Hornby says full-year profits will be in line with forecasts
Toy and model retailer Hornby said that although sales for the financial year to date are below the same period last year, they are in line with expectations.
In statement covering the period from 1 October 2012 to date, Hornby said that issues highlighted in its Interim Report had continued to impact the business although actions had been taken to mitigate their effects.
A supplier causing disruption to Hornby’s model railway supplies is now expected to contribute less than 15% of total production in 2013, from a peak of 75% and 35% in 2012. The group said its remaining London 2012 merchandise has been discounted and the majority has now been sold.
Despite general weakness in demand, sales of the Corgi and Airfix brands have held up well and shown positive year-on-year growth.
Although group sales for the financial year to date remain below the same period last year, Hornby is expecting underlying pre-tax profits for the year to 31 March 2013 to be in line with current market expectations.
The group said it continues to operate within its banking covenants, which were revised to provide more operational flexibility in December 2012.
Looking ahead, Hornby said that its board remains confident in the group's strategy despite challenging trading conditions in the UK and the rest of Europe. In a statement the group said: "This may constrain sales of our higher ticket Hornby and Scalextric items. However particularly in continental Europe, demand for our model railway products continues to be strong and improvements in the supply chain should result in improved sales performance.
"Progress in the last year in the Corgi and Airfix brands has been encouraging. We have also continued to take steps to broaden our portfolio of products, resulting in lower average price points."
At the London Toy Fair last week, Hornby showcased a number of major product introductions for 2013 which had been well received.
Hornby has also announced a number of changes to its board. Following a previous announcement that current chairman Neil Johnson is to retire from the board on 1 February 2013, Roger Canham, who was appointed to the board on 6 November 2012, will succeed him as chairman. In addition, Nick Stone will be appointed as group finance director, replacing Andrew Morris who is leaving the group in February.
Incoming chairman Roger Canham said: "I would like to thank Neil for his contribution to the business and look forward to consolidating the transformation that the business has undergone during his tenure. I am confident that as I take over the chair, we are on the way to dealing with the headwinds highlighted in previous trading statements, not least the supply chain challenges.
"I visited our suppliers in China early in January and believe that the strategy being pursued by the business will result in a much more robust product pipeline as 2013 progresses. Despite weak consumer spending in our traditional markets, the continuing innovation amongst the core brands, such as the Quickbuild launch and Railmaster app, will place Hornby in a strong position compared to its peers in maintaining its relevance to the changing market dynamics."
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