Hornby 2023 Annual Report

[The Stationmaster]

20 hours ago, Gatesheadgeek said:

 

I believe they made a small profit in 2022 and then they had problems late last year. They made a gross profit last year before over commitment of stock led to problems. Revenue is increasing despite the economic downturn. Worth waiting to see what the new team does before talking of selling up. Their financial backers have shown confidence. 

But one problem they have is that revenue is not keeping pace with inflation while costs are increasing once again.  Compared with 2017 sales in their FY just ended were £8 million down.  And I suspect that even the budgetted sales levels were lower than keeping pace with inflation.

 

Ollie Raeburn seems to have clearly grasped the fact that they need to sell to bring in revenue as well as at the most basic level they should invest where it produces the best return through sales revenue as well covering development costs.

[The Stationmaster]

15 hours ago, spamcan61 said:

Hell no, I'd much rather they try focussing on the task that seems to have proven rather problematic in the post Sanda Kan era; producing the right number of products at the right time at a consistent quality level. Not saying that's easy.

Added to which they have succeeded in thoroughly shooting themselves in the foot with stuff that does arrive from factories. Or in some cases what they actually order in quantity terms from a factory in the first place.  This 'method' has resulted in uneven quantities of otherwise complementary products - think HST power cars and coaches - being put into the market and leading to surpluses ending up in the inventory heap.   Part of this is a direct consequence of placing factory orders before they get round to selling the product to retailers etc and that in turn stems from their outmoded annual 'big bang' announcement policy.  

 

Hopefully the latter will now vanish - at long last - and even more hopefully maybe they will begin to order both realistic quantities but also properly thought out  complementary product mixes.  This could enable them to do away with Tiers and actually buy in - certainly for model railway items - things which they are able to sell without ending up with surplus stock resulting from poorly thought out factory orders.

 

They have steered away from that for TT120 - albeit by carefully and sensibly giving information about their future plans,  But that would, I fully accept, be a difficult approach to apply in 00 where they might become the victim of gazumping rather than being a perpetrator.  An awful lot is going to depend, I think, on the Brand Managers having a properly detailed and in-depth knowledge of their markets at all stages of the process from product inception through to delivery and getting the money numbers right.

[BachelorBoy]

1 hour ago, The Stationmaster said:

 An awful lot is going to depend, I think, on the Brand Managers having a properly detailed and in-depth knowledge of their markets at all stages of the process from product inception through to delivery and getting the money numbers right.

 

[eldomtom2]

On 13/08/2023 at 12:24, Drifter said:

I was very imressed until l read his profile. 
 

Not decrying his new role but might we now see a Hornby Theme Park? 1:1 tilting APT, Ghost Train, Scalextric merry go round, the list is endless. 

 

I wish him well.

I would be very surprised if Hornby hasn't considered making a Miniatur Wunderland of their own.

[Guest]

6 hours ago, The Stationmaster said:

Added to which they have succeeded in thoroughly shooting themselves in the foot with stuff that does arrive from factories. Or in some cases what they actually order in quantity terms from a factory in the first place.  This 'method' has resulted in uneven quantities of otherwise complementary products - think HST power cars and coaches - being put into the market and leading to surpluses ending up in the inventory heap.   Part of this is a direct consequence of placing factory orders before they get round to selling the product to retailers etc and that in turn stems from their outmoded annual 'big bang' announcement policy.  

 

Hopefully the latter will now vanish - at long last - and even more hopefully maybe they will begin to order both realistic quantities but also properly thought out  complementary product mixes.  This could enable them to do away with Tiers and actually buy in - certainly for model railway items - things which they are able to sell without ending up with surplus stock resulting from poorly thought out factory orders.

 

They have steered away from that for TT120 - albeit by carefully and sensibly giving information about their future plans,  But that would, I fully accept, be a difficult approach to apply in 00 where they might become the victim of gazumping rather than being a perpetrator.  An awful lot is going to depend, I think, on the Brand Managers having a properly detailed and in-depth knowledge of their markets at all stages of the process from product inception through to delivery and getting the money numbers right.

A good point you made about revenue and inflation in your last reply - I did consider that but didn’t include. Will be interesting to see how price rises feed through. Not sure how their contracts with suppliers work though. Presumably there must be some sort of clause to update prices for long-delayed products and in any case there’re additional costs for shipping from China. 
 

In terms of brand managers, I’m less than convinced that they know their market brilliantly. 
 

PS the brand managers may have mixed feelings about SK’s departure. On the one hand they can make their own decisions, on the other they have to make their own decisions!

