Hornby hit by poor Olympics sales
Filed under: News
The group had hoped sales of its merchandise would drive a bounce-back in profits but admitted that demand for London 2012 items - such as model taxis and buses - had been lower than expected.
The group - which makes model railways, Scalextric racing cars and also owns the Airfix and Corgi brands - has been hit by weak consumer spending amid the recession and saw profits fall from £4.5 million to £3.4 million in the year to March 31.
Shares fell by more than a third after the profit warning.
Hornby said that, despite encouraging early demand for Games-related products, the presence of substantial quantities of other London 2012 goods meant sales failed to deliver and retailers were forced to slash prices to shift stock.
"Retailers lost confidence in many categories of London 2012 merchandise and repeat orders for our products were cancelled," it added.
The group said it would be "constrained significantly" in the current financial year, but would keep a tight lid on costs and had "redoubled efforts" in product development and innovation in order to turn sales around.
The firm had put its hopes in Olympics fever to help revive flagging UK sales, which fell 4% in the last financial year. Trading was stronger in Continental Europe and North America, which helped wider group profits rise slightly from £4.4 million to £4.5 million.
Sales of Scalextric racing cars were the worst hit during the year, but the group plans to reignite interest with the recent launch of its Star Wars-based range and introduction of a number of products celebrating the 50th anniversary of the James Bond franchise. It also has high expectations for its range of Corgi toys, including a product based on ITV children's series Olly The Little White Van.
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