More Hornby financial woe

[JSpencer]

. I cannot recall the last Hornby product that I bought either.

 

 

Me last year:

One a Golden Arrow last day of steam pack (1 loco + 3 coaches)

3 Merchant Navies

3 H class

1 Sir William Stanier

1 Q1

4 mk1s

3 TTS chips

 

Twice compared to all others combined.

[Fenman]

...

The fact remains that I have spent silly money on my layout over the last few years yet less than 5% of the rolling stock is from Hornby. I have more Dapol rolling stock than Hornby!

...

The fact remains that extrapolating an entire market from your personal experience is foolish.

 

We all know that different manufacturers have different strengths: taking the Big Four, Hornby has always been stronger than Bachmann in LNER and SR subjects, and vice versa. So, if you have a Big Four era layout, whose products you buy says more about your own interests.

 

I favour GER/M&GN lines. Hornby produces pretty much everything I’m interested in running (plus a few LMS locos that Bachmann launched a long while back - Ivatt 4MTs, 3 and 4Fs).

 

Until very recently, if you wanted *any* decent pre-Mk1 coaching stock Hornby had a near-monopoly.

 

All the companies have recently tempted me to waste my money (by which I mean buy stuff that I just like); Hornby’s Pecketts, Rapido’s APT (what am I doing with that?!); Dapol’s GWR railcar (I just like it); and I’ve had a fistful of Bachmann’s 158/159s on order for nearly a decade (it’s a crazy idea I have involving a non-electrified Fenline, plus the survival of the Norwich-Midlands bit of the M&GN as an interurban route, plus a new parkway station at South Lynn where the two meet. ... I know, I know).

 

Hornby has produced some amazing models over the last few years. Clauds, B12s, Gresley non-corridors, J15s...

 

I would be hugely sorry - for the staff, of course, but also for myself - if they can’t get out of their difficulties. And I think the hobby would be poorer for their loss.

 

Paul

[Earl of Pembroke]

Well, here is the actual RNS interim trading statement published by Hornby plc today. Hornby is not the only model railway business with a stretched balance sheet and Companies House is always worth looking at. 

 

Regards,

 

Charles

 

 

Hornby PLC

("Hornby" or the "Group")

3^rd April 2018

Trading Update

Hornby Plc, the international hobby products Group, provides an update to shareholders on the progress of the new strategy.

 

4^th Quarter Trading

 

We have continued to implement the strategy to support the long-term value of the brands rather than the use of discounting to drive short term sales.

As reported in the January update, the lack of discounting coupled with late deliveries of product has continued to affect our sales rate. There was an improvement in sales towards the end of the financial year as some of the European product started to arrive, but as expected, the Group sales and profits were lower than last year.

Lending Update

The Board has now refined its strategy to enable the business to return to profitability. The investment needed to support this strategy will require a larger facility than the one currently  available to the Group. Hornby is in the final stages of discussions regarding a new financing facility with new lenders and expects to have the facilities in place ahead of the Group's full year results, which are expected to be announced in mid-June 2018.

To support these discussions, the Board has engaged with Barclays and it has been agreed that they will support the Group with a covenant waiver in relation to the Group's EBITDA covenant in respect of the quarter to 31 March 2018, which is required due to the reduced sales volumes.

At the financial year end, the Group had a net cash position of c. £4m.

Interim Chairman and CEO, Lyndon Davies, said:

"As the dust settles on the changes to the strategy and we start to put together the line plans for 2019 and beyond, morale is starting to build in our hardworking staff and some trust is coming back with our retailers and customers; both in the UK and abroad.

Whilst we have managed to make a lot of progress in the first few months, there is still much more to do in terms of reducing costs, streamlining processes and adding routes to market."

More information on the progress of the strategy will be included in the full year results announcement in June.

[Barry O]

Sexist rubbish; I know the ladies to which you refer and they are experienced marketing professionals who have attended many shows, one of whom has done much to improve media communications.