Edited August 14, 2023 by Guest
Added postscript

[ruggedpeak]

On 01/08/2023 at 12:25, The Stationmaster said:

His immediate past retail experience was with Paperchase - and look what happened to them (although he did come when the company was already very deeply in the mire.  Previous 'retail experience' involved betting shops - so he might well recognise a good bet when he sees one.

 

But he has seen the things which Hrnby need to do pretty quickly - b get back into that 'national retailer' area with the right product at the right prices and sell, sell, sell..

So to be clear, the new CEO has experience of betting shops and high street retail. A previous CEO had a rather similar background.....

 

https://www.theretailbulletin.com/general-merchandise/Hornby-appoints-richard-ames-as-chief-executive-13-02-2014/

 

https://www.marketwatch.com/story/Hornby-ceo-richard-ames-steps-down-2016-02-15

 

So far it all sounds horribly familiar, with branding/high streety types brought in. Hopefully the new personnel will be more successful than last time and improve on offering branded merch.....

 

Will be interested to see what Mr Lego does.

[adb968008]

I good coach once told me management goes in cycles…

1st you get someone with all the money and no ideas

2nd you get someone with all the ideas and no money

3rd you get someone with some money and some ideas.

I’m not going to guess where this company is at.

 

Edited August 14, 2023 by adb968008

[melmerby]

3 minutes ago, adb968008 said:

I good coach once told me management goes in cycles…

1st you get someone with all the money and no ideas

2nd you get someone with all the ideas and no money

3rd you get someone with some money and some ideas.

I’m not going to guess where this company is at.

 

No money and no ideas?😄

[Bucoops]

30 minutes ago, melmerby said:

No money and no ideas?😄

 

You called?

[adb968008]

On 13/08/2023 at 12:29, Widnes Model Centre said:

Up to a few months ago l was still using mine. Just went dead, disappointed, only had it (quite) a few years.

I’m open to a deal if you want this one ;-)

 

 

[Baz657]

I m reliably informed that the cost of containers from China is far lower than it crazily was a year or two ago. Perhaps the overall cost base for items manufactured in China is lower now than at this time last year? That could only add to the bottom line.

[BachelorBoy]

2 hours ago, Baz657 said:

I m reliably informed that the cost of containers from China is far lower than it crazily was a year or two ago. Perhaps the overall cost base for items manufactured in China is lower now than at this time last year? That could only add to the bottom line.

 

The yuan has dropped in value quite a bit too

 

[BachelorBoy]

14 hours ago, The Stationmaster said:

 

 

They have steered away from that for TT120 - albeit by carefully and sensibly giving information about their future plans,  

 

It's a difficult balance to get right.

 

Investors and lenders like as much detail as possible.

 

But then, so do competitors.

 

[The Stationmaster]

16 hours ago, ruggedpeak said:

So to be clear, the new CEO has experience of betting shops and high street retail. A previous CEO had a rather similar background.....

 

https://www.theretailbulletin.com/general-merchandise/Hornby-appoints-richard-ames-as-chief-executive-13-02-2014/

 

https://www.marketwatch.com/story/Hornby-ceo-richard-ames-steps-down-2016-02-15

 

So far it all sounds horribly familiar, with branding/high streety types brought in. Hopefully the new personnel will be more successful than last time and improve on offering branded merch.....

 

Will be interested to see what Mr Lego does.

In some respects it doesn't matter where they come from as long as they understand what drives the numbers that go into the bottom line.  And, probably even more importantly, they have the necessary skills and experience to not only recognise what needs to be done but also have the ability to pick the right people for the tasks and jobs  that will, hopefully, do that.

 

Being in a business for however many years doesn't necessarily make you into the sort of person who has the rights skills to handle a company the way it needs to be handled now.  Which is why many what were  'family run' companies have survived and prospered by picking the right outsiders while others have gpone because they relied on 'expereince' from within.

 

So the simple answer is to pick the right people, irrespective of the area they have worked in provided they have the necessary managerial and organisational skills.   The difficult bit is identifying the right person and if you don't get the right one things can go the wrong way.  The worst thing that can happen is for someone to walk in and say 'I've been in this business for years and now I'm going to show you latwhat you have been doing wrong'.

[Guest]

They took time to find their CEO and they will be mindful of recent history, so it’s worth giving the Board and investors some slack and trust that they’ve picked someone who came with the right ideas. I don’t know the full saga of their last problems 15 years or so ago, but the annual report suggests that Rayburn is focused on tightening the brand propositions, limiting poor decisions and maybe willing to make some unpopular decisions (parting company with Simon K is a good or bad decision, depending on who you listen to). 

