Share price drop after drop in profits.

[VESPA]

Profits were down 47% in Hornby and the share price has plummeted 52% today. At 12.30 the share price was down from 81p to 38.89p. That is a massive drop.

[Fishmanoz]

Buy, buy, buy!

[RB51]

Hopefully not - bye, bye. R-

[poliss]

You can't sell things if they're not in stock. Just look at the locomotives. There are pages filled with of 'Out of stock' or 'Pre-order' notifications.

[Buz]

 Hi all

Who cares it will bounce back in a few days trading.

When it comes to stocks and shares never ever base anything on one days trading.

The stock market and the Yo-Yo have a lot more in common than you think.

The only people who go day by day are those playing the game for money and profit,

trying to buy and sell at the right times to maximize profits for themselves

regards

John

[JeremiahBunyan]

HRN   Update on Trading and Transformation PlanReleased 07:00 10-Feb-2016

http://www.londonstockexchange.com/media/img/void.gif 

 

RNS Number : 5857OHornby PLC10 February 2016

 

UPDATE ON TRADING AND TRANSFORMATION PLAN

 

Hornby Plc ("Hornby"), the international hobby products group, is updating shareholders on progress made so far in its turnaround strategy.  

 

The Group has made significant progress in implementing changes to its business model to modernise product sourcing, improve management of the supply chain, upgrade the logistics, warehousing, stock control processes and accelerate the distribution routes to customers.  This, together with the rollout of the new ERP system, has required major investment and resulted in disruption which has had a significant impact on the trading performance of the business, as previously disclosed on 8th December last year.

 

UK Trading

 

In the UK the Group saw a strong sales performance in the key November and December period as sales opportunities were maximised in the run up to Christmas. Like for like sales in this period were up 17% overall year on year, though this masks some volatility within the period. However, subsequent trading since the start of the New Year has been in stark contrast, with a disappointing response to January product promotions combined with poor underlying sales resulting in negative year on year revenue growth and sales for the month being substantially below expectations. While we are expecting performance in February and March to improve on January, it will not reach previously anticipated levels. 

 

International Trading 

 

As disclosed at our interims, there has been a significant reorganisation of the management and distribution operations of the European subsidiaries.  The impact of this has been that trading in the international businesses was disrupted last autumn as the restructuring took place.  Hornby is now through the main period of major disruption.  Improved sales in the last two months have reflected the changes that have been made to the logistics, stock handling and distribution operations and like-for-like sales across December and January combined were up 5%. Despite this being the first positive like for like sales performance this financial year, this is still significantly behind the Board's previous expectations.  

 

Financial Performance

 

The Group now expects to report a substantially wider trading loss than previously forecast in this current financial year.  The team has also conducted a full stock take at the Group's consolidated  warehouse in Hersden and a balance sheet review following the reorganisation of the European subsidiaries which will result in a £1.0m write off.  The disappointing sales performance experienced in the New Year is expected to result in a trading profit deterioration of between £2.5m - £3.0m, with approximately half due to UK performance. In total the Group is now expecting to report an underlying loss before tax in the range of £5.5m - £6.0m, which represents a substantial setback in our recovery plan for the business. 

 

As a result the Directors consider there to be a risk that the Group will breach a covenant of their banking facility in March 2016. The Group has enjoyed a long and supportive relationship with its lender, with whom it is currently in discussions. 

 

The Directors are continuing to execute the Group's turnaround strategy.  At the same time, the Board is now analysing the causes and consequences arising from this poor start to the new calendar year. We will update the market on the Board's progress and our revised expectations for the financial outlook for the business in due course. 

 

Richard Ames, Chief Executive of Hornby commented,

 

"This has been a real year of change at Hornby.  Undoubtedly this is a disappointing result, but we have a strong portfolio of brands that we are determined to see flourish.  

 

"The feedback from customers at the recent International Toy Fairs was encouraging and we are facing the future where, with the right platform, we can build value for our shareholders and drive the Group's recovery."

[poliss]

Have you read the report on the investor relations page Buz? There's a reason the share price has fallen, and it's not a single day thing.

[PJ_model_trains]

Stock and at what level is an issue for every company.

