Hornby's financial position worsens.

[centenary]

Bit behind the curve with the news.

Hornby's financial position took a hit in their last accounts. Income was up 2% to £56m but reported loss after tax doubled to £12.1m. No wonder they announced a 10% price increase for September. It does show that having an income of over £56m, breaking even never mind turning a profit is not an easy ask.

Some people regularly complain at the price of locos and rolling stock today but these figures show the price pressure is surely upwards and claims of outright profiteering do not hold up?

https://wp-hornby-2020.s3.eu-west-2.ama ... 24-WEB.pdf

[Mountain]

Is a difficult position to be in.

The only thing I can suggest is to find buyers for the sideline elements that are not thought of as the brand of "Hornby" in the hope one can reduce ones debts, and keep to the unique selling point of the brand.

One thing to save the company is to bring the fun back!

I do have a pioneering idea but it requires investment which is not what a company in debt would want to hear.

[aleopardstail]

There are not that many companies out there without debt of some sort, though it is worth noting the few who manage it seem to be remarkably robust.

certainly a focus on fun could help, Hornby (across their many brands) are up against the video game generation who expect to sit back and be entertained with little input from themselves, this is not entirely a situation of their own creation though I suspect continuing to price themselves out of reach while adding ever more trivia to models that add cost but likely end up being used a few times then forgotten about perhaps may not be helping. I'd not call if profiteering though

[Bigmet]

It's a small business that tries to pretend it's a big business. There's income potential enough to restore it to profitability if it was run 'lean and mean'; which appears to be what all the competitors that are eating Hornby's lunch are doing...

[aleopardstail]

It's a small business that tries to pretend it's a big business. There's income potential enough to restore it to profitability if it was run 'lean and mean'; which appears to be what all the competitors that are eating Hornby's lunch are doing...

most of Hornby's "Big" rivals are part of much larger groups, and their "small" rivals are a hell of a lot more agile with much lower overheads doing one thing well

Hornby has fingers in a lot of pies, recently taking on a chunk of Warlord Games for example

they sit in that awkward spot where they don't own their own manufacturing so have in effect outsourced their reputation around quality, and incur all the extra costs, plus they have a very wide product base that is all "hobby" but actually very different, e.g. Scalextric shares very little manufacturing skill with model railway (different materials, different detail levels etc) so all they can share are the art department, sales etc. it should work though their entire range suffers from riding on the coat tails of the past

the competition, say Acurascale, really have got the "do one thing and do it well" side down, yes they also outsource the actual manufacture, but they seem to have the design for quality side sorted and are able to offset higher design and manufacturing costs by being a hell of a lot smaller with significantly less overhead as they don't have a legacy business model to drag along

what they are all trying to chase is a little insignificant company called Games Workshop who short of printing books and boxes and actually making paint do it all in house, design, tooling, manufacture, packaging, online & retail sales. they also do their own warehousing even if the actual vans and lorries are outsourced. and GW manufacture in the UK so have full control and rapid turn around

of course they are not making anything beyond injection moulded plastic, no motors, no electronics, no painting, no assembling etc, but the control they have means they take all those little markups all along the chain and keep them all

I dare say a split of the price of a Hornby product would show remarkably little actually goes to Hornby

[centenary]

There are not that many companies out there without debt of some sort, though it is worth noting the few who manage it seem to be remarkably robust.

certainly a focus on fun could help, Hornby (across their many brands) are up against the video game generation who expect to sit back and be entertained with little input from themselves, this is not entirely a situation of their own creation though I suspect continuing to price themselves out of reach while adding ever more trivia to models that add cost but likely end up being used a few times then forgotten about perhaps may not be helping. I'd not call if profiteering though

Id say Hornby's situation is not due to the video gaming generation as its target audience is the 50 year old and above coming back to the hobby after 40+ years. This age group now has more disposable income (present taxation regimes excepted) and want to rekindle their childhood. I think the video gamers causing a lack of model railway interest is a great misrepresentation (with greatest of respect).

The video gamers are as much of a loss to the hobby as young lads 'discovering' girls (or vice versa!) and people having other modelling related interests. There are huge numbers of people aged 20 and above into drones, RC flying, RC cars and RC boats as examples before you even consider those into static model making.

The CAA states there are 450,000 active registered RC drone \ model aircraft operators in the UK. https://www.caa.co.uk/newsroom/blogs/20 ... -revealed/

Id say that probably outstrips the number of active OO scale railway modellers in the UK by some margin before you add in RC boats, cars, trucks etc.

