Not only has Hornby issued yet another profits warning, it is caused by the same old reason which has plagued the company for years – supplies. They introduced a new Enterprise Resource System ( as these things are now grandly called ) in the UK in June & July and it had a significant adverse impact on trading, as Hornby’s new systems tend to do but lessons have been learnt and over the 10 weeks to 8th November, UK revenue was up by 9% over last year and a strong end to quarter 3 is expected.
But why couldn’t they get it right in the first place. Which particular bit of management got it wrong and what has been done about it.
The Board then decided to hurry up and implement the new system in Spain in October and in Italy, Germany and France in November. And surprise, surprise no lessons had been learned. They got it all wrong again but on a much greater scale.
The disruption in Europe has been significantly greater than expected and adding in the UK mess up, revenue and profits for the current financial year will be lower than market expectations. What Hornby is really trying to say is that this years profit will not be a lower profit at all, it will actually be an underlying loss of £2.0m
Shareholders need not fear however, profits will recover next year which in Hornbyspeak presumably means the losses will get bigger..