Update from Hornby with regard to Oxford Rail.

[adb968008]

10 hours ago, melmerby said:

Like the ones that keep Hornby going?😄

The railway side is is the sluggard in the business.

 

The models themselves feel lower costs than others, but sold at higher prices. That is hinted in the reports which show high margins.

I think its the overheads thats the issue, not the product.

 

To lower overheads, you can cut head count, but it still leaves debt.

Or you can reduce headcount and debt by selling business units.

But they need to contain viable potential IP.

 

Given current interest rates i’m not sure which way they will play it, as one of the loan guarantors is a major shareholder and receiving those interest rate payments.. they might be happy with that arrangement, but if Hornby isnt taking greater income to service those payments, it could be bleeding cash, but they may be ok with it for now too.

 

But coming back to Oxford… to me it looks easy to divest and an easy starting point but would seem at odds with the other recent business acquisition..Warlord.

 

I think this is a very good summary state of affairs

https://knowledge.sharescope.co.uk/2023/07/12/is-warlord-games-a-potential-game-changer-for-Hornby/

 

Quote

Its products have arguably been too expensive with the lack of entry-level products making it very difficult to attract new and younger customers.

…

Digging into its accounts, there are also some worrying signs. It’s tooling and moulding assets have a gross value of £81.6m and have been depreciated to £11.7m. This means that they are over 85 per cent written off

…

 

Hornby also needs to develop new entry-level products from Airfix, Scalextric and Hornby at lower prices to open up new markets from retailers who focus on cheaper and value-for-money products.

One other issue is that Hornby may have too many brands that aren’t profitable enough. It needs to significantly improve its gross margins and this could be done by slimming down the brand portfolio.

The good news is that Hornby does have some very profitable products. If you look in the notes to its accounts about testing goodwill for impairment, Corgi (bought in 2008) and Airfix (bought in 2006) are valued on the basis of respective gross margins of 61.4 per cent and 65.6 per cent.

As well as improving gross margins, Hornby is going to have to increase its sales volumes and leverage its fixed overheads to boost profits. Management believes that its current cost base can deliver much higher sales than it is at the moment.

 

…

 

basically a changing of shape of the business is needed… Oxford maybe part of that change.

Reading Warlord forums, they  seem to view it as a positive for model production, and linking with Humbrol/Airfix.

Edited August 15, 2023 by adb968008

[AY Mod]

14 hours ago, micklner said:

they have far too many "Names " that are "bleeding" money big time.

 

Which are they and what evidence do you have?

[Mike Bellamy]

7 hours ago, adb968008 said:

 

I think this is a very good summary state of affairs

https://knowledge.sharescope.co.uk/2023/07/12/is-warlord-games-a-potential-game-changer-for-Hornby/

 

 

 

Thanks - a very detailed review of the past, present and future, and what's right and wrong with Hornby. Perhaps it should be compulsory reading for everyone before they comment on here 😊

 

.

[micklner]

7 hours ago, AY Mod said:

 

Which are they and what evidence do you have?

Look at the losses over years and years.

 

This handily sums it up.

 

https://knowledge.sharescope.co.uk/2023/07/12/is-warlord-games-a-potential-game-changer-for-Hornby/

Edited August 15, 2023 by micklner

[JohnR]

8 hours ago, AY Mod said:

 

Which are they and what evidence do you have?

 

I would imagine Corgi falls into that category, otherwise they wouldnt have taken the decision to write off £3m of goodwill against the brand. 

[Dunsignalling]

9 hours ago, No Decorum said:

Whilst it’s true that “TT120 has a long way to go before it challenges 00, if ever”, I think Dunsignalling’s point is that Hornby has launched into TT120 because it thinks it can no longer compete in 00. I wonder, though, if that is the case. Hornby may be much more expensive than its new rivals but the P2 is a case in point. If you want a RTR P2, and plenty seem to, then it has to be Hornby. If Hornby would sort out its QC problems and can pick the right models, it still has a future in 00.

Hornby is, by no means wholly uncompetitive in OO, but it seems unable to maintain the position within the industry that it feels necessary.

 

Whether that's just a matter of wounded pride at seeing newcomers take market share off them, or there is a real issue of sustainable volume for the business in the longer term isn't clear, though.

 

Whilst TT:120 shows a welcome touch of innovation, from some angles it might look like a "Plan B". However well it may be going so far, it will be many years before it generates sales comparable with those of Hornby OO, and they really need to sort that out too.

