GordonC

13 minutes ago, Michael Hodgson said:

This never used to be a problem.  OK, so the range and the standards weren't what they are today, but a train set would consist of Flying Scotsman and a couple of carriages in a livery from the same era to match the loco - or the goods train equivalent.  And it you wanted a longer train, the coaches were also available separately.

But no-one wants the cost of holding stock on shelves for any length of time now whether its retailers or manufacturers. Maybe in the past there was more of a steady trickle of purchases over a longer period of time but I get the impression of there being more purchases of train-loads when new tooling appears and probably far less sales in future years.

6 hours ago, Les1952 said:

 

That is answered pretty comprehensively by Hornby in Peachy120TT's video.  You do need to sit through three quarters of an hour or so to get the whole answer, but it is there.

 

Les

🤷‍♂️ I've got better things to do with my time than sit through 45 mins of video on a scale I'm not interested in. An answer wasn't obvious to a casual observer

2 hours ago, Legend said:

It would be interesting to find out exactly what this slow moving inventory is , remembering it could be Corgi/Airfix/Scalextric  as well as Hornby . 
 

Standard accounting practice is that it should be valued at the lower of cost or Net Realisable Value (ie what you can get for it) - surely we must be on verge of some large write offs ? 
 

Agree with maximisation of tooling and getting as many liveries out as possible . The lack of blue/grey Mk1s this year  and more liveries on the 50 (eg Banger blue) is an example . Also by having blue/grey mk1s they could have stopped valuable tooling costs of mk2e/fs as there would be something for blue diesels to run with .Introduce mk2s later when scale has settled in . Also , while it is early days , according to their 2024 TT120 catalogue they only intend launching Class 37s initially as era 6 (green?) and era 9 (EWS) . Surely if you want to maximise cash flow you would also go for standard and large logo blue ones . TT120 needs critical mass .They seemed to have figured this into their tooling yet won’t get the benefit of it till later . This is a company that needs cash ! 
 

it looks like they’ve decided to make too much of the wrong stuff in the past . But I still think a significant issue is lack of manufacturing capacity which is stopping the maximisation of their tools . They just can’t get the manufacturing slots .

For any Class 37 model, I would have thought BR Blue and Large Logo Blue options would be right up there to produce straight away. If they want to encourage people to the scale then it needs to be things that people want and thats a huge gap between Era 6 and 9. Relatively speaking, it must be lower sums of money to offer more liveries rather than more tooling

12 hours ago, Gallows-Bait said:

I found this topic so interesting I ended up registering so I can comment.

 

Warning: You can tell this is written by an accountant.  If you have a problem with beancounting you may want to skip this one... TL:DR version - main points are the sentences in bold.

 

Looking at both the recent stock market update and the previous financial statements, there are some pretty clear problems at Hornby, but comments such as those by Simon Kohler in Railway Modeller actually don't touch them, they focus on the wrong problem.  In fact the final Outlook section of the trading update Hornby issued does a much better job at actually telling us what the issues are - high stock and high overhead costs.

 

It's not about the competition or the innovation from smaller entrants or any of that.  It's not about firebox lighting or headlamps or detailed underframes.  Sure those drive up the cost of the product and the sales price, but they do that for all manufacturers equally.  They're not why Hornby is in trouble.

 

Yes, there are newer, smaller, entrants to the market.  Normally smaller entrants are more agile, but the larger incumbent players have a massive advantage, which is simply size.  Being larger simply allows Hornby to do everything more efficiently and therefore more profitably.  To blame new entrants into the market for changing the focus of the market, whether it's quality features, wider liveries or larger rakes of wagons, whatever, none of that is really the point.  Hornby can make the exact same moves and do it more cheaply due to their ability to scale up.

 

Ultimately all of the companies are playing the same game, there's no secret advantage, no technology that can't be copied, no significant exclusive product that makes them unique, no monopoly on the market.  They're not Microsoft or Apple with a product you can't live without.  Whether large or small, the products and the processes are pretty much identical.

 

Research -> Design -> Engineering Models -> Tooling -> Production -> Sales (and repeat).

 

With few exceptions (Dapol and PECO) that production is largely happening in India and China, so costs should be expected to be broadly similar regardless of which company is making the model.  The only advantage the smaller companies have that the market has different expectations, they can rely more heavily on a pre-order funding model that reduces their need for costly stock holdings.  That's their agility in play, and it's much needed as they simply don't have the cash that Hornby has to invest in production runs that clear the shelves more slowly.  Of course recently Hornby don't have they money either which is why they're struggling (it is happening somewhat though and I think the TT120 market is probably a good example of this shift happening with Hornby simply not having the excess stock on hand, though whether that's by design or by mistake is a matter of opinion).

