Frasers Group (nee Sports Direct) raises stake in Hornby to 9%

[The Stationmaster]

3 hours ago, ruggedpeak said:

That is one of the areas that Frasers could bring their expertise to bear and add value. Hornby are still following a core operating model that has not changed in decades, even as competitors enter the market very successfully using other methods.

Simple questions.  Do they know the model railway market and how it works; do they know the slot car market and how it works; do they know the plastic kit market and how it works - and more.   In fact do they even know the size of those markets and the spending power in them or how pricing impacts volume impacts sales, and so on?

 

Why has someone like Accurascale been able to offer the sort of prices they do for model locos while other can't (one hint - volume)?  Why have some retail commissioners sold more, far more, of some of their models than Hornby manage to sell of some of their hi-fi/mainstream models (one hint - knowing the market)?  Can Frasers/Mike Ashley answer those questions I wonder?

 

Frasers could probably do pt retty well on TT120 marketing and sales at this point in the life of the range where there still emphasis on starting with a trainset.  Could they sort out the marketing of Railroad - possibly but they needa lot of wider knowledge than they would with TT120.  But would they know what hi-fi- loco  to develop that would sell in sufficient quantities to keep the price under (or even well under) £200?

[adb968008]

25 minutes ago, The Stationmaster said:

Simple questions.  Do they know the model railway market and how it works; do they know the slot car market and how it works; do they know the plastic kit market and how it works - and more.   In fact do they even know the size of those markets and the spending power in them or how pricing impacts volume impacts sales, and so on?

 

Why has someone like Accurascale been able to offer the sort of prices they do for model locos while other can't (one hint - volume)?  Why have some retail commissioners sold more, far more, of some of their models than Hornby manage to sell of some of their hi-fi/mainstream models (one hint - knowing the market)?  Can Frasers/Mike Ashley answer those questions I wonder?

 

Frasers could probably do pt retty well on TT120 marketing and sales at this point in the life of the range where there still emphasis on starting with a trainset.  Could they sort out the marketing of Railroad - possibly but they needa lot of wider knowledge than they would with TT120.  But would they know what hi-fi- loco  to develop that would sell in sufficient quantities to keep the price under (or even well under) £200?

I have my doubts on Frasers ability for all of that.

 

I’m just trying to figure in my mind how they could persuade Phoenix to sell a large stake, without offering a large bundle of cash..and why for a company whom Phoenix has burned up millions into with not much progress, plus that company also with a large amount of loans and if they did could Frasers still make money out of it by selling the parts separately… and if that was a lucrative option why wouldnt Phoenix do it without them ?
 

But as it is, unless Hornby is sitting on an innovation of the century thats going to take the market by storm, I only see fiddling around the edges as a way forwards and more of the same if its kept whole, and i’m not sure why Frasers would want that ?

 

At the same time, if this wasnt hostile, why not approach Phoenix directly and buy in, they just bought a minority stake off a minority shareholder without a path to majority that doesnt involve Phoenix.

 

Frasers might have the power in China but its still 2 years to do a tooling, the demand is still finite and the models are fashion accessories which means the desire to buy fades with time, but with the added baggage the models dont decay to waste over winter, they hang around for decades.

 

last time phoenix had a small stake was the battle with Pistoia and i’m not sure they want that again... but is that what this is….?

 

Could the strategy be much simpler…. buy a shareholding, become unruly and beligerant, risk the whole business and seek a share buy back premium payout from Hornby or Phoenix or let it sink… afterall this is chump change to Frasers, but a bigger risk to Phoenix which forces them into an even larger stake in Hornby ?

 

 

 

 

 

 

 

Edited March 22 by adb968008

[micklner]

15 minutes ago, The Stationmaster said:

Simple questions.  Do they know the model railway market and how it works; do they know the slot car market and how it works; do they know the plastic kit market and how it works - and more.   In fact do they even know the size of those markets and the spending power in them or how pricing impacts volume impacts sales, and so on?

 

Why has someone like Accurascale been able to offer the sort of prices they do for model locos while other can't (one hint - volume)?  Why have some retail commissioners sold more, far more, of some of their models than Hornby manage to sell of some of their hi-fi/mainstream models (one hint - knowing the market)?  Can Frasers/Mike Ashley answer those questions I wonder?

