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Hornby HRN – Still Being Impacted, Again

Hornby (HRN) still cant get its act together as it goes through yet another critical period of major operational change.

Hornby is a world leading brand name, selling  Hornby train sets and Scalextric model cars. With products  which make many a fathers eye mist over with recollection of childhood memories it should be one of the worlds leading toymakers. But it isn’t.  It is in a mess and it has been in a mess for 5 years or more.

It claims to have been impacted again and again by this that and the other and even now when the beginnings of a recovery were expected to be in sight, it has been forced to announce that half year revenue will be down on 2014.

Its original problems were due to a collapse of supplies from its Chinese supplier. But that was some 6 years ago and it has still not recovered from the problem.

In its latest RNS on the 16th September it was forced to admit that it had been impacted by the introduction of new systems, impacted by a weaker retail environment and that European sales had been impacted by “ongoing problems with international model rail supplies”. The CEO confessed that managing its planned turnaround was challenging – well,why ?, may one ask, if it had been properly planned.

It makes no attempt to claim that management efforts had impacted the company beneficially and looking at the mess that is quite believable.

In 2010 Hornby’s share price reached 170p but by November 2012 it had slumped to 58p. By July 2014 it had started to recover at 64.3p and until last weeks admissions caused a 4% retreat it was well over 100p.

In March 2009 group revenue was 61.57 m. For the year to March 2015 it was only 58.13m. A dividend has not been paid for 3 years and it has made a pre tax loss for each of the last 3 years.

This reads like a horror story from the sixties and seventies when one British industry after another collapsed due to incompetence and mismanagement.  Hornby is an icon which deserves better than that.

The CEO claims that the turnaround will work. Manufacturing production is ahead of plan and attractive new products will be available for the Christmas trading season. It is too late to do anything about November’s interim results but I await the Christmas trading figures with hope that they will not be disappointing or to use the correct jargon, impacted by yet more challenges which management finds itself unable to cope with.

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