Like any struggling business, Hornby finds itself between a rock and a hard place as the Americans say. Does it increase prices further (as it is doing from September) to try and increase turnover and cut losses or does it reduce prices in a bid to get more sales and finds all that happens is the headline turnover decreases while losses remain comparatively static?

It's making a £12m loss on a turnover of over £50m. IIRC, Hattons closed down after seeing a meagre profit on a £10m turnover and judging market trends would see future losses as a one way street.

Some people may say Hornby needs to cut its prices. This will lead to more sales and hence profitability if not reduced losses. It's a big gamble for a company making a loss to make and in all likelihood, its accountants are advising other options such as reduce operating costs or sell off part of the business before discounting prices.

Just my opinion though.

[fourtytwo]

IMOP long ago lost it's mojo! Run by accountants to satisfy greedy shareholders, what customers.............
Doomed to failure it's only a question of how long, like Thames Water.

[Bigmet]

...in all likelihood, its accountants are advising other options such as reduce operating costs or sell off part of the business before discounting prices.

Hopefully - but there's not much external signalling of this happening from where I sit. Major restructuring has to happen one way or another, either from within the business, or by a predator, much as Hornby 'ate' Lima. Expect loud wailing when the inevitable occurs, as what is not going to be continued becomes apparent.

[Mountain]

Hornby do make some excellent models, and I personally think that despite them not being that accurate, the robustness and overall reliability of the basic range of 0-4-0's (Such as thr Smokey Joe style saddle tanks, the GWR Holden experimental oil burning locos and other similar designs using these or similar motorized chassis) has in my view never been beat. Yes, even Hornby (And others) have come out with more adv anced (As models) 0-4-0's, but since they modified the chassis to these old ones, they have been amazing! Even before they were ok and easy to repair if things went wrong. (There is the odd rare few to avoid such as the rare square axled versions (Continental tank locos) or the ones that had dull grey wheels that had very little chrome on them (Most had heavily chromed wheels which ran fine). Buy other than those rare few, and to remember to keep the wheel backs clean as well as the wheel treads... They have very little to go wrong... If they do go wrong, one can pick up a spare donor loco and swap bodies etc etc...)

[Bigmet]

... If they do go wrong, one can pick up a spare donor loco and swap bodies etc etc...

I doubt Hornby can ever expect to make a penny on these, the s/h market is awash with them, as you clearly know. This is typical of the mountain of old stuff that should be off-loaded pronto.

[aleopardstail]

... If they do go wrong, one can pick up a spare donor loco and swap bodies etc etc...

I doubt Hornby can ever expect to make a penny on these, the s/h market is awash with them, as you clearly know. This is typical of the mountain of old stuff that should be off-loaded pronto.

these models though are perfect for what they seem to be aimed at - to fill cheap trainsets bought by "grown ups" who don't know a lot for younger relatives or where they want to test the water without spending much and its going to someone who won't know they are not all that real

they have other uses but I suspect the entire point of them is to have a "cheaper" option. of course they are not all that cheap these days which is a pity but perhaps understandable even if its unhelpful

[Mountain]

... If they do go wrong, one can pick up a spare donor loco and swap bodies etc etc...

I doubt Hornby can ever expect to make a penny on these, the s/h market is awash with them, as you clearly know. This is typical of the mountain of old stuff that should be off-loaded pronto.

With a little adapting of design I have an idea that can be the next big thing for old and young alike!

[Bigmet]

With a little adapting of design I have an idea that can be the next big thing for old and young alike!

Then you need to have the finance ready in case the piece(s) you want for such a product ever become available in a restructuring.

[centenary]

The impact of hornby's financial position and price rises laid bare: Class 43 HST power car set, one motor unit, one dummy, with TXS sound decoder, RRP 1 penny under £450. If you fancy a pre order with Rails, yours for £404.99

[aleopardstail]

The impact of hornby's financial position and price rises laid bare: Class 43 HST power car set, one motor unit, one dummy, with TXS sound decoder, RRP 1 penny under £450. If you fancy a pre order with Rails, yours for £404.99

this sort of pricing worked for Games Workshop, because they have a fan base that is not entirely rational to be polite, I don't think Hornby are in the same position

GW will charge you £500 odd for a game army, but in bits, not one lump usually

I wonder what the price point for the HST would be if the power car and dummy were available individually? and without the sound decoder pre-fitted.

I dare say its a very nice model, but with the coaches RRP being a fraction less than £50 a coach the price is now firmly in the "ridiculous" zone, and also I dare say at or past the point where you make up in individual price what you lose in reduced sales

to charge this you need a captive fan base who "need" that product, and cannot get it elsewhere, and for your own factory to be at capacity