Member Article

Losses widen at Hornby following supply chain and technical issues

Model railway and car brand, Hornby has reported losses of over £4m for the six months to 30 September 2015, a dramatic decline from the same period last year.

The Kent-based company saw losses widen from £516,000 in 2014 to £4.46m as a result of a drop in sales and the cost of an ongoing IT upgrade.

The group, which manufactures Scalextric and Airfix kits, as well as the famous Hornby train sets, saw sales decline by 8 per cent from £24.2m to £22.3m for the six month period.

During the first half sales in the international business fell by 25 per cent compared to the same period last year. The company attributed this drop to ongoing European supply chain issues together with significant disruption caused by reorganisation and senior management changes.

Hornby reported gross margin for the period at 41.1 per cent lower than last year, due to planned clearance of old stock especially within the European subsidiaries and also due to lack of new, high margin European train stock because of the supply chain problems noted earlier.

Following the Hornby’s head office move to Sandwich from Margate, where it had been based for 61 years, and the opening of a new group warehouse earlier in 2015, the new ERP system went live in the UK in July. This resulted in “notable distruption” during the summer months as sales dropped 45 per cent in July and 8 per cent in August.

Richard Ames, Hornby chief executive commented: “We are at an important stage in Hornby’s transformation. Our new ERP system is now embedded in the UK operation and following significant disruption in the first two months, the business is performing well in the important Christmas and New Year period.”

“We have pulled forward our reorganisation plan for our European operations, which has contributed to further trading disruption but which accelerates our overall plan. We are confident that these changes will give us the platform from which we can drive our business forward.”

This was posted in Bdaily's Members' News section by Ellen Forster .