 

Frasers could probably do pt retty well on TT120 marketing and sales at this point in the life of the range where there still emphasis on starting with a trainset.  Could they sort out the marketing of Railroad - possibly but they needa lot of wider knowledge than they would with TT120.  But would they know what hi-fi- loco  to develop that would sell in sufficient quantities to keep the price under (or even well under) £200?

Nothing that cant be overcome , all they have to is hire the right people for the job , pay a reasonable wage and sort out the rubbish that makes no money and is still being made. If there isnt any rubbish???? , then they need to reduce the prices and up the quality otherwise they sink for good.

Too many other companies are now the leading lights, in a relatively small market, Hornby are not competive enough, they seem to kid themselves that everybody want Hornby etc before any other brand, those days are long gone and will not return in the short term or perhaps even the long term unless they up their game no matter who the owners are.

 

Do Hornby still need to be in a defunct factory ??, many miles from main shopping areas , how many people/customers would be bothered where they are based. I would'nt.

[1andrew1]

6 minutes ago, adb968008 said:

=Could the strategy be much simpler…. buy a shareholding, become unruly and beligerant, risk the whole business and seek a share buy back premium payout from Hornby or Phoenix or let it sink… afterall this is chump change to Frasers, but a bigger risk to Phoenix which forces them into an even larger stake in Hornby ?

So far, Frasers  has bought a stake in Hornby and seen the investment rise substantially in value. Not bad for Frasers or the other shareholders, primarily Phoenix.

 

The next step seems to be to try and help continue the share price growth by sharing expertise with Hornby and seeing if there's more areas the two companies can collaborate on.

 

After this, it's all a bit of an unknown. If Frasers think they can run Hornby better by taking control and it's worth their while, then I'm sure Phoenix will be pleased to sell them their controlling stake. But would it really be worth  spending Frasers' management time on such a niche, low margin business? 

 

Perhaps Frasers see a Wonderworks or a Warlord retail opportunity they can roll out to reinvigorate Game?  With traditional computer games sold by Game moving to online downloads, it does seem to be moving towards being a more traditional games retailer by necessity.

[Michael Hodgson]

4 hours ago, ruggedpeak said:

 

Two more points I'd make, firstly moving away from China is now a strategic security and economic imperative for reasons we all know, so huge efforts are being put in globally to find other locations for things China currently does.

 

Maybe I've missed something but whilst I agree that model railways are important, I wouldn't put them very high up the list when it comes to their significance to our strategic national interest.

 

 

[Michael Hodgson]

3 hours ago, The Stationmaster said:

Simple questions.  Do they know the model railway market and how it works; do they know the slot car market and how it works; do they know the plastic kit market and how it works - and more.   In fact do they even know the size of those markets and the spending power in them or how pricing impacts volume impacts sales, and so on?

 

 

 

Of course.  They're only 1/72nd  the size of full size markets, or in TT's case, 1/120th !

[GrumpyPenguin]

3 hours ago, micklner said:

Do Hornby still need to be in a defunct factory ??, many miles from main shopping areas , how many people/customers would be bothered where they are based. I would'nt.

I was going to refrain from commenting on this thread as I find the whole speculations quite amusing.

 

Clearly, you have no idea of the geography of Thanet. The Hornby facility is within half a mile of Westwood Cross (Primark, WHS, Waterstones ect), Various Westwood Retail parks (Halfrauds, Dunelm, B & M, Pets at Home, Tesco (a biggie), Currys, Sainsbury's ect) and over the road from B & Q.

Edited March 22 by chiefpenguin

[teletougos]

11 hours ago, Michael Hodgson said:

 

Maybe I've missed something but whilst I agree that model railways are important, I wouldn't put them very high up the list when it comes to their significance to our strategic national interest.

 

 

It's been said that the reason TT survived in Eastern Europe was that there was strategic value or military applications in the smaller motors developed for N scale. Whether that's true or an old husbands' (?) tale I don't know. 

[HExpressD]

11 hours ago, Michael Hodgson said:

 

Of course.  They're only 1/72nd  the size of full size markets

They've grown a bit then ;)

[The Stationmaster]

16 hours ago, 1andrew1 said:

So far, Frasers  has bought a stake in Hornby and seen the investment rise substantially in value. Not bad for Frasers or the other shareholders, primarily Phoenix.