 

The 2024 Hornby catalogue (or range announcement) is probably the most high-profile manifestation of the new regime and will set the tone for some time. They’ve already demonstrated that TT120 is here to stay, though it’s easy to speculate whether it would have happened if they’d been a year later - the last opportunity for cancellation (though still costly in terms of development time & costs, but not in reputation) would likely have been around this time last year.

[ruggedpeak]

3 hours ago, The Stationmaster said:

In some respects it doesn't matter where they come from as long as they understand what drives the numbers that go into the bottom line.  And, probably even more importantly, they have the necessary skills and experience to not only recognise what needs to be done but also have the ability to pick the right people for the tasks and jobs  that will, hopefully, do that.

 

Being in a business for however many years doesn't necessarily make you into the sort of person who has the rights skills to handle a company the way it needs to be handled now.  Which is why many what were  'family run' companies have survived and prospered by picking the right outsiders while others have gpone because they relied on 'expereince' from within.

 

So the simple answer is to pick the right people, irrespective of the area they have worked in provided they have the necessary managerial and organisational skills.   The difficult bit is identifying the right person and if you don't get the right one things can go the wrong way.  The worst thing that can happen is for someone to walk in and say 'I've been in this business for years and now I'm going to show you latwhat you have been doing wrong'.

Don't disagree with anything you've said, and as a skilled professional who will probably never make it into the "C-Suite" as it is a parallel universe in many respects, it is just interesting that despite the less than ideal performance of Mr Ames this latest incumbent has a very similar background so what is different this time around in terms of skills and running a non-high street non-betting business? Not looking for answers but uncomfortable parallels at this point.

 

3 hours ago, Gatesheadgeek said:

The 2024 Hornby catalogue (or range announcement) is probably the most high-profile manifestation of the new regime and will set the tone for some time. They’ve already demonstrated that TT120 is here to stay, though it’s easy to speculate whether it would have happened if they’d been a year later - the last opportunity for cancellation (though still costly in terms of development time & costs, but not in reputation) would likely have been around this time last year.

I will wager (based upon zero knowledge) that if the new management get stuck in it will be about all Hornby brands and the business as a whole rather than any great changes in the OO gauge train part of the company. However you slice it and dice it, radically improving the Hornby train part of the business will not in itself turn Hornby plc around or solve its lack of profitability. My bet is we will see everything from more products to appeal across the market to new forms of Hornby licencing and experience, building on what Simon and Montana have already done. Whether they go the full Legoland/Ferrari World remains to be seen, but I would be surprised if Mr Betting Shops or Mr Lego are going to start delving into the nuances of too many LNER and not enough SR locos in the Hornby range! Whether we see a Hornby Star Wars range remains to be seen but it worked for Lego!!

[Guest]

No the management shouldn’t be delving into the detail but they should be setting targets in terms of spend and revenue. They will no doubt be instilling some discipline in broad model/range  decisions & direction that the individual brand managers will have to demonstrate that their plans will have a strong probability of meeting.  
 

I suspect, and hope, that the brand managers will have a far less easy ride than Simon Kohler seemed to and will need to back up their decisions with evidence. 
 

I doubt Hornby will want to spend money on licensing deals at this stage. Harry Potter & Thomas had direct relevance and were good partnerships. Star Wars etc risks going the way of steampunk. I’d hope that they gave any such idea short shrift. Not least because there would be tooling costs on top of very hefty  licensing fees. Much easier for Lego who can create sets from their existing massive component inventory, with only a few small bespoke pieces in a set. 

[ruggedpeak]

1 hour ago, Gatesheadgeek said:

No the management shouldn’t be delving into the detail but they should be setting targets in terms of spend and revenue. They will no doubt be instilling some discipline in broad model/range  decisions & direction that the individual brand managers will have to demonstrate that their plans will have a strong probability of meeting.  
 

I suspect, and hope, that the brand managers will have a far less easy ride than Simon Kohler seemed to and will need to back up their decisions with evidence. 
 

I doubt Hornby will want to spend money on licensing deals at this stage. Harry Potter & Thomas had direct relevance and were good partnerships. Star Wars etc risks going the way of steampunk. I’d hope that they gave any such idea short shrift. Not least because there would be tooling costs on top of very hefty  licensing fees. Much easier for Lego who can create sets from their existing massive component inventory, with only a few small bespoke pieces in a set. 

The Star Wars bit was tongue in cheek, Star Wars licencing basically having saved Lego after they almost went bust 15-20 years ago.