I totally support you Andy. The ladies are very good at what they do and, since taking on their roles have been very enthusiastic to learn more about the hobby. All of my dealings with them with regards to support to the 1967 Shop at Warley NEC 2017 were very professionally conducted and far better than some other I had to talk to.

 

Baz

[tomparryharry]

I totally support you Andy. The ladies are very good at what they do and, since taking on their roles have been very enthusiastic to learn more about the hobby. All of my dealings with them with regards to support to the 1967 Shop at Warley NEC 2017 were very professionally conducted and far better than some other I had to talk to.

 

Baz

 Ah-Haaa! The truth is out! "Don't go near the Hornby stand fellows, they've got girls on there...."

 

I think every lady involved in model railways should be taught the difference between Primary & Secondary air. Also, why George Jackson Churchwards' finest  act was to hire Charles Benjamin Collett, as his limits & fits man....

 

Cheers,

 

Ian.

Edited April 3, 2018 by tomparryharry

[Downendian]

One commentator on another Finance sight suggested they should stop swelling Lima engines and bring out some new. Ones like Bachmann!

I thought the swelling was confined to mazakitus in a batch of 31s Keep selling the revamped Lima stuff, good repowering projects and good old school tooling.

Neil

[Hroth]

Me last year:

One a Golden Arrow last day of steam pack (1 loco + 3 coaches)

3 Merchant Navies

3 H class

1 Sir William Stanier

1 Q1

4 mk1s

3 TTS chips

 

Twice compared to all others combined.

Well, reviewing my capital acquisition strategy, I find that  I've bought twice as many Hornby locomotives as Bachmann, Heljan and Oxford Rail combined.  Bachmann are the largest group in the runners-up but even so, the ratio of Hornby to Bachmann is 3:1

 

Current acquisition (actual and planned combined)  for 2017 is level pegging between Bachmann and Hornby, though the Bachmann is all new/discontinued, whilst the Hornbyby is all current/due to arrive in 2018.

 

It must be noted that the ways and means committee are concerned about the rate of expenditure on capital stock....

[Mike at C&M]

As a retailer, I found dealing with Hornby up until October 2017 often very difficult.

 

Since Lyndon Davies arrived, we have seen many things change in the retailer-Hornby relationship, and they have all been positive. With Lyndon in charge, many retailers are now confident that they are dealing with an organisation that actually know the industry they are in, rather than having an outsider in charge trying to impose extremely unsuitable practises on to our business relationship.

 

Any changes take time to become completely functional and acceptable, but in my eyes Hornby are definitely getting there.

 

I have a confidence in the company and their current management, that simply wasn't there 6 months ago. Don't write them off yet.

Edited April 3, 2018 by 87029

[woodenhead]

You know what Hornby needs. a new B-Set, that'll sort the balance sheet for 2018/19.

[jjb1970]

Whatever problems Hornby have, they're delivering some superb models which are competitive with any others offered in OO (problems with the class 800 excepted....) and I don't think anybody can seriously deny that the hobby would be much poorer without Hornby. Could the hobby survive without Hornby? Of course it could but we'd lose an awful lot and it'd leave quite a hole. Despite their problems there is still a huge well of goodwill for the brand I think.

That said, their financial performance has been less than spectacular for a long time and whilst Davies may know about models I do think their communications with customers went into reverse in a big way when he took over.

[Oldddudders]

As a retailer, I found dealing with Hornby up until October 2017 often very difficult.

 

Since Lyndon Davies arrived, we have seen many things change in the retailer-Hornby relationship, and they have all been positive. With Lyndon in charge, many retailers are now confident that they are dealing with an organisation that actually know the industry they are in, rather than having an outsider in charge trying to impose extremely unsuitable practises on to our business relationship.

 

Any changes take time to become completely functional and acceptable, but in my eyes Hornby are definitely getting there.

 

I have a confidence in the company and their current management, that simply wasn't there 6 months ago. Don't write them off yet.