 

The next step seems to be to try and help continue the share price growth by sharing expertise with Hornby and seeing if there's more areas the two companies can collaborate on.

 

After this, it's all a bit of an unknown. If Frasers think they can run Hornby better by taking control and it's worth their while, then I'm sure Phoenix will be pleased to sell them their controlling stake. But would it really be worth  spending Frasers' management time on such a niche, low margin business? 

 

Perhaps Frasers see a Wonderworks or a Warlord retail opportunity they can roll out to reinvigorate Game?  With traditional computer games sold by Game moving to online downloads, it does seem to be moving towards being a more traditional games retailer by necessity.

The share price has only risen because someone (Frasers Group) has been buying shares - that's how the stock market works.  But the market also looks at yield which means results from the company's activity producing sufficient income to justify the price paid for shares and the price at which they trade.  So Hornby's Trading Statement that should emerge late next month could be a big factor in what happens next.  Share price movements in the days before that statement is released might give a clue but that hasn't always worked with Hornby shares.

 

I agree very much with adb in wondering what Ashley is at and why?  And let's not forget that Frasers Group is very much into share buy-backs and Hornby has the power from past AGM resolutions to buy back shares (although I doubt they were meant for this!).  A while back Hornby shares were so cheap I even considered buying some -  if I had I'd now be sitting on a profit  (less fees) of over £200.   And all these goings on would almost pay for a new Hornby Black 5; maybe Mike Ashley really does offer some uses for railway modellers?

[Michael Hodgson]

5 hours ago, The Stationmaster said:

 A while back Hornby shares were so cheap I even considered buying some -  if I had I'd now be sitting on a profit  (less fees) of over £200.   And all these goings on would almost pay for a new Hornby Black 5; maybe Mike Ashley really does offer some uses for railway modellers?

That would of course have depended on how many you bought and exactly when you bought & sold. 

 

But I like the idea of reinvesting in the company by buying a loco - perhaps we should try lobbying the Chancellor to get that technique incorporated into the ISA rules!

[teletougos]

Thanks for the discussions. How has manufacturing in Vietnam panned out so far for the model railway brands doing it?  Roco I think was suggested.

[ruggedpeak]

Roco and Fleischmann are part of the same group, both produce high quality model trains in HO and N without using factories in China. They are a well known and successful brand in Europe. I have some of their locos and they are as good as any UK outline model. A particular challenge is Euro loco liveries as there are lots of complex liveries to replicate. The Swiss SBB Re 460 loco class alone has a never ending stream of complex liveries as they use the ribbed loco sides to promote all sorts of things, this being a good example from Roco

 

 

The Vectron locos are even worse for complex liveries!

 

In 2020 Roco were the no.1 DC analogue model train company in Europe and no.2 in DCC after Marklin. So they seem to be doing very well without Chinese factories.

 

https://www.fleischmann.de/fen/locations

 

https://manufacturing-today.com/news/roco-modelleisenbahn/

 

 

[GrumpyPenguin]

1 hour ago, teletougos said:

Thanks for the discussions. How has manufacturing in Vietnam panned out so far for the model railway brands doing it?  Roco I think was suggested.

From recent Roco purchase's it looks to me like locomotives are produced in Europe and rolling stock in Vietnam.

 

A fair amount of "soft" scenics are also produced in Vietnam.

[The Stationmaster]

18 hours ago, Michael Hodgson said:

That would of course have depended on how many you bought and exactly when you bought & sold. 

 

But I like the idea of reinvesting in the company by buying a loco - perhaps we should try lobbying the Chancellor to get that technique incorporated into the ISA rules!

I was thinking of buying 1,000 shares - a nice round number.  So at c.15p - which they were at the time - they would have been cheaper than many r-t-r locos and selling now would be enough to buy a loco plus my original investment back (less fees of course).  So ISA rules would make a lot of sense in this situation!!

[1andrew1]

6 hours ago, teletougos said:

Thanks for the discussions. How has manufacturing in Vietnam panned out so far for the model railway brands doing it?  Roco I think was suggested.

