Hornby 2023 annual results

[woodenhead]

42 minutes ago, Clearwater said:

I think the arguments about people having less space and hence there being a market opening for TT have some traction.  However, if you're thinking about the market segments, I'd wonder whether TT should be targeting 70s diesel era not the A3 or A4 plus carriages?

 

If the hypothesis is that the best sellers for Hornby are the "I'll buy him a train set as he retires market now he's got time" then the age of those people retiring are now the ones increasingly for whom their railway salad days were 1968-1980 (a 10 year old in 1968 is 65 and even a 10 year old in 1980 is now 53).  I can see a logic that those people still have the smaller modern houses and hence might not want OO or larger but be amenable to something not as fiddly as N gauge.  Hornby's brand is such that they pick up sales here that others don't. A TT blue/yellow HST set would play to that market plus a certain level of the nostalgia market given it was a core OO set in the late 70s/80s.

 

David   

If no-one was buying A1, A2, A3 and A4 Hornby locos then I would agree, but the fact they keep churning them out must mean generally someone is buying them.

 

Also I think Simon Kohler was looking at grandparents buying TT and then influencing the grandchildren into railway modelling, the grand parents being of the 1960s children who remembered the old TT system and Triang.  Probably also linked to them using Dublo as a brand in OO because it harks back to an era.

[Guest]

I think the current range seems to be selling well. The Easterner & Scotsman sets have been sold out for months and the digital sets are due soon. 

Where I do think they might have made a mis-step is in not having more stock early on for small end to end layouts. The Pacifics and coaches need a decent oval as a minimum. Shelf, windowsill and other small layout opportunities are a little difficult, particularly when the only currently available models in the range with front couplings are the 08s which have no suitable stock for a shunting layout. a small 0-6-0 tank is definitely missing. Even a small BR standard steam locomotive is a decent choice to operate a branch line terminus. 

That said, they don’t seem to be having any trouble shifting stock and, whatever the view is here, TT120 seems a relative success. It’ll be interesting to see whether the sales trend suggested by the TT £1.5m sales in not much more than Q4, that was reported in the June financial results, is sustained or bettered when it comes to the next reporting. £6m annual sales would represent 10% of their total group revenue. Not bad from a standing start, nor for an initiative that was widely disparaged when announced. 

Edited July 6, 2023 by Guest
Spelling

[Robin Brasher]

1 hour ago, Bilbo said:

I don't know if this has been mentioned but Cheltenham Models are now advertising themselves as TT:120 stockists. So with Gaugemaster already on board it looks as if it won't be all direct selling. I wonder if they have a invented a new TT Tier. And who will be next ?

 

It will be wonderful if Cheltenham Models sell TT:120 as they have a sales stand on the Swanage Railway near my flat on some of the railway's special event.  It would be better still if the Swanage Railway and other local shops became stockists.

[woodenhead]

11 minutes ago, Robin Brasher said:

It will be wonderful if Cheltenham Models sell TT:120 as they have a sales stand on the Swanage Railway near my flat on some of the railway's special event.  It would be better still if the Swanage Railway and other local shops became stockists.

Well plenty of it in stock with Cheltenham Model Railways

https://cheltenhammodelcentre.com/model-railways/c-1173?sortby=popular&ppview=2&m=[Brands~Hornby|Main_Category~Buildings_And_Scenery¦Coaches¦Locomotives¦Wagons|Gauge~TT]&minp=000&maxp=53000&v=grid&start=24

 

Edit: well maybe not so much in stock - some are single items in stock, some are available to order....

Further edit: if it's in stock it's just one item.

 

So a slow start to shop selling, but maybe warehouse numbers are low and retailers are also trying it out to test demand.

Edited July 6, 2023 by woodenhead

[Guest]

Looking at the expected arrival dates being quoted by the new retailers, the next 2-3 months should see another decent influx of stock (including the lesser-spotted straight platforms and straight track). 

[Clearwater]

1 hour ago, woodenhead said:

If no-one was buying A1, A2, A3 and A4 Hornby locos then I would agree, but the fact they keep churning them out must mean generally someone is buying them.

 

Also I think Simon Kohler was looking at grandparents buying TT and then influencing the grandchildren into railway modelling, the grand parents being of the 1960s children who remembered the old TT system and Triang.  Probably also linked to them using Dublo as a brand in OO because it harks back to an era.

 

Sure but that doesn't mean other stuff wouldn't sell. I'd suggest a Deltic plus three coaches is equally a more modern equivalent of the A1 set.  Kolher obviously had a view of what sold and to whom and why but they may be taking a different direction in the future.  Given Hornby and Kohler parted company, we can wonder the extent to which they differed on strategy.

