Hornby's financial updates to the Stock Market

[Clearwater]

Just an aside on web marketing. I was prompted by the blue pullman thread to think about how models are priced and distributed overseas. Interestingly, Bachmann USA have a web sales point. I know they're a different company but nonetheless would be interesting to understand if their trade relationship is better than Hornby's here appears to be

 

David

[Mike at C&M]

Hornby website this morning:

"Visit you local model shop. Find yours today"

 

"As an ongoing continued effort to support the independent trade, the [above] will be displayed on the website for the next 48 hours." [Hornby e-mail received this morning].

 

Yes, we had a busy day today. A couple of Heljan 'O' gauge locos can have a major effect on our daily takings!

[Legend]

Does anyone know when in March, Hornby is going to breach its banking covenants? 

 

That is when is D Day?

 

Dean

I would have thought responsible management will be negotiating with banks and producing business plans to ensure this day does not arrive. The departure of Richard Ames will have been part of this, after all a business plan put together by someone who managed them into this position is not really credible. I think Roger Canham is a completely different proposition. So I really believe that they will avoid this doomsday scenario. I hope so for the employees, but also for us enthusiasts. Anyone in any doubt that we need Hornby should have a look at the Bachmann new announcements thread.

[robmcg]

I would have thought responsible management will be negotiating with banks and producing business plans to ensure this day does not arrive. The departure of Richard Ames will have been part of this, after all a business plan put together by someone who managed them into this position is not really credible. I think Roger Canham is a completely different proposition. So I really believe that they will avoid this doomsday scenario. I hope so for the employees, but also for us enthusiasts. Anyone in any doubt that we need Hornby should have a look at the Bachmann new announcements thread.

 

While I agree with the above, Bachmann's new prices throw even more light on some of the excellent value Hornby has offered in the last 6 months either by bargain bin tactics or ordinary pricing...  Hornby D16s for instance at under UKP100 where a Bachmann D11 in GCR colours will be north of UKP150 (and they haven't even photopraphed it well, but perhaps they will be discounted)..

 

While I feel for Hornby employees, I think that we enthusiasts have a lot less to lose if Hornby production slows or falters, there are so many good models available 'as new' but second hand.  In that light I wouldn't want to be in Roger Canham's shoes, devising production schedules and sales expectations for a good business plan.

[jjb1970]

Looking at the Bachmann price rises and the arguments supporting them it certainly does seem to me that Hornby probably dropped a klanger selling their lovely little J50 at an SRP of £80.

[Coryton]

 Ah well, its a while since I bought them, but the point remains that [the odd duff one aside] its a good robust mechanism, looks the part and above all is affordable. Even at £40 its not very much more expensive than a newly released game for say the WII or X-Box, which is where the competition lies if you're trying to attract the younger generations.

 

Yes absolutely, though from what I've read for some reason the 0-6-0 chassis seems more problematic than the (cheaper) 0-4-0, and the 0-4-0s are somewhat more attractive now their top scale speed is below mach 1.

 

Actually the 0-6-0 I can find on the Hornby web site is £32.50, though I'm sure I've seen them in shops at £40.

 

Hornby website this morning:

"Visit you local model shop. Find yours today"

 

"As an ongoing continued effort to support the independent trade, the [above] will be displayed on the website for the next 48 hours." [Hornby e-mail received this morning].

 

 

Why do I have an image of them saying that with one hand behind their back holding a knife?

 

Recently their "ongoing continued effort" to support trade has perhaps been a little lacking.

[antrobuscp]

Hornby website this morning:

"Visit you local model shop. Find yours today"

 

"As an ongoing continued effort to support the independent trade, the [above] will be displayed on the website for the next 48 hours." [Hornby e-mail received this morning].

 

Yes, we had a busy day today. A couple of Heljan 'O' gauge locos can have a major effect on our daily takings!

 

Why only the next 48 hours?

[andyram]

I agree Mike - it's why like it or not Thomas is so important. Equally, the Harry Potter Hogearts express touches public consciousness in a way a debate about the CRE or ACE doesn't. The trick for the manufacturers is to defray cost for the enthusiast market into these products without making them too expensive

I commented elsewhere that when a steam charter came through one of our local stations; someone had put the information onto the local mother and child Facebook group, the time the train was due. At c10am on a December morning, there must have been 20+ parents and children to see the black 5 pass through. The comment from one of the father's to me was how impressed he was with the engine - bigger and more powerful than he expected. Shows the importance of getting the WCRC situation resolved as well

David

A few years ago I found out, via UKSteam.info, that "Olton Hall" was due past our school on a positioning run one lunch time close to the summer holidays. I happened to mention this to the headteacher who mentioned it in an assembly. I subsequently ended taking a significant group of the older primary children to the watch it go past from the nearby railway bridge. Proof how important Hogwarts is to developing the public's interest.