 

Indeed, logic dictates that if TT:120 really "takes off" among newcomers to the hobby, it could impact Hornby's own OO sales rather more than those of their competitors. who seem to be placing their emphasis on attracting committed OO users. 

 

Also, of course, there's nothing to stop any of the others releasing a P2 up against the Hornby one. I hope they don't because it might be made instead of something of interest to me! 

 

Hornby need to be careful, though, to update "back catalogue" items from other companies / regions / post-steam or they will surely see replacements in boxes of other colours emerge just as Bachmann have. The forthcoming Accurascale Class 50 may be more than a "straw in the wind"....

 

John

Edited August 15, 2023 by Dunsignalling

[AY Mod]

37 minutes ago, micklner said:

Look at the losses over years and years.

 

This handily sums it up.

 

https://knowledge.sharescope.co.uk/2023/07/12/is-warlord-games-a-potential-game-changer-for-Hornby/

 

No; that doesn't answer my question.

 

You said:

  

23 hours ago, micklner said:

Hornby simply keep what actually makes money,and sell the rest off if ?? they can find any buyers. If not knock them on the head, they have far too many "Names " that are "bleeding" money big time.

 

I am asking you which names and your evidence to back that statement up. We know they lose money; but which brands are "bleeding"?

[micklner]

With a SIX Million loss all of them .

[AY Mod]

6 minutes ago, micklner said:

With a SIX Million loss all of them .

 

You don't know that; you can't tell that - no-one outside the business can.

 

You said "Hornby simply keep what actually makes money" so I'll switch the question round and ask you which bits "actually make money"?

[BWsTrains]

On 14/08/2023 at 08:46, melmerby said:

The Dean Goods is a fairly simple design (unlike DJM's atrocities) and there doesn't seem to be much that could stop it working. Maybe just a QC problem?

 

See many of the 86 pages here for various answers, many of us carry the scars!

 

oxford-rail-announces-oo-gauge-gwr-dean-goods

Edited August 15, 2023 by BWsTrains
86 pages

[micklner]

4 minutes ago, AY Mod said:

 

You don't know that; you can't tell that - no-one outside the business can.

 

You said "Hornby simply keep what actually makes money" so I'll switch the question round and ask you which bits "actually make money"?

A million dollar question or in Hornby's case Six . Hornby are the only ones who know that answer as already said , sadly they seem to be scratching their combined heads !!

A Very sad scenario and no good will come out of it for anybody, if they dont sort it very soon. Hopefully they will .

[melmerby]

37 minutes ago, BWsTrains said:

See many of the 86 pages here for various answers,

Of which I was a considerable contributor.

[Steamport Southport]

On 09/08/2023 at 20:45, Ravenser said:

 

A shocking 8 years after it was released , Margate are still trying to shift a stock of unwanted Adams radials. It seems that the market may not be able to absorb RTR duplication of a class of 3 used only on one branchline  . Who'd a thunk it?? The Dean Goods is a couple of years more recent, heavily criticised - and Margate are still stuck with a pile of them they can't get rid of. If you ever wondered whether forums could really sink a model , and could actually inflict serious financial damage on the manufacturer of a criticised RTR release - here's your evidence

 

 

 

 

Surely you mean a class of 71 that spent most of their lives as Suburban tank engines around London until displaced by M7s and then electrification, where upon they started to be used as cross country engines?

 

It was only the three late survivors that toddled around on branch lines. They worked as main line engines for about 40 to 50 years!

 

https://sremg.org.uk/steam/0415class.shtml

 

Just need to back date the boiler fittings and you've got a perfect loco for those new LSWR coaches.

 

 

 

Jason

[frobisher]

15 hours ago, adb968008 said:

The major issue with the mk3 was assembly (stepboards, couplings) and the shade of light grey used on exec/scotrail.

 

Not forgetting the godawful underframe...

[Ravenser]

This is not specifically an Oxford Rail matter (and this is an Oxford Rail thread) but...

 

Having looked at the linked piece , this bit leapt out and hit me:

 

Quote

For a business with hardly any retail stores – apart from a visitor centre in Margate -Hornby has also been very slow to embrace the internet and direct-to-consumer sales.

Last year, only 15.5 per cent of its sales and 8 per cent of its sales volumes were over the Internet, although this has been improving. The majority of its sales are still made through third-party distributors.

