Scale model manufacturing company Hornby, which has been based in Margate for 70 years, is likely to continue with job reductions into 2025 as part of a three year turnaround plan.
The model making firm is halfway through the plan and has already made ‘significant’ headcount reductions with savings of around £1m of annualised central costs in the six months to 30 September, 2024. A further £500,000 of savings are expected in 2025.
A half yearly report says: “We have enjoyed revenue growth at the top line for 5 years in a row, but our return to profitability has been held back, in part, by a central cost base that has grown disproportionately over the years and is suited to a larger business.
“In H1 2024 we spent a great deal of time looking at structures and costs across the organisation and enacted a significant headcount reduction in the Margate Head Office in September.
“This initiative has reduced our annualised people costs by c£1M and we anticipate a further £500K of central costs coming out by July 2025.
“We continue to review our central overheads, and cost base in totality, and there are a number of live initiatives in play that will further, positively, impact this number moving forwards.”
The Hornby turnaround plan is being carried out with consultancy from Mike Ashley, through MASH holdings.
The Frasers group, which also owns GAME and Sports Direct, increased its shareholding in Hornby across February and March this year and now owns a 9% stake.
The report says: “Our brands are already part of GAME’s product offering and we’re looking forward to exploring other opportunities, including leveraging Frasers Group’s scale in retail logistics and distribution.”
For the six months to September 30, the business reported increased revenue of £25 million (2023: £22.7 million) but a statutory loss before taxation for the period of £5.1 million (2023: loss of £4.9 million) plus Net debt of £18.9 million (September 2023: Net debt £14.8 million). The Group has in place a £12 million Asset Based Lending (ABL) facility with Secure Trust Bank Limited (STB) through to December 2025.
Hornby is also moving logistics operations from Hersden, near Canterbury, to a new partner in the Midlands to “significant operational, service and cost efficiencies in 2025.”
The firm says: “ The move will result in greater flexibility in how we serve our UK digital customers, and will significantly improve our ability to support our international business and platforms like Amazon and eBay.
“Whilst cost was not necessarily a key driver for the exploration at the outset, there are significant commercial benefits to be gained from relocating operations from Kent to the middle of the country, closer to a national delivery hub, and we will also see ongoing savings as a result of changes in process and new technology that come from the move.”
This month Hornby completed sale of its Oxford Diecast to EKD Enterprises Limited, a company owned by Lyndon Davies who will step down from the Board and his role as a Non-Executive Director of Hornby with immediate effect.
A letter to shareholder from CEO Olly Raeburn says Hornby has secured new distribution through national retail partners in the United States.
He adds: “From October this year, and for the first time, we have our Airfix and Quickbuild product in more than 2,500 stores through the Michael’s and Lowes chains across North America. These are businesses of significant scale with 2023 turnover of over $5Bn and over $90Bn, respectively, helping us present our products to an important, and untapped, new customer base.”
Hornby has also secured an exclusive licensing agreement with Ferrari for the Pocher brand and there are also new distribution partners in China for this brand with “opportunity to grow the footprint of this premium brand in the Far East” The first Ferrari kits will be available in early 2026.
Potted history
Hornby Railways’ roots date back to 1901, when founder Frank Hornby received a patent for his Meccano construction toy. The first clockwork train was produced in 1920 in Liverpool.
In 1938, Hornby launched its first 00 gauge train. Production was suspended in 1942, during the Second World War. Production resumed after the war but did not reach full capacity until 1948.
In 1964, Lines Bros Ltd, the parent company of rival Tri-ang Railways, purchased Meccano Ltd., and merged Hornby and Tri-ang into Tri-ang Hornby at the Margate site. The former Hornby line was discontinued in favour of Tri-ang’s less costly plastic designs.
The Tri-ang group was disbanded in 1971 and Tri-ang Hornby was sold to Dunbee-Combex- Marx, becoming Hornby Railways in 1972.
Hornby Railways became independent in the 1980s. Production continued at the Ramsgate Road factory until the 1990s, when it transferred manufacturing to Asia and the old factory became a warehouse.
In July 2010 the Hornby Shop And Visitor Centre opened. In June 2013 the firm announced that it was shifting its warehouse to Hersden, near Canterbury, and in May 2015 the remaining sections of the business moved to Discovery Park.
A restructure of top management in 2017 led to the welcome return of Hornby offices in Margate and the creation of a new showroom alongside Locomotive Storage which bought the site when Hornby moved out.
Lie down with dogs, you will get up with fleas.
Meaning?????
Agree ton suspended gb lost the plot sounds good in his/her head should explain the statement,
Just did. Lost count of the number of stories here over the years & before this site existed in the local papers/other sites about their massive losses-they didn’t move away in 2015 for fun.
Believe it started in the mid 2000’s when they bought Humbrol & Airfix. Now they are so desperate for cash they have gone to the asset stripper who likes to buy everything.
Production now gone from Kent up north & expect Westwood to eventually go up there as well, now they are taking instructions from him. they already moved once to another part of Kent.
Production is in China just like most British ‘toy’ companies and has been for over two decades or more.
Well there you are then-production sent to China, Ashley just told them to move warehousing (what I meant. good spot) up north. They already moved their base elsewhere nine years ago before moving back. How long before Ashley tells them to move Westwood up there permanently?
Mike Ashley-the man cares nothing about people, just about his own personal wealth. Knows the price of everything & the value of nothing.
Then again this is hardly the first time Hornby have laid people off. Their business model seems to be buying other brands at an insane rate to create some weird monopoly & claiming to be successful, while constantly carrying huge debt from doing this.
Just search for their debt with a random year & you get load of hits of losses from about 3 million up to about 19 million-going back into the 2000’s I think.
Visited Hornby yesterday and couldn’t resist several bargains, beautifully presented in their new “Wonder Works” shop. If only I had the time to build, setup and play as I did as a kid.