Not a great start to the Christmas period for toy manufacturer Hornby, as it unveiled sliding sales and bigger loss. But it has a cunning plan...
Group sales fell to £22.3m in the six months to the end of September, down from £24.2m during the same period last year. Meanwhile, statutory losses rose from £500,000 last year to £4.5m.
But the company added UK trading has risen 10 per cent year on year since the beginning of September, while net debt has fallen to £5.7m, from £11m last year.
Why it's interesting
It's been a rough ride for Hornby in recent years, as the company grappled with waning interest in the likes of Airfix and train sets from the video game generation.
This year the company has refinanced and moved onto Aim, London's junior market, raising £15m in the process. It's also put its Margate headquarters up for sale, and said today contracts had been exchanged on part of the site, subject to planning permissions.
So far, so good - although there were factors beyond its control in the second and third quarters, not least disruption to its supply chain in two of its European model train factories. Miniature signal failures, perhaps?
In May it launched the brilliantly-named Kitstarter, a crowdfunding project aimed at producing the vintage Airfix kits customers really want, in an effort to "build closer links with our consumers".
These strategies seem to be having an effect. Shares closed at 94.2p yesterday, up from a low of 64p in August last year.
What Hornby said
Richard Ames, its chief executive, said:
We are at an important stage in Hornby's transformation. Our new ERP system is now embedded in the UK operation and following significant disruption in the first two months, the business is performing well in the important Christmas and New Year period.
We have pulled forward our reorganisation plan for our European operations, which has contributed to further trading disruption but which accelerates our overall plan. We are confident that these changes will give us the platform from which we can drive our business forward.
After a troubled few years, it's full steam ahead with that turnaround plan.