 

Those comments will have many members of this community choking on their coffee, because it is recieved wisdom in much of the hobby that direct sales by Hornby are intolerable and immoral , and the target sales volume over the internet should be "as near zero as possible. "

 

Indeed that small third party distributors are the only legitimate sales channel for Hornby...

 

The fight against Hornby concession outlets, deals with boxshifters, and above all the website, within the hobby has been ferocious, over many years. However that plainly isn't how outside observers see the situation. For better or worse.

 

I still stand by my basic point. Oxford Rail models haven't sold - as evidenced by the desperate measures being taken to shift remaining stocks of models released many years ago. That amounts to commercial failure for Oxford Rail.

 

The QC issue is perhaps explained by the reflection that diecast doesn't have to work. Hence Oxford Rail were on fairly safe ground with wagons - but apparently got into quite a lot of trouble with locomotives.

Edited August 16, 2023 by Ravenser

[BachelorBoy]

On 15/08/2023 at 15:26, AY Mod said:

I am asking you which names and your evidence to back that statement up. We know they lose money; but which brands are "bleeding"?

 

This doesn't answer that question, but it is interesting to see that Hornby's losses extend beyond the shores of the UK of GB and NI....    Looks like Italian brands could be doing OK

[Dunsignalling]

There is an argument that there's no such thing as a poor seller, it's all down to producers not judging the correct quantity.....😉   

Edited August 17, 2023 by Dunsignalling

[darrel]

13 hours ago, Ravenser said:

For a business with hardly any retail stores – apart from a visitor centre in Margate -Hornby has also been very slow to embrace the internet and direct-to-consumer sales.

Last year, only 15.5 per cent of its sales and 8 per cent of its sales volumes were over the Internet, although this has been improving. The majority of its sales are still made through third-party distributors

Hardly surprising when Hornby are only selling at the RRP and the retailers are selling them cheaper. Why pay more to buy direct from Hornby? 

[34theletterbetweenB&D]

14 hours ago, Ravenser said:

The QC issue is perhaps explained by the reflection that diecast doesn't have to work. Hence Oxford Rail were on fairly safe ground with wagons - but apparently got into quite a lot of trouble with locomotives.

 I well recall posting this in 2017, when the only 'Oxomotive' available was the Adams Radial:

"I feel they have done a reasonable job climbing the learning curve, but have found it considerably steeper and more extended than anticipated. I would propose that model railway product is for complexity an order of magnitude ahead of same scale diecast road vehicles. The externally visible form has to be correct on both, but in the railway item this must be achieved within the constraints of matching a standard for the working parts and any necessary mechanisms, to ensure correct operation within a system by those purchasers intent on using the item on a layout. (I imagine the most severe test of operation of diecast road vehicles is an owner wheeling it 'brm, brm brm' to its permanent shelf position.)"

 

That said, would I rate their Adams Radial better or worse than Bach split chassis locos (their entry product) versus the  Hornby and Lima contemporary tender drive/power bogie, traction  tyre dependent, items? Definitely superior, but the advances Bach, Hornby, Heljan, Dapol had made since these died off, meant the competitive environment was way more challenging.

 

 

[Mike Harvey]

Oxford Rail is showing 45 items in stock, excluding 2 bundles and 9 Oxford Diecast items. The rest are sold out or for future release. No indication of quantities but they alone are not going to account for the end 2022 stock bulge at Hornby because they were almost all already in stock at that stage.

 

https://www.oxforddiecast.co.uk/collections/oxford-rail?pf_t_availability=In+Stock

 

And the future unreleased models:-

 

https://www.oxforddiecast.co.uk/collections/oxford-rail?pf_t_availability=Future

Edited August 17, 2023 by Mike Harvey
added links

[Ravenser]

On 17/08/2023 at 17:15, Mike Harvey said:

Oxford Rail is showing 45 items in stock, excluding 2 bundles and 9 Oxford Diecast items. The rest are sold out or for future release. No indication of quantities but they alone are not going to account for the end 2022 stock bulge at Hornby because they were almost all already in stock at that stage.

 

https://www.oxforddiecast.co.uk/collections/oxford-rail?pf_t_availability=In+Stock

 

And the future unreleased models:-

 

https://www.oxforddiecast.co.uk/collections/oxford-rail?pf_t_availability=Future

 

That brings us back to where we started... Hornby have sent out an email to those ordering the future models via the Hornby website , saying their orders have been cancelled.

