Belfast Telegraph

UK Website Of The Year

Hornby turnaround plan 'proceeding as expected', says chief executive

Toymaker Hornby said plans to shore up its flagging performance were on track as it presses ahead with a sweeping structural overhaul.

The Scalextric-to-Airfix firm said underlying Christmas trading was "healthy" and January sales were "solid" despite annual group revenue slumping 25% over the festive season.

Shares soared 12% in morning trading on the London Stock Exchange after the firm said it was "well-positioned" on its journey back to profitability.

Hornby, best-known for its model railways, warned in November that annual revenues would plummet by around a quarter as it trims costs by shutting concession sites and shifting European staff to the UK.

Chief executive Steve Cooke said the company was "in the midst of a transformational year", but the turnaround plan was "proceeding as expected".

"The restructuring of our UK operations is complete and we are well-advanced with our initiatives in Europe," he said.

"Our improved financial position is evidence of the success of the first stage of the turnaround. Hornby is well-positioned to continue its transition to profitability and higher cash generation."

The firm said UK revenues dropped 21% during key Christmas trading, but all sales channels had met, or exceeded, expectations.

Moves to reinforce relationships with independent retailers were also bearing fruit, with sales in this area lifting 4% year-on-year over the period.

But the company said it expects to continue trading at a loss as it "reshapes and streamlines the business" throughout the current financial year.

As part of the turnaround plan, the group said it had sold its Margate site for £2.25 million, which will deliver a profit of around £900,000.

It plans to lease back part of the site for the Hornby Visitors Centre and shop.

A string of profit warnings have caused Hornby's shares to plummet over the past year, with its stock price plunging around 60% since December 2015.

In November, Hornby said turnover had dropped 2% to £21.9 million in the six months to September, with pre-tax losses widening to £4.7 million from £4.5 million for the half year.


From Belfast Telegraph