Our school also runs a model railway show as part of our yearly fundraising events. You would be surprised how many dads are actually closet modellers!

[Ozexpatriate]

Just an aside on web marketing. I was prompted by the blue pullman thread to think about how models are priced and distributed overseas. Interestingly, Bachmann USA have a web sales point. I know they're a different company but nonetheless would be interesting to understand if their trade relationship is better than Hornby's here appears to be

David, it's hard to compare since I don't live in the UK.

 

My opinion is that the hobby shop is in a stronger position here than the UK and there is much less reliance on manufacturer direct online selling, though doubtless this is increasing. I doubt that much of Bachmann USA's business is through their proprietary website. A big difference is the presence of Walthers - a very big Milwaukee based distributor and reseller, who are now also a model railroad manufacturer in their own right.  Walthers have a huge mailing list and send out a monthly catalogue.

 

Besides the Walthers' catalogue there are other companies who also 'curate' a selection of items and offer these through a catalogue as well.

 

Another difference is that pre-ordering is a big thing in the US market. This of course can be done with local retailers.

 

Hornby have a US version of their website. (it's the same infrastructure as the UK site.)  I suspect it has very little real presence. They don't sell the full range of Hornby Railway items, but they do sell Hornby International brands (like Rivarossi*) and brands like Scalextrix and Airfix. Hornby USA maintains relationships with retailers. There is a hobby and games shop very close to me that stocks Scalextric and Airfix.

 

* Rivarossi has re-released their UP Big Boy. For years the RIvarossi model was the definitive plastic RTR Big Boy model and it has been updated to provide DCC/Sound, but I believe the Athearn Genesis model is superior.

Edited March 4, 2016 by Ozexpatriate

[Ronny]

David, it's hard to compare since I don't live in the UK.

 

My opinion is that the hobby shop is in a stronger position here than the UK and there is much less reliance on manufacturer direct online selling, though doubtless this is increasing. I doubt that much of Bachmann USA's business is through their proprietary website. A big difference is the presence of Walthers - a very big Milwaukee based distributor and reseller, who are now also a model railroad manufacturer in their own right.  Walthers have a huge mailing list and send out a monthly catalogue.

 

Besides the Walthers' catalogue there are other companies who also 'curate' a selection of items and offer these through a catalogue as well.

 

Another difference is that pre-ordering is a big thing in the US market. This of course can be done with local retailers.

 

Hornby have a US version of their website. (it's the same infrastructure as the UK site.)  I suspect it has very little real presence. They don't sell the full range of Hornby Railway items, but they do sell Hornby International brands (like Rivarossi*) and brands like Scalextrix and Airfix. Hornby USA maintains relationships with retailers. There is a hobby and games shop very close to me that stocks Scalextric and Airfix.

 

* Rivarossi has re-released their UP Big Boy. For years the RIvarossi model was the definitive plastic RTR Big Boy model and it has been updated to provide DCC/Sound, but I believe the Athearn Genesis model is superior.

 

Totally different here where I live. I know a lot of modellers and to a man (& woman), they buy their kit over the internet. Why on earth wouldn't you? It's cheaper plus has zero sales tax, arrives at your door (usually free postage) in a couple of days and if anything is wrong, a simple return to get your money back.

 

Local hobby stores are used for paint & glue. I don't know of any in a couple hours drive that would past muster as a UK railway store. A couple of general hobby places where radio control is king with a section for Woodland scenics & paint.

 

Just re-reading and wondering how popular internet sales would be in the UK if no sales tax (VAT) were charged :-)

[Caledonian]

As to marketing I remain bemused by that ludicrous business of stopping sending out review samples to magazines, given that in the scheme of things the cost to Hornby is minimal in relation to the advertising value, particularly given that back in the day every effort was made to provide reviewers with samples early enough to write them up before the models hit the shops

[Revolution Ben]

As to marketing I remain bemused by that ludicrous business of stopping sending out review samples to magazines, given that in the scheme of things the cost to Hornby is minimal in relation to the advertising value, particularly given that back in the day every effort was made to provide reviewers with samples early enough to write them up before the models hit the shops

 

Hello Stuart,

 

I am not a OO modeller, but Hornby is such an iconic brand I take an interest in their activities.

 

It was when I heard about this policy that alarm bells started to ring with me in terms of the competence of their management team.  As you say, the cost to them of sending out review samples is trivial, yet the amount (effectively) free advertising such samples generate is significant.