Very informative,thankyou. Many of us still regard what you do as a retailer as the soul of our hobby, from which layouts and modelling stem, so if Hornby is reaching out to you anew, we may all feel more confident about our hobby’s future.

[jjb1970]

On Hornby and Toys R Us, I'm only familiar with the stores they had in Milton Keynes and Northampton but neither had more than a token few train sets (usually the cheaper 0-4-0 based sets) with little to no accessories or track etc.

[jjb1970]

Perhaps more important than Toys R Us (given their sad demise) is that I've not seen even a token presence in Smythes Toys and although Hobby Craft stock a good range of Airfix kits and Humbrol paints they seemd to abandon stocking Hornby trains a few years ago except for a few token 0-4-0 based sets at Christmas (or at least the stores in Milton Keynes, Bedford and Aylesbury). And the garden centre stores seemed to die a while ago.

[Big James]

Hobbycraft Crayford’s Hornby section has shrunk significantly and tbh there’s not even the basics anymore. Although as someone else said their aircix section is impressive and must be a strong seller for them to continue with it

 

Big james

Edited April 3, 2018 by Big James

[jjb1970]

Hobbycraft Crayford’s Hornby section has shrunk significantly and tbh there’s not even the basics anymore. Although as someone else said their aircix section is impressive and must be a strong seller for them to continue with it

 

Big james

That is what has always struck me as quite telling. Hobby Craft stock all sorts of weird and wonderful arts and craft items and clearly do good business. And they stock a good range of plastic kits from Tamiya, Airfix, Revell and Italeri as well as tools, paints, adhesives and scenic materials. Yet they basically abandoned model trains a few years ago (at one time they did sell Hornby trains and they still sell Woodland Scenics).

 

That said, I tend to think the future for model trains is on-line sales, either from specialist model retailers or direct sales from manufacturers.

[locoholic]

Strategically Hornby as a business is a basket case, it is hard to identify anything they have done recently that has been strategically successful.

I would have thought that producing models like the Peckett saddle tank and the SECR H class that are so popular that they sell out rapidly was a pretty successful strategy!

[7013]

Shame to read about the problems Hornby appear to be having. The locos they are producing at present are superb. I have bought several of their locos over the last year and been completely satisfied with them, whereas Bachmann output has been much less obvious. 

All we can do is support the company as much as possible.

[adb968008]

the Hornby name will survive.

It’s long term owner remains tbd, with or without its management and staff.

 

 

So far everything is to plan, but staffing inventory and costs all need attention.

I watch Mothercare with equal interest as Hornby, as they both see, to suffer the same problems and issues.

Edited April 3, 2018 by adb968008

[sjp23480]

I would have thought that producing models like the Peckett saddle tank and the SECR H class that are so popular that they sell out rapidly was a pretty successful strategy!

The days of stacking high and selling cheap are over, our industry is not alone as many large retailers/manufacturers are struggling and Compulsory Volutary Arrangements (CVAs) are everywhere. Others are sitting on mountains of stock or seeking new owners to take on their liabilities.

 

A much more successful strategy in the competitive fashion industry has been to release short runs of desirable items that customers will purchase at a profitable RRP. These runs are not repeated and said items can be found at a premium on eBay pretty much as soon as they are released. Those values increase once the regular supply lines have run out. Check out Www.supreme.co.uk.

 

Sound familiar? Whilst it is tempting to repeat a run, as in Sir William Stanier, those that missed out on the first release will snap them up but suspect stocks will be remaindered unless it is a very limited run. Surely it is better for Hornby to under rather than over estimate demand for a product. That way, when they release a new model we will be keen to snap them up before we miss out?

 

On this basis, why not produce City of Salford or SWS in a different livery thus creating a new market for the collectors that have to have the various combinations?

 

I suspect we are heading towards the limited run approach across the hobby, it will mean more expensive models and a need to pre order to ensure you get the model you want.

 

As a strategy it means manufacturers can produce a model knowing it will sell and they can turn a profit. But, this will mean the manufacturers will have to produce accurate, high quality products with robust quality control - which does seem to be the case by and large. E.g. The Rapido APT is a good example.

