break down in communication from the reps feeling the pulse of the trade and the office people ordering from china.

 

Financial mismanagement behind the scenes not realising the savings anticipated or lack of Capitol from their real estate with the move to a new site.

 

We don't have the full information to come to a full and frank reason as to what is. What does matter to us is where they go from here, how they correct the mistakes made, and what effect such a strategy they end up usng effects us, their consumers.

Edited March 1, 2016 by cheesysmith

[Hroth]

According to BBC News this morning, Barclays shares have tumbled 11% after reporting "a drop in full-year profits, a dividend cut and a restructuring..."

 

They'll probably recover after the Frightened Faries have taken their profit, but if this means they'll take a more jaundiced view of companies that have stretched the limits of their borrowing requirements then it doesn't look rosey for Hornby.

[Coryton]

The Hornby Christmas set has been available at several concessions for the last 14 months. Since January 2015 it has been discounted to £50 from the RRP of £70. They have never truly sold out.

 

Hmm. Not discounted on the web site when I looked.

 

It seems very odd to me that they would be happy to hang onto Christmas sets for a whole year but want to get rid of things like Mk 1 coaches that I would imagine would be a steady seller.

[Richard E]

Barclays own performance will not influence decisions on the banking covenants of their customers.

[DonnyRailMan]

ok then will Hornby still be in business come the end of 2016 either with buy-out or not ?.

I  would like to see it still in business  so  will not sit on the fence and say ,,,,,,,,,YES.

[Poggy1165]

I saw a statistic the other day that 47% of children have never been on any form of public transport. I imagine of those that have, the majority will have been on a bus. Of those that haven't, they probably come from families with spare cash that could theoretically buy model railways if they wished. Or perhaps some come from areas where public transport simply doesn't exist any more.

 

As a child, I certainly couldn't model what I saw every day. You couldn't get a Black 5 for love or money, or a Jubilee, let alone a Robinson 2-8-0 or a 4F. What the trade provides overall - not just Hornby - is staggering. The only snag is if you don't (or can't) buy it when it appears, you probably won't be able to in three or four years. Maybe it's producing a huge variety of models in short runs that's part of the problem.

[The Stationmaster]

Absolutely agree. Clearly they have to negotiate their banking position as top priority, but maximising revenue in the short term would also be helpful

 

The behaviour of the company over the past 18 months or so would seem to indicate that the latter is exactly what they have been trying to do.  One of the main reasons for underselling is to get money in, whatever it costs to do it; a big reason for reducing trade discounts is to get money in - again whatever it costs in the end to have done it; going for online direct selling is another way of getting money in - at the retail price (except when underselling of course) so it's been seen as another way of getting money in, and offering massive discounting to key account customers is yet another way of getting money in but in some respects comes with the same impact as underselling.

 

The 'dash for cash' over the past 18 months or so might well look good in sales figures, might well help attract bonuses for managers and so but ultimately it can lead to the very situation now confronting Hornby.  Get it in quick  (? by airfreight??) would undoubtedly help to boost pre-Christmas sales, as would knocking out surplus stock in massive underselling, but it doesn't leave much to sell in January.

 

We don't know the breakdown of sales etc over the November - end January period but things can very easily be discerned from what was hitting the shelves when and there was little new 'big money' product coming forward on the model railway side in January this year.    All down I suspect to managing the wrong emphasis together with other managerial problems and still at the mercy of a  far from 'smoothed' supply chain which distorts sales figures due to the patchy arrival of brand new quick-turnover items.  Sometimes the way to get conssitent figures is not to dash for cash but to spread the sales instead.

[Ozexpatriate]

Maybe it's producing a huge variety of models in short runs that's part of the problem.

I think that it is very challenging to be a model railway manufacturer.

 

Once upon a time there were two purchasing behaviors:

• Stock sat on shelves until people saved up their money and went to the shops, or grandad/uncle/etc purchased a gift for little Johnny's birthday/Christmas etc. 
• Keen enthusiasts eagerly awaited a new release and purchased it when it became available.

Once upon a time new releases were infrequent and there were relatively few 'new' items in a catalogue each year.   It seems to me that a huge part of the business has migrated to the latter of the two behaviours above.  This has a huge impact. Today new items are hungrily snapped up, but second runs of those items (coaches excepted) have much less interest for today's punters.

 

This behaviour lends itself well to the commissioner who wants to produce a special one-off, but it puts a heavy burden on a mainline supplier accustomed to releasing models from one set of tooling over many years.

 

What has driven the change in purchasing behavior?

 

Certainly the widespread availability of consumer credit is a factor, as was the bubble of low-priced, highly detailed models possible with Chinese labour in the 2010s in an economic climate that was generally favorable.

 

Why did the market move to wanting one of everything new?

 

There is no way that people 'need' all these new items for our layouts. Most of us purchase items because we like them and I suspect that people who have been in the hobby for a while probably have many times over the number of locomotives that they could run on their existing layout at a time, or any layout they are likely to build.

 

I don't believe that wish lists caused this. Wish lists reflected consumer demand and helped manufacturers calibrate consumer demand.

 

Hornby has tried to react to the market by producing a stream of 'new' items. Somewhere in this process (and why exactly we don't know) they have overstretched themselves. Bachmann Branch-Line has been much more cautious (and why exactly we don't know) in feeding the stream of 'new' items, despite the demand being there.

 

I don't think I'd want to be a mainline model railway provider. Things still look pretty good for the commissioning segment - but we have so much backlog even there it will take a while for things to normalize.

Edited March 1, 2016 by Ozexpatriate

[andyram]

Hmm. Not discounted on the web site when I looked.

 

It seems very odd to me that they would be happy to hang onto Christmas sets for a whole year but want to get rid of things like Mk 1 coaches that I would imagine would be a steady seller.

No I agree that they had sold out on website. But there were piles of them at a discount price in two of the regular concessions I visit. These have been present throughout the year.

[gismorail]

On the mixed subjects of Hornby, the retail trade, children coming into the hobby - I went to Hattons place at Widnes for the first time on Saturday - much easier and quicker for me than Smithdown Road. Very small temporary sales area which was filled when I arrived with 3 staff and a family with a youngster looking to his first model layout. One of the staff in particular was dealing with them, advising on the wiring, the precise track pieces required(they were setting up on a track mat), and making sure it all came together. Advice was offered and taken, and the goods were produced and tried in place. All as it should be, from a so called "box shifter", and Hornby should know better than to seem to be trying to sabotage their retailers. This is not the only way into the hobby, but it sure is one of them.

 

Colin

I think that you have highlighted a very valid point here and goes to show how Hornby have lost it's core value towards a specialist market place.