Hornby Trading update - positive

[The Stationmaster]

On 20/01/2024 at 13:00, ruggedpeak said:

Whilst I get that the mainstream media don't understand the hobby, that is part because if a story comes up and they want more info they will trawl the relevant specialist press. The question I would ask (as I don't know the answer) is whether model railways has any meaningful specialist business press reporting on it? Who offers business commentary on what is going on that they can tap into? There was certainly no specialist business sector financial reports from agencies as it is too small and is seen as a small subset of the toy market when I used to have access to business reports.

 

The average journo will be unaware that Hornby is fighting in the train sector against a string of effective new entrants, this is not a dormant or dying market. But since no one actually reports on it, and meaningful market data is scarce, it is little wonder the MSM don't get it right. The model train industry has done well to get in front of punters via TV etc, but business wise it is perceived to be a tiny backwater for a certain demographic. No one seems to be pushing the business angle that is a vibrant and diverse market of X size and worth exploring further.

 

Just a thought.

You will find Hornby dealt with on some 'financial', i.e. aimed at investors, websites but that is simply whether or not they're a good or bad investment bet,  And inevitably those sites completely ignore the wider market and competitive situation (probably because they don't know about it).

 

There are numerous wildly varying guesses or comments about the total size of the UK model railway market (including mine) but the simple fact is that such information isn't in the public domain.  Only one retailer (Hattons) seems to quote sales revenue and there is an incomplete picture from the various manufacturers who provide publicly available sales information let alone those who don't have any account information at all in the public domain.  For example Hornby don't tell us, and haven't since a sudden disclosure in 2017. how much of their revenue comes from the UK model railway sales.

 

So market size, buoyancy - or otherwise - of demand, and market share are hardly in the public domain and are difficult to even surmise from whatever information does exist.   A good example is Accurascale's recent comment that they have so far sold 18,000 EE Type3s/Class 37s - but we don't know how many Bachmann have sold so even there we don't know the size of the current hi-fi Class 37 market.  And are Class 37s alone any guide to the total size of the UK 00 market for hi-fi diesel outline models?  Presumably when they invest the manufacturers will have a pretty good idea of what is marketable but we don't know their balances between quantity and cost and the impact of that on price.  And in many cases price affects the marketability.   Similarly if the end customer is upfront funding development and tooling we don't even know if an apparent 'oddball' is a model that would be a worthwhile investment for a manufacturer or comissoner who funds everything themselves.

 

There an awful lot of blank areas out there in the model railway market and anyone who funds development is either a wizard at getting the right thing, or equally clever at picking something with inevitable high volume sales which will reduce RRP, or just plain lucky or unlucky.

[stonesboy]

On 19/01/2024 at 10:42, The Stationmaster said:

Of course we don't know the results by brand.   On past information I reckon their railway sales are probably no more than 10-12% of total sales although the percentage is likely to be higher in the immediate pre-Christmas period where trainsets still seem to figure as purchase for some age groups.  Plus in the pre-Christmas period they obviously reduced prices on some low end model railway items which might have had an  impact.

But we should not overlook the fact that we don't know how the different brands are performing and which of them are increasing online sales (in the past the differences between brands in online sales was very noticeable).

 

Clearly the overall results are encouraging with bottom line benefits from the reduction in the size of the inventory - which alas is still huge - and the small improvement in nett debt.   The improvement in margin is also encouraging but also indicates that online purchases are becoming more important at the cost of sales via retailers.  But, perhaps, most encouraging, is the increase from 'new customers' - no doubt online and whatever they might be buying.  

 

Clearly some people are happy with the results as the share price is currently up 2.5p on yesterday.  So some encouraging numbers but don't forget that in terms of sales the period covered is being compared with poor results in the same quarter last year.

 

The most interesting number in their is that their 5% growth compares well with an overal wider market area 1.5% decline in sales.  Apart from Hornby comparing with a previous year's poor performance does it also mean we are seeing a sign, once again, of creative hobbies doing better than many other things in times of dismal economic news?

 

 

Last information provided showed that Hornby trains made approx 50% of total sales. Although that was in 2017.

