Hornby comes off the rails
In its interim management statement and trading update for the period from 1st October 2010 to date, the company says that the first half growth did not continue during the pre-Christmas period.
The Group's retail customers experienced weaker sales than expected in the weeks immediately prior to Christmas. They say that the major reason was the impact 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.
Whilst interest in products remains strong, a further consequence of lower consumer sales prior to Christmas is that 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.
In the interim report Hornby stated that sales in their European subsidiaries were constrained by shortages of product due to supply chain issues. These issues are continuing to improve but sales in Europe prior to the end of the financial year will not recover the ground lost in the first half.
The Company therefore expects that pre-tax profits in respect of the year to 31 March 2011 are likely to be below current market expectations.
Net debt as at 31 December 2010 was £10.3 million (30 September 2010 £10.8 million, 31 December 2009 £10.5 million).
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