 

What we don't know is how the internal strategy documents set out how the range would evolve if successful.  If I was a director approving the tooling, I'd have wanted a series of exit points if it wasn't successful and equally a sense of vision as to what to do if it was making money.

[Dunsignalling]

43 minutes ago, Clearwater said:

 

Sure but that doesn't mean other stuff wouldn't sell. I'd suggest a Deltic plus three coaches is equally a more modern equivalent of the A1 set.  Kolher obviously had a view of what sold and to whom and why but they may be taking a different direction in the future.  Given Hornby and Kohler parted company, we can wonder the extent to which they differed on strategy.

 

What we don't know is how the internal strategy documents set out how the range would evolve if successful.  If I was a director approving the tooling, I'd have wanted a series of exit points if it wasn't successful and equally a sense of vision as to what to do if it was making money.

 

All pretty normal stuff.

 

SK will not have had the power to launch TT:120 off his own bat. Investment of that magnitude into novel product would have required authorisation at board level, and a control mechanism will be in place.

 

Yes, there will be a "kill clause" somewhere, but it won't be triggered unless things were to go very pear-shaped very quickly, or performance were to decline long-term. Current indications are that TT:120 is doing pretty well, so it's academic for now.

 

However, the timing and extent  of further investment is likely to be flexible, and conditional upon sales reaching thresholds within projected timescales. There's no reason why it couldn't be speeded up rather than slowed down if things went really well, though....

 

My own guess is that the project has been given at least five years to prove itself commercially, and is unlikely to be cancelled at that point unless things were to take a big turn for the worse.

 

John 

 

 

 

Edited July 6, 2023 by Dunsignalling

[ColinB]

8 hours ago, jonnyuk said:

how much of this is because its Hornby, i suspect majority of it. If one of the new boys (if you read my other posts you can guess who i mean) had started tt:120 i would almost bet my house on it be lauded, fanfare, party poppers, lots of arse kissing.  This forum is not the barometer for the hobby, it's a small glass house.

I've a large stock of OO from nearly every brand (can't think of one brand out of the 7 well known i don't own) so i have no over riding support for one or another but i'm onboard with tt, i have a nice 5 by 3 board layout for the cold winter months when the shed really is not a nice place to be. The loco's are great, rolling stock nicely detailed, the buildings are good, track is abit pants and most of mine is peco. I've a couple of the eastern BR loco's so in reality i'm done until some BR diesels arrive. I really hope Hornby stay in the tt game.

 

Will it replace my OO, not a chance, will spending in OO out strip tt, yes and by some margin, tt will be very specific with no impulse buys. 

Just a final thought on Hornby, given this is a Hornby thread. I was in my local a couple of weeks ago. In walks a father and son. They wanted to get into hobby, despite the shop having tons of other makes on clear display (including starter sets) they wanted a Hornby starter set, other makes were shown but Hornby it was. Additional track was also talked about, Peco was shown with reasons for it, but again, they chose Hornby and in particular the Hornby track packs. They walked out with a starter set, track pack and i'm almost certain a couple of wagons.

 

This 20 minute sales pitch really hit a tone with me, despite allot thinking Hornby are a dead man walking clearly to the new starters they are the go to brand. With this in mind, i can see TT sticking around for along time.

 

Don't under estimate the power of brand, a old brand that to most out side of the hobby is model/toy trains, i only have to mention trains to friends/family, conversation is then centred around Hornby and them having a Hornby train set or knowing someone who did when they where younger.

 

 

You just have to look at the Hornby Forum to get that opinion. They all seem to run Hornby track even though Peco is better and cheaper. Hornby can do no wrong. Lets face it if it wasn't Hornby, it would not be around now with those debts it got during the really bad times. They still make one of the best mechanisms but most of that is thanks to the Engineers at Triang many years ago. I imagine now SK has gone they will drop the huge fanfare with the new catalogue, products within that very rarely meet the timescale. Perhaps they should be more realistic on what they can produce within a set time frame.

[adb968008]

2 hours ago, Clearwater said:

 

What we don't know is how the internal strategy documents set out how the range would evolve if successful.  If I was a director approving the tooling, I'd have wanted a series of exit points if it wasn't successful and equally a sense of vision as to what to do if it was making money.