 

Buy to much and not sell it just ties money up that could be used for other stock or investment.

 

Buy to little and you don't have it to sell then there is reduced revenue.

The world market is in turmoil and controlled by 'fear'

 

In fairness it is not an easy call, pre-ordering does help a company and helps prevent over ordering but it it takes to long to have an item manufactured and back on th shelves again it results in lost revenue.

 

Sadly a drop in share value so large is going to cause major concern, questions will be asked, methods of ordering reviewed, etc, etc. But we thought they had done all that.

 

Shareholders will be asking lots of questions, blame the world market! Blame the fall in demand, blame the slowing down in China, blame ones self! Strange how the last one is rarely considered in times like this.

 

Not a good time I am afraid.

 

Some say... Buy, Buy, Buy, some say Sell, Sell Sell, some think Take-Over, Bid, Bid, Bid, then think when and is it safe to do so. The one factor we can be sure of is 'Fear' it is controlling businesses worldwide. It was sad to see our successful internet business sold, in reflection two years down the line we consider ourselves best out of it. Strange how things work out, health was the only reason we sold.

 

Good luck Hornby.

 

[VESPA]

Here is the wider picture than just today's disaterous news... http://www.ft.com/cms/s/0/b8427dac-cfce-11e5-92a1-c5e23ef99c77.html?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev

[Nick_]

I don't see any breakdown into the various areas as to where is profitable and where is not. They seem to indicate that in the UK November and December were up, but January significantly down. From the Hornby Railways perspective I didn't buy anything in January because there wasn't anything to buy that I wanted, everything I want this year is not due out yet. You can't spend money if the product doesn't exist yet...

[Buz]

5.5- 6mill loss 3 times last year, lending covenents at risk , bounce back ,based on what buzz?

i cannot see any bounce until the company sorts out its forcasting ,accuracy and credibillity,back to the shareholders for more cash?

Well for a start the world economy is still bouncing around like a drunken basket ball.

All because of the mindless greed that started it with some very dodgy investments and predictions.

That's still kicking every one for a start and will do for a while yet better waiting till that dust settles.

Hornbys greatest problem at the moment seems to be not much to sell to keep the money coming in.

In the current world picture every ones forcasting is up the spout the only ones not loosing are the big banks they never loose.

I can't even buy what I want because localy what I want has not arrived yet.

I still don't think its time to panic yet the worst enemy is fear its self.

regards

John

 

[VESPA]

The good news is that the share price is recovering, albeit slowly.  That is good news from a dismal day. My links involved the statement.

[Cronan]

This is so depressing can't imagine model railways without Hornby

[walkingthedog]

Now where did I put my noose. 62% is a huge drop but let's not get all doom and gloom just yet eh guys. 

 

I couldn't imagine life without my dad but I got over it.  

[tyneside emu]

I think some of the writing has been on the wall especially with all the "special offers" being thrown at us , that tell us all a story.

[JasonKerner]

Some of you on here may have seen my reply on this topic on a Facebook group, but I'm hoping someone from Hornby will see this - and I know my voice and thoughts alone won't change anything, but if it plants a seed or sparks a conversation about how to help Hornby, which I think we all want - then thats a good thing... Hornby have given customers this platform a way of communicating between us, but also with them, so I thought I'd chip in my 2c about some thoughts...

- Get the core demographic right - currently the price range of products varies hugely to try and cater for everyone. The core audience, to get longer term customers and interest, should be those in the £50-£150 range, probably buying a set for their first purchase, or 2nd loco.

- More exposure of the brand in high street shops needs to be present, and more importantly, at the right price - not just RRP all the time - consumers aren't stupid and will Google it as soon as they get home if they are serious

- Sponsor more events, especially at heritage lines where the fans are - Scotsman events are all throughout this year, setup pop-up shops at the lines, partner with them to give them a share and take the models that actually run on those lines and are relevant. The kids will like to buy the ones they see or have riden on

- Get the real train companies on board - get the models onboard the onboard shops, major railways, etc. - just like airlines have a duty free catalogue and you can buy things. Do a bit of PR around it, I'm sure Mr Branson wouldn't mind a bit of PR for the East and West Coast routes and seeing as you now have both liveries, not a bad idea...

