How Mandeville and Wenlock derailed Hornby

view gallery VIEW GALLERY

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

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".

Start your day with The Independent, sign up for daily news emails
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own