 

However one of Lego's USP's is that it can and does make extensive use of bespoke pieces in its sets these days, and because the design all the way through to manufacture is in-house or tightly controlled, they can respond quickly. Hornby can't do that as they only do the design bit in house and their parts are more complex than a Lego piece. It is this ability to produce custom parts as required that has allowed Lego to really exploit the licensing market. I had a brief moment of madness collecting Lego Marvel Iron Man variants and sets, lots of custom bits as well as the normal ones.

 

Was in a department store the other day and nearly fell over when I saw the likes of these:

 

https://www.lego.com/en-gb/product/millennium-falcon-751 

 

https://www.lego.com/en-gb/product/eiffel-tower-10307?ga

 

 

Over £700 for Star Wars Lego 😲 And over £500 for the Eiffel Tower - where do you put it when its built?

 

However if Hornby brands can move into higher value areas somehow then good news. Must be a huge margin on that Eiffel Tower. And there are loads of variants of the Lego Millenium Falcon over many years that have all sold out. Completely mad but Lego are coining it. Hornby plc need to find their groove like Lego did, but Lego almost sank in the process.

 

 

Edited August 15, 2023 by ruggedpeak
typos

[Guest]

13 minutes ago, ruggedpeak said:

The Star Wars bit was tongue in cheek, Star Wars licencing basically having saved Lego after they almost went bust 15-20 years ago.

 

However one of Lego's USP's is that it can and does make extensive use of bespoke pieces in its sets these days, and because the design all the way through to manufacture is in-house or tightly controlled, they can respond quickly. Hornby can't do that as they only do the design bit in house and their parts are more complex than a Lego piece. It is this ability to produce custom parts as required that has allowed Lego to really exploit the licensing market. I had a brief moment of madness collecting Lego Marvel Iron Man variants and sets, lots of custom bits as well as the normal ones.

 

Was in a department store the other day and nearly fell over when I saw the likes of these:

 

https://www.lego.com/en-gb/product/millennium-falcon-751 

 

https://www.lego.com/en-gb/product/eiffel-tower-10307?ga

 

 

Over £700 for Star Wars Lego 😲 And over £500 for the Eiffel Tower - where do you put it when its built?

 

However if Hornby brands can move into higher value areas somehow then good news. Must be a huge margin on that Eiffel Tower. And there are loads of variants of the Lego Millenium Falcon over many years that have all sold out. Completely mad but Lego are coining it. Hornby plc need to find their groove like Lego did, but Lego almost sank in the process.

 

 

I did wonder whether you were serious. As you say, they’ve really gone for the big sets. If I had room, Titanic would be good. I do have a few bits though, including an old ultimate edition Star Destroyer which is probably worth a bit now if the pieces haven’t discoloured too much.

 

Hornby need to distinguish their sets/ranges a bit. Mr Mawer might bring some new ideas. 

 

 

[Widnes Model Centre]

Not quite sure if posters are advocating for Hornby not to become involved with Star Wars. If so, too late.

[1andrew1]

39 minutes ago, ruggedpeak said:

Was in a department store the other day...

Could the reduction of high street retailers spell an opportunity for Hornby World? Is there an opening for Hornby World in department stores? 

[Guest]

5 minutes ago, Widnes Model Centre said:

Not quite sure if posters are advocating for Hornby not to become involved with Star Wars. If so, too late.

Was more Hornby railways I was worried about. There’s a trainy thing in one of the recent films. Was it Solo? Airfix would presumably be a good fit.

[Guest]

1 minute ago, 1andrew1 said:

Could the reduction of high street retailers spell an opportunity for Hornby World? Is there an opening for Hornby World in department stores? 

Certainly concessions are an opportunity. Fenwicks in Newcastle has a decent stock of Hornby OO and could be expanded to a mini version of what they have planned in Margate. Am wondering if they plan to have that ready for the AGM next month, so we may not have long to wait. 

[Widnes Model Centre]

1 minute ago, Gatesheadgeek said:

Was more Hornby railways I was worried about. There’s a trainy thing in one of the recent films. Was it Solo? Airfix would presumably be a good fit.

The Scalextric , Star Wars was a bit of a disappointment to put it mildly. Revell and Bandai have the licensing at the moment  for Star Wars kits. 

[Guest]

Just now, Widnes Model Centre said:

The Scalextric , Star Wars was a bit of a disappointment to put it mildly. Revell and Bandai have the licensing at the moment  for Star Wars kits. 

Yes I thought some one was already there but am not au fait with that area. Does it still sell well?