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Hornby to reduce number of product lines by 40 per cent after ‘disappointing financial results’

Hornby has revealed its plans to cut the number of toys it makes in an effort to turn the business arounds following a ‘disappointing financial year.’

The firm, whose brands include Scalextric, Airfix and Corgi, aims to reduce the number of product lines by 40 per cent, as well as raising £8m via a share placing to fund its restructuring.

The plans come as Hornby attempts to make the business profitable again following a loss of £13.5 million in what it has said was a "difficult and disappointing year".

The model trainmaker reported a £200,000 pre-tax loss for the 2015 financial year.

Chairman Roger Canham blamed the poor performance on the implementation of a new software system and supply chain issues due to the reorganisation of its European business.

According to the BBC, revenue for the year fell four per cent to £55.8m, but the firm said it had continued to retain its core hobby customers.

Canham said the overhaul of the firm’s structure would result in a "smaller, more focused business" focused on its core UK brands, but warned that revenues were expected to fall by about a quarter as a result.

The turnaround is being led by new chief executive Steve Cooke who took the helm in April after Richard Ames stood down in February, one week after the firm announced its second profit warning in a matter of months.

"The turnaround plan is intended to return the business to sustainable profitability and cash generation," said Cooke.

Despite the disappointment of the last financial year, Canham said that sales had been strong in the key Christmas season and since it had sorted out its supply chain issues, the business was now in an improved position.

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