 

So if all the players in the game are broadly selling the same goods for the same prices with the same underlying costs, how is it Hornby are struggling so much?  Hornby should have the advantage, they can make larger batches, more product, have more efficient distribution, wider marketing and other theoretically more efficient overheads, so they should be making more profit than the smaller competitors, not less.

 

Fundamentally Hornby are left with two problems then, which are exactly as Hornby have disclosed in their statement.

 

1. Their higher stock position is costing them money.  This one is all about cashflow.  When you have spent all your money buying stock that's sat in a warehouse, that money isn't doing anything useful, like buying more tooling or paying more designers.  Instead Hornby are borrowing more money to pay for that, and borrowing costs interest, so it's a double whammy, your own money is doing nothing and it's costing you to use someone else's.

 

In fact Hornby have a huge and persistent stock problem caused by what I can only assume are bad decisions in their past (railways or other brands, I don't know for sure).  The latest statement indicates their stock level is around £20m (down £3m from previous disclosure which was £23m).  Based on their 2023 account they had £21.3m of stock and turnover of £55.1m that means they have a stock ratio of about 39%.  That means they have effectively about 4 months worth of sales value held in stock doing nothing for the business, not generating a penny.  This is a level so bad that they have removed the Inventory graph from the 2023 annual accounts.  If you look back over past accounts this used to be reported with a pretty graph every year.  In fact between 2004 and 2018 the average stock level was closer to 22% of sales.  And this was with a business model that Hornby acknowledged was on the princple of selling things more slowly over time (the opposite of the current market trend).  So you'd expect Hornby to be reducing stock in line with market trends, not increasing it.  In fact Hornby have doubled their stock level since 2019.

 

To even get back to their previously levels of efficiency in stock, Hornby need to offload about £9m of stock.  It's no coincidence that the level of bank debt has increased by £14m in the same time period and it's clear that the naysayers can't just blame that on tooling up for TT120.  It's caused by stock not selling.  We've all seen the fly on the wall documentary with Simon K and Montana at a fete trying desperately to offload unwanted garbage steampunk sets and the like.  Think of this as at kind of problem but on a massive scale.  It's simply stuff no one wants.  Whether it's bad or just expensive I don't know.  But it's costing Hornby money in bank interest (nearly £700k in bank and loan interest in 2023 when that debt was less than half what it is now).

 

2. Their overheads are out of control.  Hornby should be making the most profit out of the players in the market because they can do things more cheaply when they do them on a larger scale. 

 

Partly this seems to be driven by the obession with online direct sales.  We know from the announcement that around 18% of all sales are online direct sales.  These should be making the most profit out of all sales because they're selling direct at RRP and not having to sell them at wholesale prices to retailers.  Even the points discount is barely a dent in their profitability here as it's only the same as Retailers discount at and those retailers must still make something out of the deal or they wouldn't buy the products.

 

On average Hornby have around a 48-49% profit margin on the actual cost of the product that covers these overheads.  In the 2023 accounts digital sales were £8.5m, which was 15% of total sales.  So those digital sales contributed about £4.3m of profit margin towards the overhead costs of the company.  At the same time the cost of winning those digital sales in overheads went up by £1.9m, so actually those digital sales only contributed £2.4m toward the rest of the overheads - a little over half what they would have done if those sales had simply come from retailers instead.

 

Yes, this is longer term investment for the future, but between 2023 and 2024 the digital sales share of the total has only moved from 15% to 18% of total sales.  That 3% is around £1.6m of extra sales.  Yet total sales are pretty flat at only 2% growth (around £1.1m), so quite a lot of those new digital sales have come from taking market share off of retailers, not from growing new sales/new customers.  And because of this massive investment in digital, they are actually making Hornby less money, not more.

 

Ignoring the one off exceptional costs (writing off bad investments and refurbishing the visitor centre) then these two things alone would have been the difference between turning a profit and the loss they actually made.

 

Also, for what it's worth, last year when Hornby lost all that money, their departing CEO's pay went up from £241k to £617k.  So that's a £375k pay off to someone they wanted out.  Who says you need to make a profit to get rewarded eh?

 

 

I think your logic holds up if the product were all exactly the same in terms of quality and reliability and demand, but that I feel is where Hornby have fallen down.

I think the smaller entrants will have a couple of big advantages over Hornby. In producing to pre-orders, they're generally offering a range of perhaps 8-10 liveries in a batch but with the pre-orders, they'll be able to gauge percentages of one livery against another to better tweak production numbers to match demand. Of course there can be some left at the end, but even those tend to sell quickly certainly in the popular liveries and detail combinations. Hornby generally produce one or two livery options at a time and production quantities will be plucked out the air either by them or in response to retailer orders. It would be interesting to know what the level of pre-orders are for Hornby relative to overall sales. Personally, I have such little faith in Hornby following too many times in the past that they've snatched defeat from the jaws of victory that I want to see whats produced before placing any orders. I feel that when Hornby make an effort, they can make beautiful, well designed, well decorated and smooth running models that are a match for anyone .... I just dont think they make that consistent effort enough and there's too much "that'll do" attitude. The smaller manufacturers really care and go the extra mile to get everything exactly correct and I probably am more accepting of flaws knowing it'll be the best they could produce or a small oversight.

