Hornby offers update on trading and transformation plan

Published on: 11th November 2015

Following the recent fundraising and extension of the group’s banking facilities, Hornby is to roll out the strategic reorganisation of its European businesses, whilst making further improvements to its supply chain.

hornby480In the UK, Hornby has improved its distribution capabilities by moving to modern warehousing premises near Canterbury. The group’s UK performance has been recovering and revenue for the 10 weeks from early September to 8th November increased by 9% compared to last year.

The UK business is well positioned for a strong end to the third quarter. A new Enterprise Resource Planning (ERP system) has enabled Hornby to be more flexible and accurate in managing its product shipments. Ahead of the Christmas period, new product lines including the Scalextric James Bond Spectre slot car racing sets have proved to be very popular.

The board also decided to accelerate the strategic plan to reorganise its European businesses. This involves a restructuring of the supply chain with logistics and distribution activities being transferred to the platform being managed by DS Logistics. The roll out of new ERP system was implemented in Spain in October and will be rolled out across Italy, Germany and France during November.

There have also been senior management changes in Italy, France and Spain as well as the UK.

While UK trading was impacted during July and August, the trend in UK revenue growth since early September has been very encouraging and it is expected that the UK business will deliver a result broadly in line with expectations for the full year.

Although it is currently expected that stock levels of European products will recover close to originally planned levels over the next two months, it is thought that European sales will now be lower than the original plan for the full year. It is expected that there will now be an underlying group loss before tax for the full financial year of £2m.  A further update will be given with the interim results.

Richard Ames, chief executive officer, said: “The performance of our UK business since we modernised our distribution set up has been very encouraging and this demonstrates that the strategy to turn Hornby around is working.  Since the implementation of the new ERP system, we have further improved the platform on which we can build the group’s recovery. Whilst there has been a short-term impact, we are already seeing the tangible benefits of these changes.

“We set out in detail at the time of our recent fundraising our strategy to improve the structure of the group’s operations in Europe.  Buoyed by the recent improvement in UK performance, we have now taken the decision to accelerate the reorganisation of our European businesses. While this will impact upon this year’s performance, we will be unlocking significant year on year cost savings and the board is confident that the accelerated plan will leave us very well placed by the end of the financial year.”


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