13th Nov 2013 11:56
LONDON (Alliance News) - Hornby PLC Wednesday said that it is on track to meet market expectations for its full-year results, despite declining revenue and a widened pretax loss in the half-year ended September 30.
The model railway company posted revenue of GBP22.5 million, down from GBP27.0 million in the previous year. Revenues were hurt by the continuing decline of the independent model store sector, as well as the closure of UK retailer Modelzone, which disrupted the company's distribution channel.
Hornby had a pretax loss of GBP1.1 million, widened from GBP541,000 in the previous year, as administrative expenses, distribution costs and other operating expenses increased.
The close of Modelzone caused Hornby to write off GBP150,000 of debtors. The company made deals with retailers WHSmith and Hawkins Bazaar to sell its stock instead, and WHSmith subsequently bought the Modelzone brand.
Last year the company's largest supplier closed the factory which supplied Hornby, leading the company to reallocate its production. This caused further disruption in the first-half of the year that Hornby said will persist into the second-half.
As a result, European model rail brands are forecast to achieve around 80% of the production it has budgeted for the year, and UK model rail brands 88%.
Hornby's Corgi and Airfix brands both performed ahead of the previous year, excluding the exceptional bump of Olympic products in 2012, boosted by strong sales in the US.
The company said that it expects its second-half to be much stronger, partially due to the impending Christmas period and partially due to the company recovering from the supply chain issues that hampered its first-half.
Shares in Hornby were trading up 3.5% at 84.35 pence Wednesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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