How Mandeville and Wenlock derailed Hornby

Games merchandise flop wipes a third off toy company's value

view gallery VIEW GALLERY

When London 2012 organisers unveiled the mascots they hoped to bring Olympic gold to the pockets of merchandise-makers, many eyebrows were raised – one-eyed, alien-like characters formed from droplets of steel were a slightly off-the-wall choice to symbolise the British capital.

And now it seems those concerns were legitimate, as Wenlock and Mandeville's failure to sell sent a much-loved British toy-maker's shares tumbling by more than a third. Hornby, the maker of childhood favourites from Scalextric and Corgi to Airfix suffered dire sales in their London 2012 merchandise this summer.

A key problem is understood to have been a distinct lack of demand at big retail chains for Hornby's figurines of the two official mascots.

A person familiar with the situation said that big retailers, such as Tesco and Argos, got cold feet after sales of the mascot toys disappointed, which led to them cancelling orders en masse from licensee Hornby early in the summer.

The warning from Hornby further reinforces the view that, while the Olympics delivered a temporary feel-good boost to the UK, they led to a reduction in consumer spending and footfall on the High Street for the duration of the Games.

The lower than expected sales of merchandise hit Hornby's profits by £3m. Andy Wade, an analyst at Numis Securities, said: "Where the group had originally envisaged the Olympics providing a £7m fillip to revenue and £2m of profit, it is now expected to result in a £1m hit to the bottom line."

Amid a warning about "continued depressed consumer spending," Hornby explained that before the Olympics it had initially enjoyed "strong" orders from retailers and "encouraging" consumer purchases.

But the problem was that retailers had also purchased huge quantities of London 2012 merchandise from other licencees and faced with a glut of unsold stock they "resorted to deep discounting".

The toy maker said: "The consequence of this for Hornby was that retailers lost confidence in many categories of London 2012 merchandise, and repeat orders for our products were cancelled."

The company, which produced its first Hornby electric train set in 1925, said it now only expects to "break even" this year, following a profit of £4.5m in 2011-12.

Shares in the group – which also sells through 200 concessions, including Hamleys and Harrods – fell by 30.3p, or 34.2 per cent, to 58.3p yesterday.

However, demand for Hornby's other 2012 merchandise, such as the Corgi London taxis and Scalextric Team GB cycling velodrome set, were more robust. The company's London 2012 train set was also still selling at the full recommended retail price of £99.99 on its website yesterday.

Hornby also blamed its third profit warning of this year, following previous downgrades in January and April, on the plans of one of its big suppliers in China to "rationalise its manufacturing facilities". This is affecting Hornby's shipments of model train sets to the Continent.

Hornby said the "disruption to our supplies for the remainder of the financial year will be substantial".

It added: "We have made solid progress in recent years to diversify our supply base in China and also in India." However, it pulled no punches, describing the realignment of its manufacturing as "part of a painful process".

Independent Comment
blog comments powered by Disqus
News in pictures
World news in pictures
       
iJobs Job Widget
iJobs Money & Business

Programme Change Manager

£850 - £1000 per day: Orgtel: Programme Change Manager - Banking - London - £8...

Operations Analyst

£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...

Finance Business Analyst - Banking - £500pd

£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...

Senior Finance Project Manager

£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...

Day In a Page

Watch out Watford: Here comes the secretive Bilderberg Group

Watch out Watford: Here comes the secretive Bilderberg Group

A meeting of global power brokers in a Hertfordshire hotel is exciting conspiracy theorists, but what are they really about?
'The ultimate all-in-one home entertainment system': Microsoft finally unveils its Xbox ONE console

'The ultimate all-in-one home entertainment system'

Microsoft finally unveils its Xbox ONE console
Plenty of Fish dating site founder pulls 'Intimate Encounters' option to ward off sleazy men

Plenty of sleaze

Dating website pulls intimate 'hook-up' section to curb harassment
Inferno author Dan Brown 'honoured' to be invited to join the Freemasons

The Freemasons’ Code

Dan Brown reveals the message that told him door to the lodge is open
Not secure any more: G4S boss heads for exit at last

Not secure any more: G4S boss heads for exit at last

Nick Buckles survived the Olympics débâcle and a £5bn bid fiasco but a profit warning finally triggered his downfall
How to say ‘I’m a sellout’: Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar

How to say ‘I’m a sellout’

Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar
Why clubs are keen to take a stand

Why clubs are keen to take a stand

There's a real desire around the grounds for safe standing. But will the authorities listen?
In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

Disillusion with a siege mentality and negative playing style made change inevitable
James Lawton: The James Hunt I knew is the subject of a new F1 movie

James Lawton: The James Hunt I knew is the subject of a new F1 movie

British driver was fascinating man whose epic duel with Niki Lauda in 1976 was typical of an era of glamour and glory – but also the ever-present threat of death
Stuart Hogg: Ready to climb his own Everest

Stuart Hogg: Ready to climb his own Everest

Lions' cub, 20, joins long line of players from Scottish borders club Hawick given opportunity to make his mark at highest level
Carl Froch handed rare chance of revenge with dream rematch

Steve Bunce on Boxing

Carl Froch handed rare chance of revenge with dream rematch against Mikel Kessler
'There is a battle going on inside us that is never discussed'

Masculinity in crisis?

'There is a battle going on inside us that is never discussed'
Have US shock jocks gone too far?

Have US shock jocks gone too far?

An incendiary remark from Rush Limbaugh may be the beginning of the end for outspoken right-wing US broadcasters
The ‘Beverly Hills’ of Surrey pays more income tax than big cities of the North

The ‘Beverly Hills’ of Surrey

Elmbridge pays more income tax than big cities of the North
Heavenly Bodies

Heavenly Bodies

Michael Landy's artistic marriage made in heaven... and hell