[davepallant]

Good news for Hornby! Full disclosure I bought some Hornby shares a few weeks ago after avoiding them like the plague. I own a few Hornby locos and a full length Pendolino to run on our club layouts even though I own an N gauge layout and lots of stock for that. Hornby had seemed to 'bottom out' over the last few months and I thought maybe there was somewhere to go after all.

 

The other thing that made me interested again around Christmas was one of the large shareholders in Hornby (Phoenix Asset Management) forcing Stanley Gibbons (stamps) into taking the company back from shareholders and giving control back to Phoenix who owned their debt. Phoenix had apparently been trying to get Stanley Gibbons to stop behaving like they were selling investments and get back to being a company for stamp collecting hobbyists. Before that Phoenix were a major investor in Games Workshop which has been doing enormously well for quite a few years now. If there was a company that needed to be creative to create and build a market for hobbyists of tabletop games and figures then it was Games Workshop.

 

The investment manager and co founder at Phoenix seems to understand how a company needs to keep the customers and hobbyists happy rather than investors. There's a Phoenix employee on the board at Hornby so hopefully the same ideas are working at some level to steer Hornby in an appropriate direction for gaining new customers and making stuff that they can afford and keep them happy.

 

Dave

[The Stationmaster]

15 hours ago, stonesboy said:

Last information provided showed that Hornby trains made approx 50% of total sales. Although that was in 2017.

Hornby 2017 total revenue £47.4 million.   Model railway total  revenue £22 million,  of which 45% was sales in the UK.  Therefore their UK model railway sales - which is what we are talking about - amounted to £9.9 million.

 

That percentage projected forward (not exactly reliable I know) would have given them UK model railways sales of £12.38 million in their FY to end of Match 2023.

 

14 hours ago, davepallant said:

Good news for Hornby! Full disclosure I bought some Hornby shares a few weeks ago after avoiding them like the plague. I own a few Hornby locos and a full length Pendolino to run on our club layouts even though I own an N gauge layout and lots of stock for that. Hornby had seemed to 'bottom out' over the last few months and I thought maybe there was somewhere to go after all.

 

The other thing that made me interested again around Christmas was one of the large shareholders in Hornby (Phoenix Asset Management) forcing Stanley Gibbons (stamps) into taking the company back from shareholders and giving control back to Phoenix who owned their debt. Phoenix had apparently been trying to get Stanley Gibbons to stop behaving like they were selling investments and get back to being a company for stamp collecting hobbyists. Before that Phoenix were a major investor in Games Workshop which has been doing enormously well for quite a few years now. If there was a company that needed to be creative to create and build a market for hobbyists of tabletop games and figures then it was Games Workshop.

 

The investment manager and co founder at Phoenix seems to understand how a company needs to keep the customers and hobbyists happy rather than investors. There's a Phoenix employee on the board at Hornby so hopefully the same ideas are working at some level to steer Hornby in an appropriate direction for gaining new customers and making stuff that they can afford and keep them happy.

 

Dave

I hope you bought when the bid price was below 15p.  I was getting close to being tempted to buy a thousand at that price but didn't bother in the end - index linked NS&I certificates are a much safer bet

[scottrains29]

Oh dear, one way to really annoy your customers is to send an email out saying your New Year sale will end at midnight today then pull it several hours before. I had a number of items in my basket earlier then they all doubled in price!!🫣

I bet Hornby have just missed out on a load of orders.

[melmerby]

15 minutes ago, scottrains29 said:

Oh dear, one way to really annoy your customers is to send an email out saying your New Year sale will end at midnight today then pull it several hours before. I had a number of items in my basket earlier then they all doubled in price!!🫣

I bet Hornby have just missed out on a load of orders.

I would complain to Hornby.

IMHO that's bordering on illegal. (Misleading advertising)

Edited January 23 by melmerby

[The Stationmaster]

17 minutes ago, melmerby said:

I would complain to Hornby.

IMHO that's bordering on illegal. (Misleading advertising)

It does however depend on when the email was sent.  I often receive emails which seem to take several days to travel from one end of our house to the other while Farcebook posts made by relatives, especially when they're abroad, usually seem to reach me as long as a week (occasionally even longer) after they've got home.

