Hornby to cut number of toys in turnaround bid
Toymaker Hornby plans to cut the number of toys it makes as it strives to make the business profitable again.
The firm, whose brands include Scalextric, Airfix and Corgi, said it would reduce the number of individual product lines by 40%, but said it would keep its most well-known toys.
It plans to raise £8m via a share placing to fund the restructuring.
The plans come after the firm reported a £13.5m loss in what it 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.
'Smaller, more focused'
Revenue for the year fell 4% to £55.8m, but the firm said it had continued to retain its core hobby customers.
Mr 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.
"I expect to see the impact of the plan from early 2017," he added.
Even after the overhaul, the firm said it would still have about 1,400 product lines.
And Mr Canham noted that just half of the firm's toys currently generated almost all of its profit.
The turnaround is being led by new chief executive Steve Cooke. Mr Cooke took the helm in April after previous boss Richard Ames stood down in February, just a week after the toymaker 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 Mr Cooke.
The Kent-based company's roots go back to 1901, when founder Frank Hornby applied for a patent to protect an invention he called "improvements in toy or educational devices for children and young people".
The firm's first toy was construction system Meccano, before it went on to its famous model trains and then gradually expanded to own a host of other brands including Airfix, Scalextric and Corgi.
Its recent struggles have led to suggestions the toymaker has lost its relevance in an era dominated by computer games.
However, Mr 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.