 

And, yes, I do believe that signals that those models are going to be cancelled, and will never appear.

 

I cannot imagine the new regime at Margate signing off production of a J26 when they have J27s they can't shift stuck in the warehouse. Not when they have signalled that they intend to make what sells, not what doesn't. Reallocate those production slots to TT:120....

 

I can also imagine a conversation at Margate "So why do you want to make this 35T tanker? We're already doing the TTA in OO. We've got the Oxford 10T . Why do we need this???" "Oh, we used to do it in Airfix? Then re-run that as a Classic. Oh, we sold the moulds cos it was limited production/low sales...?"

 

That might be misplaced thinking, but I can certainly imagine that's how a new "sales-driven" regime looking at this project might think.

 

The Oxford Rail 10T tank wagon has been given the thumbs up - they've duplicated it in TT:120 . That might have a future in the main Hornby range, as might the open wagon 

 

What we do not know is how the pre-orders are split between the Hornby and Oxford websites . If most of them are through the Hornby site - and that must have a far greater market reach - cancelling the Hornby site pre-orders might go a long way to terminating the project

 

I don't doubt that an awful lot of the Hornby inventory bulge is not Oxford Rail (Some of it is LMS suburbans, J15s and D16/3s... all Hornby models). But I reckon Oxford has been a noticeable part of the problem , so closing down the Rail side of Oxford makes sense

[meatloaf]

11 minutes ago, Ravenser said:

 

That brings us back to where we started... Hornby have sent out an email to those ordering the future models via the Hornby website , saying their orders have been cancelled.

 

And, yes, I do believe that signals that those models are going to be cancelled, and will never appear.

 

I cannot imagine the new regime at Margate signing off production of a J26 when they have J27s they can't shift stuck in the warehouse. Not when they have signalled that they intend to make what sells, not what doesn't. Reallocate those production slots to TT:120....

 

I can also imagine a conversation at Margate "So why do you want to make this 35T tanker? We're already doing the TTA in OO. We've got the Oxford 10T . Why do we need this???" "Oh, we used to do it in Airfix? Then re-run that as a Classic. Oh, we sold the moulds cos it was limited production/low sales...?"

 

That might be misplaced thinking, but I can certainly imagine that's how a new "sales-driven" regime looking at this project might think.

 

The Oxford Rail 10T tank wagon has been given the thumbs up - they've duplicated it in TT:120 . That might have a future in the main Hornby range, as might the open wagon 

 

What we do not know is how the pre-orders are split between the Hornby and Oxford websites . If most of them are through the Hornby site - and that must have a far greater market reach - cancelling the Hornby site pre-orders might go a long way to terminating the project

 

I don't doubt that an awful lot of the Hornby inventory bulge is not Oxford Rail (Some of it is LMS suburbans, J15s and D16/3s... all Hornby models). But I reckon Oxford has been a noticeable part of the problem , so closing down the Rail side of Oxford makes sense

Ive been after a J15 and i dont see them on the Hornby site. Cant really find anywhere with them but i di remember them being very cheap a while back

[Dominion]

I have 4 Oxford Rail locos and many wagons.  The locos all run very well, and I see very little inventory available of the items in their range I would still like. I for one think Oxford have already made a very good contribution to the models available to us and I hope they continue. 
Tom

[Dunsignalling]

10 hours ago, meatloaf said:

Ive been after a J15 and i dont see them on the Hornby site. Cant really find anywhere with them but i di remember them being very cheap a while back

It's probably being "rested" for a year or two for a new demand to build up.

 

The J15 was just one of Hornby's too-soon-and-over-produced follow-up runs that took ages to clear and ended up heavily discounted.

 

They did it with a number of locos, and I benefited from a 72xx tank, an extra S15, a 700 for a mate, and something else that slips my mind!  

 

John

[34theletterbetweenB&D]

10 hours ago, Ravenser said:

...I cannot imagine the new regime at Margate signing off production of a J26 when they have J27s they can't shift stuck in the warehouse...

So, opportunity for 'someone' to offer a conversion kit?

 

10 hours ago, Ravenser said:

...I do believe that signals that those models are going to be cancelled, and will never appear.

No great surprise. Of all the locos the N7 should have future potential for Hornby; except of course that it makes all their Big Four tank locos look shabby, other than the J50 and Terrier...