 

e.g Yesterday afternoon my wife sent me a link about a nearby road closure later this week - it had not reached me by midnight although it was here ready to be opened this morning.  So it took in excess of c.6-8 hours to travel no more than 12 feet - although it probably went halfway round Europe in order to make the journey.  And we use the same email client system

[scottrains29]

The email (sent just a few days ago) specifically said until midnight on Tuesday the 23rd you can enjoy double points on the New Year sale items.

 

Looks like both the double points offer and the New Year sale have both been removed early.

 

Perhaps they already reached their sales target and didn't want any more!

[ruggedpeak]

On 21/01/2024 at 14:20, The Stationmaster said:

A good example is Accurascale's recent comment that they have so far sold 18,000 EE Type3s/Class 37s - but we don't know how many Bachmann have sold so even there we don't know the size of the current hi-fi Class 37 market. 

Yeah, but 15,000 of those 37's went to Ebay resellers who are now trying to offload them as they thought they were limited production runs!! Will be a long time before the 'brand new' or 'as new' supply of 37's dries up on there.

 

In the BRM interview there was one comment that was of interest. Hornby are going to have some locos permanently available in the range, so that they will always be some core models available (hopefully in shops and not just direct online). This is sensible for Hornby and the hobby as the pre-order malarkey is no use for new entrants to the hobby or the casual purchaser. Clearly some proper thinking going on in Margate.

 

 

[Robin Brasher]

I hope that Hornby will also have some core models of rolling stock permanently available as well

[E100]

28 minutes ago, Robin Brasher said:

I hope that Hornby will also have some core models of rolling stock permanently available as well

 

In the same interview that was mentioned at the same time.

[Robin Brasher]

I have not seen the BRM interview. Will you please let me know how to access it?

[AY Mod]

Just now, Robin Brasher said:

I have not seen the BRM interview. Will you please let me know how to access it?

 

Available on newsstands from yesterday but the best value way is to take out a digital subscription or even support RMweb too with a World of Railways plus digital subscription - https://www.world-of-railways.co.uk/membership

[Robin Brasher]

I have now bought a copy of the March BRM and at £9.99 it is the most expensive magazine I have ever bought. I started buying magazines with the January 1961 Meccano Magazine for 1 shilling and 3 pence.  In those days Hornby Dublo,  Hornby 0 clockwork 0 gauge and Tri-ang all had more coherent ranges than Hornby does now. 

 

 

[woodenhead]

£9.99 dont you mean £5.49?

[Robin Brasher]

1 minute ago, woodenhead said:

£9.99 dont you mean £5.49?

I wish I did. I took it up to the counter at WH Smith at Swanage and the assistant said £9.99. I replied £9.99! Then the assistant pointed to the small print on the cover of the magazine and looked at me as if I could not read. I will be sticking with the Railway Modeller next time.

[AY Mod]

It's a special issue including Traction and a DVD.

[Bulleidboy100]

Still cheaper than Cavallino - £19.95 bi-monthly.

[1andrew1]

Hornby Share price up to 21p. 

[The Stationmaster]

On 30/01/2024 at 12:23, 1andrew1 said:

Hornby Share price up to 21p. 

Now ack down a little.  but there was a reason for the price rising as that reflected share trading quantities following the issue of some information by RNS (which was nothing to do with revenue etc.

[ThaneofFife]

On 23/01/2024 at 17:57, The Stationmaster said:

It does however depend on when the email was sent.  I often receive emails which seem to take several days to travel from one end of our house to the other while Farcebook posts made by relatives, especially when they're abroad, usually seem to reach me as long as a week (occasionally even longer) after they've got home.

 

e.g Yesterday afternoon my wife sent me a link about a nearby road closure later this week - it had not reached me by midnight although it was here ready to be opened this morning.  So it took in excess of c.6-8 hours to travel no more than 12 feet - although it probably went halfway round Europe in order to make the journey.  And we use the same email client system

Your wife had to email you when only  12 feet away?   

[MartinRS]

15 hours ago, ThaneofFife said:

Your wife had to email you when only  12 feet away?   

Perhaps his mobile was going straight to voicemail?