If it were me i’d be looking at spend per TT club member, ratio of club members spending / not spending and watching how many drop the club when it becomes paid for… then reexamining those ratios… as that sizes the market base.

it could be some rushed out to buy the novelty discounted TT trainset, put it in their garage waiting for the novelty to wear off / cash it out someday as a collectors item, them buy nothing else TT. Once they fall,off the chart, you know how many customers are left, how much they spend, on what, when and where.

 

It will be interest8ng to see how it stacks up, as prices rise closer to OO.

 

Edited July 6, 2023 by adb968008

[Guest]

25 minutes ago, adb968008 said:

If it were me i’d be looking at spend per TT club member, ratio of club members spending / not spending and watching how many drop the club when it becomes paid for… then reexamining those ratios… as that sizes the market base.

it could be some rushed out to buy the novelty discounted TT trainset, put it in their garage waiting for the novelty to wear off / cash it out someday as a collectors item, them buy nothing else TT. Once they fall,off the chart, you know how many customers are left, how much they spend, on what, when and where.

 

It will be interest8ng to see how it stacks up, as prices rise closer to OO.

 

Now that the products are in retail stores, they’ll lose some of those insights. Retailers seem to be offering about 10% discount, which is the same as the Hobby Rewards scheme. Club now costs £30 and offers an extra 10% rewards, so still worthwhile if spending £300 or more with Hornby.  Pays for itself if buying just the sound-fitted HST.

Some tried to make money on eBay but that didn’t last long. I doubt many at all will have stored them. Stock has now arrived with Australian retailers, so there’s clearly demand there too. No wonder Hornby seem pleased. 

[adb968008]

1 hour ago, Gatesheadgeek said:

Now that the products are in retail stores, they’ll lose some of those insights. Retailers seem to be offering about 10% discount, which is the same as the Hobby Rewards scheme. Club now costs £30 and offers an extra 10% rewards, so still worthwhile if spending £300 or more with Hornby.  Pays for itself if buying just the sound-fitted HST.

Some tried to make money on eBay but that didn’t last long. I doubt many at all will have stored them. Stock has now arrived with Australian retailers, so there’s clearly demand there too. No wonder Hornby seem pleased. 

I’m thinking more of the sunday newspaper supliment kind of collectors… any old guff from clocks to coins that will buy a “rare once in a lifetime” trainset with a Hornby logo on it, thinking it will buy a deposit for a house for their grandkids some day.

 

Not the normal model railway collector.

 

i do fear what would happen if Hornby ceased, it would be like everyone rushing to go out and buy a Rover, including raiding scrap yards of old metros all over again.

[Clearwater]

2 hours ago, adb968008 said:

If it were me i’d be looking at spend per TT club member, ratio of club members spending / not spending and watching how many drop the club when it becomes paid for… then reexamining those ratios… as that sizes the market base.

it could be some rushed out to buy the novelty discounted TT trainset, put it in their garage waiting for the novelty to wear off / cash it out someday as a collectors item, them buy nothing else TT. Once they fall,off the chart, you know how many customers are left, how much they spend, on what, when and where.

 

It will be interest8ng to see how it stacks up, as prices rise closer to OO.

 

I’d agree  club membership gives some insights but as @gatesheadgeek the membership fee suggest you need to spend £300 to break even.  But people will stay members because they like being a membe rand value the fringe benefits, eg exclusives, as well as the discount.  However, if they’ve got any sense they’ll use the raw sales data from website logins/sales.  They should have a targeted sales system with precise offers to follow up initial sales.  Investment I’m relatively few sales analysts can drive overall sales/margin.

[1andrew1]

We've talked about which brands are most important to Hornby before. It's six years old, but back in 2017, Hornby's sales per its annual report were split:

• £22m Model railways of which Europe accounted for £6.4m
• £12m Scalextric 
• £6m Airfix 
• £4m Corgi 
• £2m Humbrol 

 

In terms of which brands were profitable, in a loss-making year, its priorities were cited on page 10 as "Building on the strong profitability of the Hornby, Airfix and Humbrol brands. If still correct today, this supports my earlier drastic solution of disposing of Corgi and Scalextric. I thought I hadn't plucked those two brands from nowhere.

Edited July 6, 2023 by 1andrew1

[1andrew1]

13 hours ago, HExpressD said:

Arnold R&D isn't done at Margate, it's done in their EU team offices

Unless it's a recent thing, Hornby hasn't done design in its overseas offices since about 2015. In its 2017 annual report it noted "European operations and product development centralised in the UK"

[BachelorBoy]

8 hours ago, adb968008 said:

I’m thinking more of the sunday newspaper supliment kind of collectors… any old guff from clocks to coins that will buy a “rare once in a lifetime” trainset with a Hornby logo on it, thinking it will buy a deposit for a house for their grandkids some day.

