Hornby trading on track as CEO Davies eyes revival

26th Sep 2018 08:28

(Sharecast News) - Hornby said trading was on track to meet its expectations as the model train maker seeks to put a run of bad results behind it. In the five months to the end of August sales were lower than internal budgets and the year before, the company said in an update before its annual meeting. This was caused by lack of discounting, excess stock in the supply chain and late deliveries.But the AIM-traded company said cancelled discounts had improved profit margins and cost cuts had helped reduce the company's annual loss.Plans for product lines are complete six months earlier than last year, meaning products are likely to get to market on time. Receiving products on time from factories in will be an important element of the group's performance, it said.Hornby, whose brands include Corgi, Airfix and Scalextric, has issued a string of profit warnings caused by late deliveries and disappointing sales. The problems threatened the company's survival until its banks agreed to provide support.Chief executive Lyndon Davies, who joined in late 2017, has tried to stop the rot by ending discounts and overhauling the company's supply chain. The company's battered shares surged on 17 September when it announced a licensing agreement with Warner Bros to produce products based on Harry Potter, DC superheroes and other well-known characters.Hornby said its product pipeline included exciting releases and licensing deals akin to the Warner Bros announcement. The company's shares rose 1.6% to 36.47p at 08:02 BST.Davies said: "Much has changed at Hornby over the last 12 months. The business is leaner and the improvement to our planning horizons is well advanced." He said the company would announce more details at its half-year results in mid-November.Hornby could face a shareholder rebellion at its annual meeting over a £156,000 goodbye payment to former CEO Steve Cooke, who failed to revive the company.