19th Jun 2018 09:18
LONDON (Alliance News) - Shares dropped in Hornby PLC on Tuesday as it reported a widened pretax loss amid a substantial drop in revenue for its recently ended financial year, along with recent sales being below company expectations.
Shares in the models and collectibles retailer fell 17% at 21.00 pence on Tuesday.
Pretax loss for the year to the end of March widened slightly to GBP10.1 million from GBP9.5 million the year before in spite of reduced overheads and exceptional losses for the year.
On an underlying basis, pretax loss still widened to GBP7.6 million from GBP6.3 million the prior year.
Hornby does not pay a dividend.
The widened loss was the result of a 25% drop in revenue to GBP35.7 million from GBP47.4 million, as a result of the full force of the group's previous strategy to reduce stock lines and close European operations.
In October, Chief Executive Lyndon Davies reviewed the strategy and chose to reverse the strategy and follow a new plan to grow its key brands through additional investment and grow its European brands through improved product offering, as well as set up a new operational management team to streamline Hornby's operations.
Hornby's sales for the 10 week period to June 8 was below company expectations, due to the ongoing effect of insufficient investment in tooling and the late placing of purchase orders with suppliers. In addition, the group has a backlog of stock at its retailers stemming from the previous decision to bring sales forward through discounting.
"In the first seven months that I have been at Hornby, we have assessed our position and confronted the reality of the situation in which we find ourselves. Tough decisions have now been taken and we are currently laying down the foundations for our future success. There is a new energy in the business and I am excited with our plans as we re-engage across both domestic and international markets with these well-loved brands," Davies said.
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