 

It's also worth thinking about where your new customers are coming from.  I don't mean kids, but those 30-something adults considering taking up the hobby.

 

They may have had a furtive browse in their local model shop, if they have one, but the chances are their next step will be to buy a couple of magazines to start familiarising themselves with what's out there.  And if they see new Bachmann models being reviewed month on month, but not Hornby, what brand will they veer toward?

 

cheers

 

Ben A.

[RJS1977]

Until Railway Modeller announced that Hornby were no longer giving them review samples, I'd always assumed the samples were loaned to the magazine. When Mike Martin was helping me order the HW Snow wagons from Dapol, he told me that RM returned his wagons to him after they'd reviewed them.

 

Though with the increase in pre-ordering and limited runs, I should think that in many cases the models would be almost sold out by the time the review hits the shelves anyway. We never did send a Snow wagon to RM for review - we sold the first 20 so quickly we realised they'd be pretty much all gone by the time the magazine came out.

[Ian Hargrave]

Hello Stuart,

 

I am not a OO modeller, but Hornby is such an iconic brand I take an interest in their activities.

 

It was when I heard about this policy that alarm bells started to ring with me in terms of the competence of their management team.  As you say, the cost to them of sending out review samples is trivial, yet the amount (effectively) free advertising such samples generate is significant.

 

It's also worth thinking about where your new customers are coming from.  I don't mean kids, but those 30-something adults considering taking up the hobby.

 

They may have had a furtive browse in their local model shop, if they have one, but the chances are their next step will be to buy a couple of magazines to start familiarising themselves with what's out there.  And if they see new Bachmann models being reviewed month on month, but not Hornby, what brand will they veer toward?

 

 

cheers

 

Ben A.

I fear that 's a two-edged sword at the moment,Ben,given the current Bachmann pricing range.It could equally be a deterrent.Given Hornby's recent wooing of the retail sector,you may shortly see review samples arriving on magazine editors' desks again. Winds of change?

[Phil Parker]

Until Railway Modeller announced that Hornby were no longer giving them review samples, I'd always assumed the samples were loaned to the magazine. When Mike Martin was helping me order the HW Snow wagons from Dapol, he told me that RM returned his wagons to him after they'd reviewed them.

The big firms don't usually want standard items back, after all, they have been poked, prodded and taken to bits so what would they do with them? Limited editions tend to be different and do get returned.

 

Review models tend to become material for future projects so the supplier gets a second appearance for the sample. When I built a Class 13 for HM years ago, I used a pair of Hornby 08s from the review pile and people assumed that's what you'd use. If I did it again, the base models would be Bachmann.

[Oldddudders]

I did wonder whether the withdrawal of trade samples was because some models are sold out before the mags reach the newsagents' shelves, thus creating demand which cannot be met. I certainly agree the tiny saving on the marketing budget is as nothing to getting a published thumbs-up.

 

The comments about the performance of cheap 4- and 6-wheel chassis takes me back to some reasoning by Coachmann a couple of years back. He pointed out that an unsprung 6-wheel chassis can 'rock' about the centre axle, making dead-frog points a pain at low speed. Obviously 4-wheelers don't suffer from this. I certainly find my Kernow O2s and 0298s perform better than Bachmann's E4 in this respect.

[Fenman]

... those 30-something adults considering taking up the hobby.

 

They may have had a furtive browse in their local model shop, if they have one, but the chances are their next step will be to buy a couple of magazines to start familiarising themselves with what's out there. ...

Maybe in the 1970s. My guess is that the next step for the vast, overwhelming majority of 30-ish people would be to hit Google.

 

Paul

[railsquid]

Just re-reading and wondering how popular internet sales would be in the UK if no sales tax (VAT) were charged :-)

 

It's popular with me, but then I live outside the EU, so even with overseas shipping costs I can shop cheaper

 

Maybe in the 1970s. My guess is that the next step for the vast, overwhelming majority of 30-ish people would be to hit Google.

 

 

I can't speak for the 30-ish people any more alas, but coming back in to the hobby (while being an intensive internet user for years before Google) I go for both. Magazines having the advantage that you can quickly get a feel for what's going on (and how things have changed since the days of "For the Average Enthusiast"), as the interwebz has too much information.

 

Anyway, talking of childhood - somewhere I have a photo of me aged about 3 grinning like mad in front of my first "trainset", a clockwork affair from either Hornby or Lima. It lasted about a year, then I got a proper trainset (from Lima, we were poor) and being absolutely entranced, particularly by the "real" track. Admittedly I didn't know much about trains, we were living in a small trainless village at the time and public transport was never used - I was very good at identifying cars, apparently - but it was the trains which held the lasting fascination.

