I'm not sure if anybody else picked up on this article today ...

http://www.bbc.com/news/business-35538800

I visited a model shop a few days ago and had a lengthy discussion with a very friendly staff member about the manufacturers of the past (mainly continental) and how they operated their distribution systems and obtained their financing ... and also how they eventually weren't able to succeed. He seemed very knowledgeable and said he'd met many if the then family owners in person. It was most fascinating.

The discussion seems most timely now that I read the above. I wish Hornby all the best and here's to hoping they can pull out of this one.

The article mentions that they've broken their banking covenants, which isn't good. Amended to read: Hornby said it was now in talks with its lender, as the scale of losses could see the firm breach its banking agreements.

Daniel

Hmmm, I hadn't noticed - they seemed to be doing great until 8:05 though 

Quote from: DesertHound on February 10, 2016, 03:15:19 PM
The article mentions that they've broken their banking covenants, which isn't good.

Naughty - it says "may", not that they have ...

I do wonder what branch of the company has "screwed the pooch" ... that would let us know more on whether the brand is under threat, or if it's more likely they'll try & divest themselves of the loss area. 

But to an extent, they have themselves to blame : closing the old locations to get into nice pretty new buildings (expensive !), losing some staff because of this move, and ditching a bunch of staff as well (eg the old Collectors Club people, now they've replaced something decent with a smelly pile of  ).

Thanks for keeping me honest Mike - that was rather naughty, if most unintended, of me. Above opening post amended to clear that one up.

It's either a real struggle these days to operate out of the UK in this business (not manufacture), or legacy costs might have caught up with them. Seems like you're more informed as to their recent history than I am.

Are we getting to the point where producers will almost come under the "cottage industry" category (and by using that term I do not mean it in a derogatory / amateur sense). After all, Hornby is a public listed company, with all the associated costs that go with it.

Are we about to see BachHornby?  :'(

Quote from: DesertHound on February 10, 2016, 04:26:16 PM
Thanks for keeping me honest Mike

You are forgiven, my son ... 

Quote
Are we getting to the point where producers will almost come under the "cottage industry" category

Well ... let's be honest : Hornby aren't a particularly big company.  Even though they've bought various other (European) model rail brands, as well as Corgi, Airfix, Humbrol etc - they are hardly in the scale of say Hobbico (owners of Revell - and interestingly a 100% employee-owned company; they have an impressive range of brands !).

Now - if Hornby was able to go private again - who knows how they would do, without the stock market beating them up regularly ...

Quote
Are we about to see BachHornby?  :'(

I doubt it    Why would Bachmann want to to buy Hornby while they have their own (better    In some ways, yes) model rail company that's doing OK ?

My impression of Hornby is that they have completely lost their way. After parting with Simon Kohler they seemed to put people in charge who know nothing about model railways. This is my view after meeting a couple of them.
They have stopped sending samples to magazines for review and upset model shops by selling stock on their web site at prices below the price they charged the shops.
Let's hope they get their act together.

Chris - that'll be because they have lost their way ...

The company is run by bean counters & marketing people - they don't care about the hobby (either ours or the other "brands" they deal in), it's all just a commodity to them.

Now that today's markets have closed, it's interesting to see there is over a 60% drop - and also interesting to see a 10pps rise & drop too shortly before close ... wonder what happened there ... 

Thanks for that Mike. Maybe I have visions of them being bigger than they are due to their heritage and all. Okay, I wasn't thinking BP or BT proportions  but they had a turnover of over £51m last year (wikipedia) and a quick bit of digging brought up an article saying they moved 150 staff to their new headquarters last year. That number of UK staff is quite an overhead.

I wonder how many staff Bachmann have in the UK (and how many would be Farish) and how many Dapol have.

I do understand though that Hornby have their fingers in many pies, nit just model trains. Seems they do well when they ride on the coat tails of Harry Potter or some other high profile event, but otherwise it seems to be a struggle for them.

My belief (and it's only mine mind) is that their future lies either in private hands, away from the pressures of the stock market, and some of the short-termism that can bring) or under the umbrella of a larger group, in which case they would be hollowed out yo just another brand.

I really hope I'm wrong though.

What say you Mike? ... and others.

Dan

Thanks Chris / Mike

Interesting thoughts and exactly what i was discussing with the chap in the model shop the other day who'd "been in the business" for 40 years. Told me that he's seen many family businesses which were passed on into the wrong hands.

Your last comment about the volatility in the stock price at the end if the day does intrigue me Mike 

Quote from: DesertHound on February 10, 2016, 05:04:37 PM
That number of UK staff is quite an overhead.

LOL, glad you don't work for my company then !!!    We have quite a few thousands in the UK 

QuoteI wonder how many staff Bachmann have in the UK (and how many would be Farish)

Not very many ... a few dozen, maybe 20% Farish ?  We allegedly have someone working for them on the NGF - maybe he could give a number here, rather than we guess ?

Quoteand how many Dapol have.

Even fewer would be my guess ...

QuoteSeems they do well when they ride on the coat tails of Harry Potter or some other high profile event, but otherwise it seems to be a struggle for them.

The Olympics was a bloodbath for them ... mind, looking at the quality of their product, it's hardly a surprise (except to Hornby !) 

Quotein which case they would be hollowed out yo just another brand.

That's all they seem to be under current mgmt though 

One thing made me chuckle - one of the Directors last year bought £2.6M shares @ 95pps ... I bet he's having kittens 

Mike

Quote from: MikeDunn on February 10, 2016, 05:22:56 PM


One thing made me chuckle - one of the Directors last year bought £2.6M shares @ 95pps ... I bet he's having kittens 

Mike

Why would he do that? To me that seems odd, knwoing this whole stock market runs on trust it seems he's trying to make the market confident because he's chucked a lump sum in...

Of course this is speculation and opinion.

They certainly have made some strange marketing decisions, an example being a Downton Abbey train set. It has a 0-4-0 loco and two of those short coaches.

If the set is to be used then I can't see children being interested in it, most of them won't have watched the programme. If it is for the Downton Abbey collector's market would it appeal? They would have paid a fortune for royalties, it makes no sense to me.

Closed 61% down.

Not looking clever is it? 

They have done well (according to their own figures) in 2015. However they borrowed £0.2m, whilst much better than 2014 for them it still isn't entirely the right direction.

Still, nothing can be ruled out and tomorrows trading will show whether it was the market or the confidence in the brand.

It's curious that the company doesn't understand that if you spent a fortune in November and December (up 17%), then sales in January will be down. Seems like common sense to me.

I bet with your few thousand UK staff you pull in more than 50 mil though Mike - rhetorical question so please dont feel the need to get drawn into soecifics on a public forum   

I make Hornby's £50m in revenue equate to £333,333 per head office employee. I dont know about the economics of their business so pure hyperbole on my part but after marketing, production, logistics, warehousing costs etc. etc. to me 150 employees seems a lot. That said, if they had of gotten their strategy right, 150 employees mightn't seem so many since the revenue would have been so much greater.

You guys seem to know much more about it than me. I just cant help thinking its becoming such a limited opportunity for capital to make a return on these days and hence the use of the term "legacy cost" in a previous post. The new kids on the block are set up differently, seem to me to operate on a much slimmer model (headcount wise) and so perhaps this is the only way the industry can survive. Of course we also have the crowd-funding element too.

I'm enjoying the debate on this one - thanks for the info.

Dan