Hornby sales derail

Shares in the toymaker have fallen by a quarter after the company issued a profit warning. But something tells us things aren't as bad as all that.

by Emma Haslett
Last Updated: 27 Jan 2012

Its model trains and Airfix kits are a symbol of a bygone era – but have Hornby’s sales run out of steam? Shares in the company plummeted by a quarter this morning, after it issued a profit warning, admitting that sales over the Christmas period were slow – which, given the fact that the festive season is traditionally the peak trading period for toymakers, is particularly devastating to the company. It’s keeping schtum about quite how much those profits will be down by – but Hornby insists this is just a temporary blip.

To be fair to the firm, it’s by no means the only one that had a tough Christmas: almost every company has its own tale of woe. But Hornby’s specialism – high-quality toys that cost a bit more than your average lump of plastic – put it in a particularly difficult position, which was reflected in falling sales of ‘high-ticket items’ like its Hornby model railways and Scalextric sets.

Nevertheless, it managed to pare down its debt from £10.3m in December 2010, to £8.5m in 2011, and said that growth in continental Europe remained ‘strong’ – so there are one or two silver linings to this particular cloud.

And the company insisted it’s already set the wheels in motion to meet new demands: not only is it due to launch a number of products, including a Star Wars-themed Scalextric set – but it’s also designed a new range of toys at pocket-money prices, including a new range of Corgi cars priced at less than £2. Which should make the nation’s little boys (of all ages) happy.

Licensing deals should also help to get things back on track: not only has it signed agreements with the producers of War Horse and new TV series Olly the Little White Van – but it’s also signed a deal to produce toys based on online game Moshi Monsters. As any parent will tell you, with more than 50 million users, that’s the toy equivalent of a licence to print money. So we doubt Hornby will be coming off the rails quite yet…

- Image credit: Flickr/Elsie Esq.

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