- Get a revenue model that works for retailers without them having to invest in huge amounts of stock, it would be more of a risk for Hornby, but getting the brand exposure means at some point, someone will buy, from somewhere, with the funds coming back to you

- Get new customers to 'register' their purchases, telling you exactly what they have - drip feed them extras and suggested extras based on their profile. Use the sales data to turn it into targetted relevant marketing and offers - existing users can do the same and tell you what they have so you can suggest the correct era, correct scale, correct liveries, etc - targetted marketing would do wonders

....anyway, just a few ideas...

[Bexhill Donkey]

We've heard it all before - Hornby-Dublo, Tri-ang, Wrenn, Hornby-Triang - management buy out - Hornby Hobbies.  The problem is that model trains have become an accountancy led business that attempts to cater for a market consisting of retired old men who are getting fewer and fewer in number. The young lads who should be the customers are priced out of the market.

[poliss]

Hellooo. Didn't you read my post. You can't sell things if they aren't in stock, and an awful lot of things aren't in stock.

All in all, Bexhill, model railways have never been cheaper. A train set at Xmas and maybe a loco on our birthdays was the most we could hope for.

[walkingthedog]

I'm always amazed when a company, any company, has problems and loses loads of money with shares plummeting how many people come forward with answers to the companies problems. They should do this not that, do that not this. How many of these souls are running very successful businesses raking in huge sums. If it's as easy as they say it would be happening. 

 

Not getting at anybody particular on here by the way.  😆

[Nick_]

As Hornby Hobbies PLC don't give a breakdown of their different brands it is quite possible that the OO gauge model railway side of the business is healthy and the problem lies with the other brands they own, we simply don't know. And we're not going to know unless Hornby Hobbies decide to start selling off brands and starts looking for buyers, even then we would probably only be able to guess.

[poliss]

Or, WTD, it could be something as simple as a lot of people being sick and not ordering anything. I know I was sick for a couple of weeks, as was the missus and people at her office.

[walkingthedog]

I agree poliss. Most people are short of money after Christmas and as you say at a low ebb. I've had a rubbish couple of weeks as has SWMBO. 

 

I think Hornby know what they're doing. I noticed that Bachmann aren't exactly over stocked with products either. 

 

[Anglia998]

Sales down massively since the New Year. Could this be due to the lack of a 2016 catalogue in the usual format.

Collectors collect catalogues. They have been snubbed and they don't like it.

Argos sell on line, but they also have a catalogue!  

Catalogues are essential to maintain a continuous history of the new model development.

[Mitchm75]

This is not about them selling out of certain stock or relying on loyal customers who can't buy what they want, when they want it.

Hornby virtually halved in value.

We need new customers to sustain the brand.

I'm a new customer and the TrakMat doesn't even fit on the dining room table. This is supposed to be the Hornby entry level track, with a little train, to get people into Hornby!

I ended up paying for a marine-ply 6x4ft at £55. Now it fits. I wouldn't expect other people to be that accomodating and that's where the business model falls down. This is the entry level track and it won't even fit on an average table! Let me repeat this, this is the entry level simple track and it is too wide for virtually every table, unless they purchase a big slab of wood.

And I'd be quite willing to pay for a a few extras like tunnels and landscaping. Yes, you can buy extra track parts and trains but I'm talking about silly extras like foliage and tunnels which I'm no good at making. I am useless at things like this and would be willing to trust and pay a company like Hornby.

Hornby can sometimes feel quite intimidating and feel inaccesible like a "club", which I is why I feel embarrassed about my lack of skills which I briefly addressed earlier. Hornby can still make a lot of money, especially with me and my son who is almost three years old and loves trains. I would quite happily invest in future hornby products, but I feel a precautious at the moment.

Thanks, Matt

[The son of Triangman]

Help is available here Matt, most of us here will help new people starting out, just ask us. The 6x4 "tail chasing" (oval layout with trains running around and around) has been standard for newbies since the 1930's, you don't have to build a tail chasing oval, an end to end layout can be quite small. Hope that helps a bit.