 

As has been mentioned on this site previously, we have enjoyed the benefits over optimistic production runs leading to unsustainable pricing, down the years this has been the undoing of Airfix, Palitoy and Lima to name a few. So, I think we all agree that the market will be all the poorer if we lost Hornby, but are we prepared to put our money where our mouth is?

 

Steve

[roythebus]

Maybe Hornby own too many brands and diversify too much? As others have said, drop Scalextric for a while, slot car racing has always come and gone as fads. Back in the late 1960s there was a boom in slot car racing with a huge shop on King Street Hammersmith being taken over by a slot car racing circuit. It lasted about 2 years then faded away.

 

Would bringing production back to the UK be viable? With shipping rates from the far east increasing and production costs rising in china, delivery times of a few months by ship, it must surely be getting to the point where home production would be worth it? But then we've lost the skills to do such fine mass production of stuff here.

 

Discounting is always a race to the bottom too. OK if you have stock left over, but to do it all the time is pointless. I've bought a couple of Hornby locos in the lat year and some of the very nice southern coaches, but as I'm now on a pension spending is limited! Good luck to Hornby, there's a lot of good products in your catalogue.

[toboldlygo]

Me last year:

One a Golden Arrow last day of steam pack (1 loco + 3 coaches)

3 Merchant Navies

3 H class

1 Sir William Stanier

1 Q1

4 mk1s

3 TTS chips

 

Twice compared to all others combined.

 

If I listed all the Hornby loco's I've brought over the last year (and that's new not second hand ones) - it would be a very long list..

 

As would the amount of 'New Tool' Airfix kits..

[Ozexpatriate]

I'm a bit disappointed to see people getting negative about Hornby. The stuff I've bought in the last 3 years has been pretty good models.

It's not about their ability to produce excellent model railway products. Very recently they have indeed returned to form (despite one ongoing questionable colour choice).

 

A couple of years ago execution and quality control was very spotty.

 

The real topic of this thread is their ability to operate as a profitable company. This is something that they have not managed for several years now, which we have discussed here to some length.

[Ozexpatriate]

This reads a bit more promising - finance agreed.

 

Troubled toy-maker Hornby has started talks with lenders on a new deal in a bid to shore itself up in the face of slow sales.

Fresh finance is expected to be in place by June and follows the company’s announcement in late 2017 that it would raise £12 million through a new equity placing.

Barclays has agreed to waive a financial covenant on Hornby's debt in the meantime, which would have been breached after its profits were hit by delivery problems and a decision to stop discounting products.

 

http://www.thisismoney.co.uk/money/markets/article-5573295/Toy-maker-Hornby-talks-lenders-12million-new-finance.html

Yet another round of equity funding.  How many is that now?  When will investors stop pouring money into the pit?  I am glad that Barclays is willing to cover them. The PLC made good on this the last time they did that.

 

Well, here is the actual RNS interim trading statement published by Hornby plc today. Hornby is not the only model railway business with a stretched balance sheet and Companies House is always worth looking at.

It always amazes me how we (collectively) get spun up about these 'newspaper' articles every time Hornby releases a trading statement in their RNS feed.

 

It is far more worthwhile to look up the actual Hornby statement directly.

[Mike Storey]

What surprises me most is the variation in share price given the majority stockholder, by far, is Phoenix.

 

If this "new lending facility" is separate from Barclays, I wonder what returns are expected, over what term, which will rather dictate how long they have to get it sorted.

 

Like all of us, I wish them well, despite the continuing trend of them not selling much at all that I want, but they would indeed be a great loss to the hobby.

[Kelly]

I don't tend to buy much RTR these days unless it is second hand. However, what I have bought the past few years has been Hornby (1 H class) and SLW (2x 24s still on payment plan).

 

I will likely buy more over the next few years, but at present funds are going elsewhere (layout stuff mainly) and on kits.