Snow and supplies rain on Hornby’s parade

The group – whose brands includes Hornby, Scalextric, Electrotren, Lima, Jouef, Rivarossi, Airfix, Humbrol and Corgi – said it expects profits for the year to 31 March are likely to be below current market expectations. Good sales growth in the first half of the financial year to 30 September 2010 did not continue during the pre-Christmas period. Retail stockists experienced weaker sales than expected in the weeks immediately before Christmas as a result of the inclement weather which led to sales to consumers being lower than expectations. This, in turn, resulted in reduced sales by the company to its retailers. As a consequence, retailers have entered the New Year with higher stocks than normal. This will result in retailers reducing their restocking orders in the remaining weeks of the current financial year. During the first half of the year, Hornby reported that its European subsidiaries were constrained by shortages of product due to supply chain issues. "These issues are continuing to improve," the company said, "but sales in Europe prior to the end of the financial year will not recover the ground lost in the first half." Chairman, Neil Johnson commented: "The negative impact on the Group caused by the unusually adverse weather in December is almost certainly a one-off event. Coming on top of the previously reported supply chain issues the result for the year will clearly be impacted. Nonetheless, due to its diverse product and geographic spread Hornby continues to occupy a position of strength amongst its peers. We continue to see significant growth potential in many of our markets. The further positive progress on our supply chain issues will enable us to capture this potential as the business grows." Shipments from Hornby's largest supplier in China are now running at substantially higher levels than a year ago and the company expects this trend to continue. "At the same time we have diversified our supply base and are now much less dependent upon our largest supplier. The combination of improved shipments and a broader supply base gives confidence that sales in the next financial year should not be constrained by supply issues," the trading statement said. Looking ahead, Hornby said it was entering the annual round of global toy and hobby fairs on a positive note. "In model railways, we will launch our new highly innovative computer based digital control system - "Railmaster". This system has been developed to interface with our "Elite" digital controller to allow the user to programme and store complex sequential activities to control multiple locomotives and accessories. In Scalextric we will launch a range of products based on the forthcoming Disney/Pixar movie "Cars 2" due for release during the Summer of 2011. Airfix developments continue apace and sales continue to grow. In Corgi we have an increasing range of merchandise associated with the 2012 London Olympic Games. We expect sales of our 2012 ranges, across all our brands, to gather significant momentum during 2011."