I think Hornby has certainly up until now been expecting to play the long game in focussing more on niche liveries or variations with the intention of stretching out demand for their tooling with the result of pretty significant liveries that havent appeared in 20 years on Class 31s for example. There's certainly some times they could have done with picking some 'dead-cert' liveries to cash in on and make the most of their tooling. Now that smaller manufacturers are duplicating more of their high-spec range, I think they'll struggle to offload what they've produced.

One thing I find odd about their TT:120 range is the liveries offered. We're always told that tooling costs are the expensive bit, but if you're starting a new scale and you want to encourage buyers to take it up, would you not make what tooling you have available in as many liveries as you can?

Things like Mk1 coaches ... crimson and cream or maroon are the options. Could they not have squeezed a blue and grey option in there too? Ok maybe they dont have locos from that era yet, but the Class 50s are being progressed. I would have thought it would have been better to offer more livery variations that tooling. Are both LMS coaches and Pullmans necessary? ok they go with the Pacifics that are available first, but it does seem a lot of tooling and therefore costs

6 minutes ago, ThaneofFife said:

A TT loco?

Class 47......

🤣 cat and pigeons spring to mind

3 hours ago, andyman7 said:

The silver is not meant to cover the whole frame. On the original there is a raised bead around the window; to the inside of this is a polished/bare metal frame in which the window sits.
By any measure, at less than £20 each these coaches are a bargain

I'd noticed these on sale and am tempted for a second rake at that price. Surprised the Intercity Swallow ones ended up discounted, I thought that would have been one of the more popular releases unless they over-estimated quantities

38 minutes ago, WCML100 said:

From what I have found in my research, they look pretty identical. Maybe some minor differences that I am not aware of however. I am sure someone can confirm either way…

Did the RLOs not have loose seating rather than a normal 2+1 interior?

13 hours ago, 61656 said:

I’ve been trying to find out more about trip workings, specifically how the ‘target’ numbers were allocated and what they meant. Target 92 seems to be the code for the trip freight from Llandudno Junction to Holyhead. The Junction was the end of the Speedlink service from Warrington and linked it in with the rest of the Network. 
 

I think by 86 most of the smaller freight destinations in the Chester area had gone, so I may need to add a couple of local workings to justify an additional couple of trip workings each day. It would be nice to justify a couple of wagons that aren’t tanks, opens and vans. Suggestions?
 

 

How about diversions that way from WCML engineering works? ... you could get all kinds of things passing by in that case

22 minutes ago, Peter749 said:

I will give that up as a bad idea.

No 3D printer and nobody in the local group has one.

can you not order online with someone like Shapeways and get it delivered to you?

19 hours ago, Gilbert said:

 Seen today:

have they both got the same catalogue number #2543A? are they sold as a pair?

17 hours ago, BrakeCoach said:

My newer (not 2020s tooling) Mk3 TGS has slots in it to fit buffers so that I can fit them from the pack that has all the couplings and buffers.

Not sure why all of these HST Mk3s had four buffers in each of their coupling packets, but I guess it's accidentally prototypical!

I presume its just standard in case its to be used as loco hauled stock

18 hours ago, The Ghost of IKB said:

What's the point in Phil Sutton turning up at the york show taking even more orders when they can't cope with dispatching even the first two locos from the first batch. He'd do better spending the easter weekend packing up locos for mailing on Tuesday.

It's simply not acceptable to wait four months for a loco that's in stock! Don't tell me I need to learn to be patient in condescending replies either.

I was told at the Bentley "launch" event they'd be despatched before Xmas. Foolishly I didn't realise they meant Xmas 2025!!

And what kind of business would keep all that stock sitting around for so long, reserved but unpaid for?  Couldn't they offer the option of collection from slw's base. Couldn't they get friends, family, or take on temps to get the orders out, generating revenue?

Shambolic in my opinion. With so many locos still to come, not to mention further 24's, this saga will drag on all year unless they pull their fingers out.

To be fair, I do think you've got a point here - to have 2 locos in stock for 3 months and not gotten through pre-orders for those in that time it does seem very odd. There must be a fair amount of money paid out to the factory for production that will need collecting in on dispatch.

If it's taking this long I do wonder if they've taken on more than they can manage as a small team and potentially part time (I don't know if it's a full time job for them or not). Maybe distribution could do with being outsourced.