[Clearwater]

Being just over 40, I use both magazines and Google. The problem with Google is you need to know what to search for and it doesn't always pull up small suppliers. Plus magazines give you a sense of who's actually trading whereas websites can be a couple of years out of date

 

Agree that magazines allow you to see what has changed since an absence from the hobby!

 

David

[The Stationmaster]

Looking at the Bachmann price rises and the arguments supporting them it certainly does seem to me that Hornby probably dropped a klanger selling their lovely little J50 at an SRP of £80.

 

Very definitely so - I'm afraid their whole 'bargain basement, get the cash in at any price' strategy has blown a huge hole in their business entirely by their own hands.  Retailers put off buying not only by lousy returns but the worry - often turning into fact - that Hornby will sell off at  giveaway prices models they have invested in for stock/their own customers. And end customers put off because they know they might well get what they want cheaper in some sort of bargain deal a few months later.

 

That sort of pricing strategy is the road to nowhere and certainly something which cannot be sustained long term by any sort of seriously managed business - and in some respects it looks like that is part of what has turned round and bitten them on their back end.

[Legend]

Hello Stuart,

 

I am not a OO modeller, but Hornby is such an iconic brand I take an interest in their activities.

 

It was when I heard about this policy that alarm bells started to ring with me in terms of the competence of their management team. As you say, the cost to them of sending out review samples is trivial, yet the amount (effectively) free advertising such samples generate is significant.

 

It's also worth thinking about where your new customers are coming from. I don't mean kids, but those 30-something adults considering taking up the hobby.

 

They may have had a furtive browse in their local model shop, if they have one, but the chances are their next step will be to buy a couple of magazines to start familiarising themselves with what's out there. And if they see new Bachmann models being reviewed month on month, but not Hornby, what brand will they veer toward?

 

cheers

 

Ben A.

But I hasn't stopped items being reviewed in the mags. I've seen King reviews and J50s recently. The only difference is the mags buy them and maybe they appear a month or so later. I think reviews are more important to the mags sales and circulation rather than they are to model sales.

 

Not issuing a proper catalogue is more of a blunder.

[Ozexpatriate]

Local hobby stores are used for paint & glue. I don't know of any in a couple hours drive that would past muster as a UK railway store. A couple of general hobby places where radio control is king with a section for Woodland scenics & paint.

There are a couple of good model railroad shops in the Portland area - The one I prefer is about a 30 minute drive for me. So with a chat in the shop it's a big chunk of a Saturday afternoon to go pick up anything I have ordered.

 

On the plus side items get examined and test-run before purchase. I did have an item with unglued tender wheel assemblies. Together we figured out how they went back on and the shop owner glued them on while I watched. I was satisfied and he didn't have to make a return. It works for me.

 

The shop that is five minutes away is a general games and hobbies shop - everything from RC cars/boats/planes/quadcopters to board games. Their railroad selection is little more than a handful of trainsets and some Bachmann EZ-track, though they do have some scenery items. They also carry Airfix and Scalextric. I bought a couple of Airfix Quickbuild items from them essentially for fun. It would have been far easier to order them from the Hornby US website, but I wanted to support the local shop because it is nice having it around.

 

All my UK stuff of course is mail-ordered.

Edited March 4, 2016 by Ozexpatriate

[Caledonian]

Perhaps the retailers amongst us will correct me, but I did mention earlier this business of Hornby concessions effectively writing off unsold stock each year and grumbled in passing that most of the stuff currently being discounted locally was Great Western in origin and therefore of no interest.

 

This is probably inevitable given that we're talking about a concession based in a big department store in Newcastle upon Tyne. In marked contrast the J50s have done a fair impression of bathwater gurgling down a drain. While there's no accounting for taste and I'm sure there are some modellers locally who are interested in the Great Western its hardly a core group and the J50s and before them all the other Eastern region stuff have sold much more readily.

 

Surely by working through local retailers Hornby ought to be able to channel stuff to where people will buy it rather than sending out a one size fits all assortment? 

[Richard E]

@ Caledonian, isn't that a heck of an assumption that sales are going to be geographical by nature.

 

I live in Peterborough and work in York but my 'affliction' is all things GWR, There is a Southern enthusiast in Retford (where my train has come to a halt as I write) and there are no doubt modellers of Scottish region areas on the South coast. How can you identify that? Sales will, by the nature of our world, be spread to all four points of the compass.

Edited March 4, 2016 by Richard E

[PCW]

'Find' as in scroll through 21 pages of an alphabetical list. About as user friendly as picking up a Yellow Pages to find an R186.

Yes, I note they also won't publish links to the independent model shop websites.

Edited March 4, 2016 by PCW