Modelleisenbahn GmbH (Roco & Fleischmann) has ported its manufacturing skills over to its factory in Vietnam. However, this doesn't directly benefit Hornby. It's more a case now of the OEMs in Vietnam getting up to speed on model railway manufacture so they can deliver and bid for more work from brands like Hornby than just Playtrains.

[tomparryharry]

Aha! I can see it now! 

 

To the mark the occasion, perhaps Hornby might release some limited edition Flying Scotsman jogging bottoms, with Beatles motifs on the posterior of said owner/wearer*

 

* Prospective purchasers are advised to buy the double tender version, for the larger 'fit'....

[Fireline]

On 22/03/2024 at 17:31, 1andrew1 said:

If Frasers think they can run Hornby better by taking control and it's worth their while, then I'm sure Phoenix will be pleased to sell them their controlling stake.

 

Have you actually asked Phoenix, or is this based on supposition?

[GrumpyPenguin]

45 minutes ago, tomparryharry said:

Aha! I can see it now! 

 

To the mark the occasion, perhaps Hornby might release some limited edition Flying Scotsman jogging bottoms, with Beatles motifs on the posterior of said owner/wearer*

 

* Prospective purchasers are advised to buy the double tender version, for the larger 'fit'....

For some strange reason my brain though "said" should be "sad"......

Edited March 25 by chiefpenguin

[adb968008]

On 24/03/2024 at 08:12, teletougos said:

Thanks for the discussions. How has manufacturing in Vietnam panned out so far for the model railway brands doing it?  Roco I think was suggested.

Rocos made some great stuff from Vietnam no complaints
 

You do need to look at the box though to find whats made where, as some comes from other places… you wouldnt know any other way.

 

Which brings me around to QA… Ive quite a HO collection, alongside my OO collection, yet in 30 years plus, Ive only ever had 1 HO item (inc wagons and rolling stock) with a fault.. that was a Piko EU07 with a glazing piece missing.. they overnighted it to me from Germany.

 

Ive nothing in OO that meets that standard, typically ive 2-4 a year with an issue.

Then of course you have multiple HO manufacturers, making in factories scattered to the four winds.. but when it comes to livery they all seem to agree and match.

 

OO has come a long way, and in price its starting to overtake, but theres still room for much improvement, HO engineering and quality is very high.

Edited March 25 by adb968008

[GrumpyPenguin]

11 minutes ago, adb968008 said:

You do need to look at the box though to find whats made where, as some comes from other places… you wouldnt know any other way.

In over 40 years of "defecting" I've had one faulty Fleischmann HO locomotive & that was a dry solder joint.

I had a faulty Roco Starter Set but that was due to transit damage.

 

A couple of years ago I had both Trix & Piko ICE sets - the intermediate coaches had "dedicated" 6 or 8 way conductive couplings - they were completly interchangable, the only difference being that the Piko ones did not have interior lights and the centre power cars had different mechanisms. I have no idea who actually made them.

 

The HO vehicle manufactures produce for each other too. Fairly standard practice in Europe.

 

Apologies for the thread drift.

[1andrew1]

2 hours ago, Fireline said:

 

Have you actually asked Phoenix, or is this based on supposition?

If the price is right, I'm sure they would sell as that would maximise the return for their investors in the fund. They're a financial investor, it's not like they're a family holding onto the stake for more emotional reasons. And I don't think Hornby has been a great investment for them to date.

Edited March 25 by 1andrew1

[1andrew1]

2 hours ago, tomparryharry said:

Aha! I can see it now! 

 

To the mark the occasion, perhaps Hornby might release some limited edition Flying Scotsman jogging bottoms, with Beatles motifs on the posterior of said owner/wearer*

 

* Prospective purchasers are advised to buy the double tender version, for the larger 'fit'....

A YouTuber has already shared a video with a mocked-up Sport Direct wagon and trainer brands applied to the Hornby 0-4-0😆

[HExpressD]

1 hour ago, 1andrew1 said:

A YouTuber has already shared a video with a mocked-up Sport Direct wagon and trainer brands applied to the Hornby 0-4-0😆

The same youtuber who is banned from being linked on the forum I believe

[darrel]

Walked past game today noticed they sell scaletrix not sure if that's a new thing or not