There's no doubting the product quality is outstanding and will be worth waiting for, but it's frustrating when I'm waiting for more than these first two and looking forward to several pre-orders

13 minutes ago, 97406 said:

The intention is to eventually have a proper mainline section to run trains on but until then I can make do with some diorama action instead.

 

That Class 81 looks great, how did you build that one? Was it a kit or a conversion?

13 hours ago, brushman47544 said:

 

I agree it will come out eventually, but we have already had two plain BR blue versions with dominoes - 47012 and 47435 - so I would expect Bachmann to prioritise other liveries we haven’t already seen on the new tooling. Also, a plated with headlight BR blue version was one of the last from the previous tooling - a weathered 47625 as a Kernow MRC limited edition - which is pretty good if you can’t wait. I expect you could find one second hand. Or the body only is available from Bachmann spares if you have a chassis to fit it to.

I hope it wont be eventually, thats one thing that frustrates me with the models picked for production - the everyday that there was hundreds of getting overlooked for random niche or celebrity liveries.

50 minutes ago, SouthernBlue80s said:

Does anyone know if Bachmann will bring out a plated headcode version in rail blue, the everyday loco of the early to mid 80s. Are there any anouncements due?

 

Or if there is a kit, shawplan or similar, to change the domino headcodes 47012?

 

Thanks

 

 

Photo Awwalker - Flickr

Its bound to come out at some point, they will certainly have the tooling for it, but you could never be sure when. Keep an eye on the quarterly updates

4 minutes ago, Wickham Green too said:

About 8'' longer than 450 cars and a whopping 10' longer than 444 cars !

think you've got that the wrong way round - 444 cars are almost the same length as 185, 450 vehicles are much shorter

11 minutes ago, Dixie Dean said:

I'm looking at buying a rake, which Hornby coaches would I need to make a complete set? 

 

Pretty much one of each ... Hornby released a rake

1 hour ago, Dixie Dean said:

Can anyone tell me what coach set(s) did the Navy/Gold GNER liveried Class 89 work with?  Does anyone have an actual formation?

 

It was just a standard Mk4 set same as the Class 91s

what was the grid under the bufferbeam for?

There was a Mk2F FO which was a spare for the Edinburgh-Glasgow push-pulls in Scotrail livery. I think that would sell well, Scotrail liveried stuff normally does

16 hours ago, Moley48 said:

I tried asking AI to add some scenery to this picture I took on my embankment as I'm lacking in scenics at the moment. 

 

 

 

What the hell is that!!

 

Serves me right for trying to be clever. 

a Gridski?????? were plans stolen from those build in Romania and thats the result?

7 minutes ago, ThaneofFife said:

Yeah,few in their right mind would have paid almost £200 with that red stripe mistake apart from those weathering them up maybe which would lessen the effect of the different reds......it was poor on Hornbys part to sign that off in the first place......almost like lets just nobody will spot the difference.

If we are to pay top dollar these things have to be right.

 

I did buy one initally purely because its my favourite livery combination on the 87s, but I did think the red stripe mistake was shockingly poor and while Hornby offered to 'correct' it, I expect they would have gone darker where I think the bright red looked better and intended fixing it myself at a later date.

20 hours ago, wombatofludham said:

It's Hornby so unless it boils water I suspect it'll be next century before they do any more livery variants.

Personally I would like to see some more blue but without names as first built, there's also IC executive without the jumper boxes which a couple of locos still carried in the early 1990s.  There's also the early IC Swallow with full yellow ends, with and without jumper boxes.  For a class of 36 there are more varieties than Heinz.

You are probably right about GBRf and DRS as they seem to sell well whatever the subject, plus they worked alongside Pendolini and Voyagers for a while which would appeal to some.

There's an absolute ton of livery variations that could be possible even just within intercity livery

• the early IC Executive variation with yellow cabsides to the cab windows and nameplates centrally on the bodyside on the stripes (e.g. 87012/87018)
• The Later IC Executive with the cabsides split between dark grey and yellow but yellow front up to the bottom of the cab windscreens
• Intercity Mainline with the livery coming right to the cab front and full yellow front

But I suspect Hornby would be wanting to sell them for a higher price than the market will allow. I'd really have thought the 87009 would fly off the shelves even at full price, but a dodgy livery application and possibly jumper/MW box configuration may have limited that.

3 hours ago, Legend said:

 You probably need a steam generator belching out smoke from the tunnel mouths ,not forgetting smoke rising up from the low level pre 1961 .  It is looking good . I don’t remember the signal box it must be before my time . I think Queen St had been remodelled by the time I took an interest . It was certainly dieselised 

where would smoke from the low level have been visible at the high level?