Hornby, A Model World. Series 2.

[melmerby]

8 hours ago, Fat Controller said:

The factory was in the ZI Marcel Doret, Calais, between Central Calais and Marck; I don't know if there's a factory shop. However, it won't be there much longer:- https://www.theguardian.com/world/2023/feb/23/last-dedicated-meccano-factory-to-close-in-france

It's currently here:

https://goo.gl/maps/PgLGma1PGFyMxWne6

Edited April 2, 2023 by melmerby

[MatP]

Hello!

 

The model of Port Dinorwic by Kathy Millatt, one of the features in this series, will be exhibited for the first time at the Bala Model Show in September. For more information, please see the most recent post on our exhibition 'thread':

 

https://www.rmweb.co.uk/topic/176115-bala-model-show-september-16th-17th-2023/

 

Best Wishes,

Mat P.

[ess1uk]

So Simon K retiring and Montana H leaving, will there be another series?

[The Stationmaster]

11 minutes ago, ess1uk said:

So Simon K retiring and Montana H leaving, will there be another series?

That decision will rest with whoever it happens to rest with,  If the new CEO thinks that it's useful to teh company's business and the tv production suggest doing it there may well be another series.  If neither or both of them see no value in doing a new series there's unlikely to be one unless another produvction company steps in and their proposal is accepted by Hornby.

 

Don''t forget that SK was basically a public face of Hornby while Montana wasn't the only brand manager who appeared in the most recent series.   The company is still there but things are changing hence a tv series might not be seen in the same light by the new CEO.

[SteveM666]

Whilst parts of the TV series were interesting, I personally found it riddled with editing mistakes and in some respects  portrayed the company as rather amateurish. Some will find it difficult to take Hornby seriously as a result.

[JohnR]

So we've had the "TV series wont be made now Simon Kohler has retired", "Hornby will drop TT:120 now Simon Kohler has retired", "Hornby will drop HM:7000 now Simon Kohler has retired", and now the "TV series wont be made now Montana has left". 

 

Just waiting for "Hornby Playtrains will be dropped now Montana has left" for the set, I think.

[Guest]

On 12/07/2023 at 11:22, JohnR said:

So we've had the "TV series wont be made now Simon Kohler has retired", "Hornby will drop TT:120 now Simon Kohler has retired", "Hornby will drop HM:7000 now Simon Kohler has retired", and now the "TV series wont be made now Montana has left". 

 

Just waiting for "Hornby Playtrains will be dropped now Montana has left" for the set, I think.

Put it this way, if something was dropped each time because of the person initially responsible for that product was leaving, there wouldn't be much left! It would be quite a nonsenscel way to run a business!   

Edited July 15, 2023 by Guest

[SteveM666]

I’ve almost completed my Hornby ‘Bingo card of woe’. Do I get a prize?

[The Stationmaster]

3 hours ago, JohnR said:

So we've had the "TV series wont be made now Simon Kohler has retired", "Hornby will drop TT:120 now Simon Kohler has retired", "Hornby will drop HM:7000 now Simon Kohler has retired", and now the "TV series wont be made now Montana has left". 

 

Just waiting for "Hornby Playtrains will be dropped now Montana has left" for the set, I think.

Mostly (entirely?) from people who haven't bothered to read things from the company that are in the public domain (e.g various positive comments about the immediate future of TT120) or don't understand how decisions are made in a company.  

 

SK was a a non-board member director of the company.. He didn't run it and spending several million quid on developing TT120 was some way above his pay grade even if he was probably the person pushing for it (which he no doubt was).

[JohnR]

15 minutes ago, The Stationmaster said:

Mostly (entirely?) from people who haven't bothered to read things from the company that are in the public domain (e.g various positive comments about the immediate future of TT120) or don't understand how decisions are made in a company.  

 

SK was a a non-board member director of the company.. He didn't run it and spending several million quid on developing TT120 was some way above his pay grade even if he was probably the person pushing for it (which he no doubt was).

 

I quite agree Mike. Seems theres a lot of people who think the TV programme was just the "Simon and Montana show". Although I have now seen someone say theyt hope the Playtrains range will now be dumped with Montana going. So I guess I have the full house. 

