Hornby Launches 85 Per Cent Off Sale Following Poor Olympics Performance

Posted on 29 September, 2012 by Kirsten Kennedy

With the benefit of hindsight, the Olympics were not the saving grace of British retailing that Lord Seb Coe et al. promised they would be. In fact, sales for many chains actually shrank as consumers chose to stay at home and watch various sporting events rather than hitting the high street to splash some cash.

However, not all brands were as badly hit as toy manufacturer Hornby, who have now launched an 85 per cent off sale in a desperate bid to recoup some of the money channelled into the production of a special “Olympics” range of goods.

Shares in the firm plunged by more than a third earlier this week due to a profit warning being issued, with the company blaming recent weak sales for its stagnating profits. Hornby had hoped that the London 2012 merchandise would allow it to post significantly higher sales figures than in recent years, yet even popular products such as miniature London bus figurines failed to boost the company’s ailing finances.

In an attempt to encourage consumers to buy the range of items, which failed to perform over the summer, Hornby has launched an 85 per cent off sale on the Olympics range, hoping shoppers will be more tempted by the items following the closing ceremony.

Hornby owns the Scalextric racing cars, Airfix and Corgi brands, and doubts that, even if the sales initiative proves successful, the overall company will manage to do more than break even this financial year. To add to the toy firm’s woes, one of its largest suppliers in China is currently undergoing difficulties, leading to facilities within the manufacturing plant being rationalised. As a result, Hornby has now been forced to look elsewhere for suppliers in China and India.

A statement from the company said; “The current disruption is part of a painful process but we believe that, working with all our suppliers, we will be able to work through this process to arrive at a more balanced supply base for the future.”

Although the future looks uncertain for the toy manufacturers, it did manage to post encouraging sales figures in the first quarter. Pre-tax profits came in at just under £4 million in the year up to March 31st, down by £0.1 million from 2011. However, annual turnover had increased by 1.7 per cent, totalling £64.4 million.

Hornby blamed the failure of Olympic Games themed toys on the flood of similar goods to the market in the lead up to London 2012. Due to the influx of souvenirs in the UK market, retailers had no choice but to cut prices in order to shift stock despite the earlier high demand for Games memorabilia.

The statement continued; “Retailers lost confidence in many categories of London 2012 merchandise and repeat orders for our products were cancelled.”

As for the coming year, Hornby is confident that new ranges will put the company back on good footing in the toy manufacturing industry. As well as releasing a Corgi line based on ITV children’s series “Olly, The Little White Van”, the company has recently launched a new Star Wars range, designed to attract children and young teenagers. The 50th anniversary of British spy series James Bond will also be capitalised on later in the year.

Do you believe that, with so many technological initiatives such as tablet computers and electronic toys to attract children, companies such as Hornby are becoming obsolete in the current market? Do you think that in order to stay afloat in the current economic situation, companies such as Hornby should be rebranding and moving into new markets which appeal to a wider consumer base?

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