Toymaker Hornby is overcoming supply chain issues that meant sales in its European subsidiaries were constrained by shortages product last year. But this was not enough to offset the impact of bad weather on sales in the run-up to Christmas.
“We continue to see improvements to our supply chain. Shipments from our largest supplier are running at substantially higher levels than a year ago. We expect this trend to continue. At the same time we have diversified our supply base and are now much less dependent upon our largest supplier. The combination of improved shipments and a broader supply base gives confidence that sales in the next financial year should not be constrained by supply issues,” the company said.
As well as Hornby model railways, Hornby brands include, Scalextric, Electrotren, Lima, Jouef, Rivarossi, Airfix, Humbrol and Corgi.
Christmas sales were affected by the bad weather, and the company said: “While interest in our products remains strong, a further consequence of lower consumer sales prior to Christmas is that our retailers have entered the New Year with higher stocks than normal. This will result in retailers reducing their restocking orders in the remaining weeks of the current financial year.”
As a result of this combination of supply chain issues and bad weather, the company said it expected pre-tax profits for the year to 31 March 2011 to be below current market expectations.
Chairman, Neil Johnson said: “The negative impact on the group caused by the unusually adverse weather in December is almost certainly a one-off event. Coming on top of the previously reported supply chain issues the result for the year will clearly be impacted. Nonetheless, due to its diverse product and geographic spread Hornby continues to occupy a position of strength among its peers. We continue to see significant growth potential in many of our markets. The further positive progress on our supply chain issues will enable us to capture this potential as the business grows.”