 

 

"Heirloom quality"

 

Edited July 7, 2023 by BachelorBoy
Added Trump train picture

[Fireline]

7 hours ago, 1andrew1 said:

Unless it's a recent thing, Hornby hasn't done design in its overseas offices since about 2015. In its 2017 annual report it noted "European operations and product development centralised in the UK"

I think that changed when they got rid of the "Woolworths" management team....

[BachelorBoy]

1 hour ago, BachelorBoy said:

 

"Heirloom quality"

 

'

Look who the partners are.... 

 

[AY Mod]

40 minutes ago, BachelorBoy said:

Look who the partners are.... 

 

Bachmann USA and Bachmann Europe are very different things.

[HExpressD]

The phrase 'Oldest Name in Model Railroads' presumably should be followed by a large number of asterisks. Bachmann might have been founded in 1833 but they were playing around with sunglasses and combs until 1966.

[Guest]

14 hours ago, ColinB said:

You just have to look at the Hornby Forum to get that opinion. They all seem to run Hornby track even though Peco is better and cheaper. Hornby can do no wrong. Lets face it if it wasn't Hornby, it would not be around now with those debts it got during the really bad times. They still make one of the best mechanisms but most of that is thanks to the Engineers at Triang many years ago. I imagine now SK has gone they will drop the huge fanfare with the new catalogue, products within that very rarely meet the timescale. Perhaps they should be more realistic on what they can produce within a set time frame.

 

Plenty of criticism of Hornby in the forum. From a quick recollection:

- inconsistent and incorrect website

- cancellation of a TT120 HST variant (apparently because they messed up the price increases and that cancelled model was shown £50 cheaper than it should have been)

- lack of availability of key TT120 products such as straight track & modern image locomotives/rolling stock

- steep price increases of 20% or so coincidentally on the day that the Hm7000 Android app was released and demand for purchasing models might be expected to increase

- poor quality control and persistent faults in some of the first generation TT120 models. 
 

Many TT120 modellers are new or returning to the hobby and using Hornby track because they know no different and have a head start from the train sets, but quite a few are using and promoting use of Peco & Tillig track. 

Edited July 7, 2023 by Guest
Minor text changes for clarity

[The Stationmaster]

22 hours ago, Clearwater said:

I think the arguments about people having less space and hence there being a market opening for TT have some traction.  However, if you're thinking about the market segments, I'd wonder whether TT should be targeting 70s diesel era not the A3 or A4 plus carriages?

 

If the hypothesis is that the best sellers for Hornby are the "I'll buy him a train set as he retires market now he's got time" then the age of those people retiring are now the ones increasingly for whom their railway salad days were 1968-1980 (a 10 year old in 1968 is 65 and even a 10 year old in 1980 is now 53).  I can see a logic that those people still have the smaller modern houses and hence might not want OO or larger but be amenable to something not as fiddly as N gauge.  Hornby's brand is such that they pick up sales here that others don't. A TT blue/yellow HST set would play to that market plus a certain level of the nostalgia market given it was a core OO set in the late 70s/80s.

 

David   

And a potentially relevant point is that many retirees without a mountain of dosh down size and move into 'retirement' property which from what I see advertised tends to be rather on the small side.

[woodenhead]

19 minutes ago, Gatesheadgeek said:

Many TT120 modellers are new or returning to the hobby and using Hornby track because they know no different and have a head start from the train sets

The exact market Simon wanted - not aware of other alternatives and kept within the Hornby ecosphere on the website.

 

Of course these days those users of the website do include those who live outside the bubble with knowledge of Peco and Tillig so perhaps the bubble will burst.  With bricks and mortar shops now beginning to stock TT the bubble will be well and truly burst.

[AY Mod]

1 hour ago, HExpressD said:

The phrase 'Oldest Name in Model Railroads' presumably should be followed by a large number of asterisks. Bachmann might have been founded in 1833 but they were playing around with sunglasses and combs until 1966.

 

We know centenaries can be an elastic concept.

[woodenhead]

A last hurrah from Simon

 

And he promised the HS2 trains from Hornby too!

Edited July 7, 2023 by woodenhead

[The Stationmaster]

1 hour ago, HExpressD said:

The phrase 'Oldest Name in Model Railroads' presumably should be followed by a large number of asterisks. Bachmann might have been founded in 1833 but they were playing around with sunglasses and combs until 1966.

'Oldest name' means exactly what it says - the name which has been around the longest.  it does not mean the company which was the first to manufacture model railways.