[Jeff Smith]

4 hours ago, SteveM666 said:

Whilst parts of the TV series were interesting, I personally found it riddled with editing mistakes and in some respects  portrayed the company as rather amateurish. Some will find it difficult to take Hornby seriously as a result.

Yes, I think many of the ' behind the scenes' aspects of product design and development were over- 

simplified for general public consumption.  The field trips, whilst no doubt useful for the designers, were not essential and mainly for dramatic effect.  The Buccaneer model was not designed from a few photos and measurements!

 

The other part that was totally ignored was the actual production in China.  Rapido has published many production photos, a few sequences showing actual production and tooling would have added to the story.  It's as though the finished products just fall from the sky.......

[MarkSG]

The programme was primarily the "Simon and Montana show" because they both come across well on TV, and it helps viewers to have a relatively small number of core participants so that it's easier to follow. That doesn't mean that they are necessarily the only key personnel as far as the company itself is concerned. Simon in particular has had a long career as the public face of Hornby, so things are obviously going to change when he's gone. But everybody retires or leaves eventually, and if Hornby haven't been planning for his departure then I'd be very surprised. And Montana's role is a level down on the organisation chart; her replacement may not be so personable or media friendly but it's the kind of position that it's relatively easy to recruit for.

 

As far as the product ranges go, I can't see it having any immediate effect. As others have said, the decision to move into TT:120 will have been made at the absolute top of the company and that's not going to change in the immediate future. Playtrains may be more of a non-core range, but it's selling well enough if the Amazon sales rankings are any guide. So there's no reason why it shouldn't continue. And it does fit the long-term strategy. Having lost Thomas, Hornby needed an entry-level range marketed at young children. Playtrains seems to be fitting the gap reasonably well.

[The Stationmaster]

1 hour ago, MarkSG said:

. Simon in particular has had a long career as the public face of Hornby, so things are obviously going to change when he's gone. But everybody retires or leaves eventually, and if Hornby haven't been planning for his departure then I'd be very surprised.

Whatever they might have been planning is now irrelevant as the new CEO is busily shifting the emphasis to selling and creating senior posts to handle it.  

 

So he is clearly organising the company to do thinsg in what he thinks  is the nn best way.  But he faces an uphill battle with a mountain of unsold inventory - some of wg hivch is clearly being discounted heavily in order to shift it - and an expesnive debt mountain because of recent borrowings.  That means getting money in and that means getting teh selling right, which is no n bad thing for Hirnby.

 

Interestingly  the last time they reported sales by brand was 2017 and they didn't exceed that year's total re sales revenue until their FY ended 2021;  i.e.the 3 2020 situation gave them a real boost.  If we were to calculate the impact of inflation from 2017 forward t the currently reported  financial year end their sales are £8 million short of where inflation would put them.  They clearly need to sell product (as well as tackle rising costs).

[Legend]

15 hours ago, The Stationmaster said:

Whatever they might have been planning is now irrelevant as the new CEO is busily shifting the emphasis to selling and creating senior posts to handle it.  

 

So he is clearly organising the company to do thinsg in what he thinks  is the nn best way.  But he faces an uphill battle with a mountain of unsold inventory - some of wg hivch is clearly being discounted heavily in order to shift it - and an expesnive debt mountain because of recent borrowings.  That means getting money in and that means getting teh selling right, which is no n bad thing for Hirnby.

 

Interestingly  the last time they reported sales by brand was 2017 and they didn't exceed that year's total re sales revenue until their FY ended 2021;  i.e.the 3 2020 situation gave them a real boost.  If we were to calculate the impact of inflation from 2017 forward t the currently reported  financial year end their sales are £8 million short of where inflation would put them.  They clearly need to sell product (as well as tackle rising costs).

 

Not  forgetting there were substantial price hikes in the period too , which means unit sales must be down . That’s not entirely a surprise as I remember pointing out if you added up all the new announcements on the 2023 range , limited editions etc , the volume of product actually wasn’t that great . I do think Hornby still struggle with their suppliers . On the other hand what is in the mountain of inventory? 

