End-of-term reports and the agony and the ecstasy….it’s the Friday Blog!

Published on: 11th April 2014

It’s the time of the year when annual financial results are released thick and fast: blink and you find another corporate end-of-term report has dropped into your inbox. To be honest, I’m wary of reading too much into some of the announcements, particularly those involving multi-channel retailers: if a grocer, for example, is experiencing problems in its core food business, it can potentially overshadow good performance in the sectors that truly concern Toy World and its readership.

Nevertheless, the results usually give a feel for which retailers – and indeed suppliers – are building up a degree of momentum and which are struggling to do so. A number of this week’s announcements test my ability to find the positive in most situations, but that doesn’t stop me from trying.

Mothercare could at least point to an improvement in Q4 trading which will see the company meeting its profit forecast of £8m. Shares soared by 16% yesterday on the back of this news, which was better than had been anticipated. Few would deny there is still a long way to go, but at least there is light at the end of the tunnel.

It’s not an entirely dissimilar situation at Hornby, which announced losses of £1.2m, although the accompanying statement suggested that the company would actually have broken even if the impact of foreign exchange was excluded from the data. The first stages of what I would imagine to be a significant company re-organisation are underway (the departure of long-serving Simon Kohler has been confirmed this week), and with the new CEO’s arrival imminent, the path to recovery is underway.

There has been further turmoil at Tesco this week, with the announcement that Matt Atkinson is to be replaced as chief marketing officer only a year after taking on the role. Tesco’s annual results are due next week, with analysts suggesting that profits are expected to fall sharply. The company’s share price is already at its lowest level for a decade, and it could dip even further if next week’s news is as disappointing as anticipated.

But on an infinitely more positive note, I did manage to speak to The Toy Store’s Purchasing and Merchandising Director Geoff Sheffield towards the end of last week. The conversation we had left me in no doubt that their imminent arrival on the UK retail scene will be a good thing for the toy trade.

Apparently the company has received a huge wave of emails since it was announced it would be coming to the UK. And for those who feel the move may in some way be a response to The Entertainer and other retailers opening stores in the Middle East, Geoff was keen to stress that it was always the intention for the Toy Store to be an international brand. CEO Peter Bracken is English, as are a number of the senior management team, and they are convinced that the company’s strengths and points of difference will travel well into other territories. The Toy Store places great emphasis on retail theatre, and believes that a toy shop should be a magical place. In Geoff’s words, “Kids reactions are all-important to us. If we create the theatre, we know that people will come.” As for the location of its first, flagship UK store, there will be an announcement in due course: all Geoff will say right now is that “The first store will be big. It’s important for us to have the space to make a real statement. There are a couple of sites which we are keen on; let’s just say that if we get one of the ones we want, it will raise a few eyebrows.” We will, of course, keep you posted with further developments.

Finally, I’d like to wish good luck to everyone running in this weekend’s London Marathon. I admire anyone with the courage and dedication to take on such a gargantuan task. For those of us who will be watching proceedings from the comfort of our sofas, the least we can do is to find someone who is running to sponsor. I’m sure there are plenty of people associated with the toy trade who will be involved again this year, but if you haven’t found anyone to sponsor as yet, I’m sure KD UK’s Tracey Devine – who is running for two very worthwhile charities – would be grateful for a few quid and some words of encouragement. Tracey’s Just Giving page can be found here. Best of luck to Tracey and everyone else – I’m sure it will be an amazing experience and the sense of achievement will make all the agony worthwhile (there I go again, trying to find the positives….).

You can follow our fearless leader on Twitter @Baulchtweet.