[HExpressD]

17 hours ago, JohnR said:

 

I quite agree Mike. Seems theres a lot of people who think the TV programme was just the "Simon and Montana show". Although I have now seen someone say theyt hope the Playtrains range will now be dumped with Montana going. So I guess I have the full house. 

I don't get the hate towards Playtrains if I'm honest. Okay, it's not high fidelity modelling but it's a bit of fun, the models are actually pretty good but most importantly it is the only range to my knowledge actively trying to encourage new blood into the Hobby which Hornby should be entirely applauded for. 

[spamcan61]

15 minutes ago, Legend said:

 

On the other hand what is in the mountain of inventory? 

A good question, I'd say quite a few Bulleid Brakes and various MK3 coaches that have been at near fire sale pricing for a year plus, but there must be more than that.

 

Maybe there's a big pile of non railway stuff, Corgi perhaps.

Edited July 13, 2023 by spamcan61

[JohnR]

15 minutes ago, HExpressD said:

I don't get the hate towards Playtrains if I'm honest. Okay, it's not high fidelity modelling but it's a bit of fun, the models are actually pretty good but most importantly it is the only range to my knowledge actively trying to encourage new blood into the Hobby which Hornby should be entirely applauded for. 

 

My (then) 4 year old loved it. I think he's grown out of it a bit now (he's about to turn 6). But the great thing for him is that the trains run on OO track, so can be run on the boys "proper" layout. 

[Chris M]

Going by the TMC summer sale the items Hornby can’t shift are the corgi 1:36 limited edition taxis, the A1s and most other Pacifics but not so bad as the A1s and Bullied coaches.

 

[Chris M]

And all the steam punk stuff. That was a complete disaster for Hornby - and I don’t think any of us are surprised.

[JohnR]

28 minutes ago, Chris M said:

And all the steam punk stuff. That was a complete disaster for Hornby - and I don’t think any of us are surprised.

It may well have been, but how much did it actually cost? The rolling stock was based on existing tooling with some "add-ons" to make them look more "steam punky", plus some bespoke buildings? Ultimately, it may have been that which caused it to flop, but the loss is a relatively small one.

[Phil Parker]

41 minutes ago, Chris M said:

And all the steam punk stuff. That was a complete disaster for Hornby - and I don’t think any of us are surprised.

 

You, of course, have the financial numbers to prove that statement?

 

11 minutes ago, JohnR said:

It may well have been, but how much did it actually cost? The rolling stock was based on existing tooling with some "add-ons" to make them look more "steam punky", plus some bespoke buildings? Ultimately, it may have been that which caused it to flop, but the loss is a relatively small one.

 

Steampunk was done on the cheap. Existing chassis and limited run resin bodies stuck on top. You could see it (as Hornby did) as a bit of an experiment. If it had taken off then great, but there wasn't a lot of money invested and a useful test of technology. As it was, I'm told, the biggest problem was Covid. The plan had been to attend Steampunk shows, but those didn't happen.

 

IMHO, if you are a Hornby collector, grab some stuff in the sales and stick it away. I have a feeling that in a few years time, the models will increase in value faster that the "proper" collectables.

[MarkSG]

For all the people who think that end-of-run discounting indicates some major failure on the part of the manufacturer, I once again refer them to a previous post.

 

 

[spamcan61]

26 minutes ago, MarkSG said:

For all the people who think that end-of-run discounting indicates some major failure on the part of the manufacturer, I once again refer them to a previous post.

 

 

That doesn't necessarily mean that's what's happening here though, I can see that's fine for 'fast fashion' but would be a dangerous game to play in this context, particularly as Hornby live on borrowed money which shouldn't be tied up in mountains of dead stock 

Edited July 13, 2023 by spamcan61

[MarkSG]

57 minutes ago, spamcan61 said:

That doesn't necessarily mean that's what's happening here though, I can see that's fine for 'fast fashion' but would be a dangerous game to play in this context, particularly as Hornby live on borrowed money which shouldn't be tied up in mountains of dead stock 

 

There's no evidence that they've got "mountains" of dead stock. There has been an increase in stock as a result of lower than expected sales over Christmas. For some reason, this has been picked up on repeatedly by the tabloid media in their quest to find yet more opportunities to talk about shares "hitting the buffers", but the actual reports from Hornby themselves are far more nuanced. The underlying problem is not that they made too much stock, it's that they didn't sell as much stock as they would normally expect to. That cost them in lost revenue as well as increasing stock levels, and the loss of revenue is a more significant aspect of their financial problems.

Also, Hornby is not just a model railway company. The business model which works for smaller, more specialist manufacturers, of basing production primarily around pre-orders, simply isn't an option for them. As well as model shops, Hornby also supplies generalist toy shops and major online retailers. That market requires inventory. Amazon won't pre-order based on what's going to be released next year. Nor will their customers. Sales via that route have to come out of existing stock. And that means there has to be existing stock, and enough of it to meet demand. 

 

That's not to say that Hornby never gets it wrong, or never will. They did, for example, significantly overestimate potential demand for their Olympic themed models back in 2012. (Which isn't speculation on my part, that was a point made by James May in his programme a few years ago). And that particular error was exacerbated by the fact that the theme was very topical, and hence not so amenable to later discounting as the demand curve was non-typical. And I think it's been generally accepted that the attempt to cut costs by "design clever" was a wrong turn which cost more in sales than it saved in expenditure.

 

But in this case, I don't think there's any evidence to suggest that mistakes made by Hornby were a cause of their lower sales. They manufactured enough stock to meet what would be normal demand. But demand fell, particularly over the Christmas period, because of factors which were both outside their control and could not reasonably have been predicted when they set their manufacturing levels much earlier in the year. They, like very many individuals and businesses, were a victim of the economic shocks towards the end of 2022 which left nearly everybody with less discretionary spending. Dealing with that is clearly a challenge, but no more so than for every other business in the same position.

[The Stationmaster]

5 hours ago, JohnR said:

It may well have been, but how much did it actually cost? The rolling stock was based on existing tooling with some "add-ons" to make them look more "steam punky", plus some bespoke buildings? Ultimately, it may have been that which caused it to flop, but the loss is a relatively small one.

Whatever it cost it cost something and that is really the point.  Diversion of effort, promotional money, plus some rtopling, anfd og'f course manufacturing costs.  That was all time and money which coud j. have been spent on something else  - although som eone would have had to decide what that would be.

 

Overall just another symptom f Hornby catchinhg ideas that didn't work well and inevitably also missed teh boat in terms of coming to market at teh right time.

 

6 hours ago, Legend said:

 

 I do think Hornby still struggle with their suppliers . On the other hand what is in the mountain of inventory? 

I doubt if Hornby is any more immune than anyone else from supply problems where Chinese factories are involved and where the impact of Covid driven restrictions on movement etc has been significant.

 

But your final question is in many respects far more important I think.  Hornby already had a significant inventory pile notwithstanding whittling away at it last year - at least as far as model railways were concerned.  The huge increase caused by the mismanagement of incorrect or excessive buying to meet the expected Christmas market is a bit different.  Link it to a comment in the financial report about price resistance on the part of 'national retailers' (which doesn't mean shops selling model railways all year round - not even the likes of big companies like Hattons and Raills) and we might havea clue.

 

Looking at what mail order houses are currently trying to clear from last year's obviouly Christmas period stocks I reckon Hornby. possibly priced themselves out of the trainset market with even their cheapest sets offering little in return for their price.   And maybe the same applied to Scalextric?  Those could be the sorts of things  'national retailers' would probably normally be likely to go for as part of their Christmas offering??  Adding loads of train and Scalextric sets could no doubt push the monetary value up due to the high individual item figures.

 

For example a mere 400 'Flying Scotsman' or "Ma;llard record breaker' train sets would each equate to £100,000 at retail prices. Producing 1,000 of either set against optimistically  estimated demand and you're up to half a million quid in retail value.So maybe that is an area where the got it wrong?   While this year is, hopefully, exceptional for inventory growth, I go back to my 2017 vs 2023 inflation comparison - sales shortfall by £8million, inventory excess growth of more than £10 million