Hornby recovery on track as Christmas sales defy retail pessimism

Hornby’s chief executive has said recovery efforts are on track after the model train maker’s sales outperformed High Street peers during the crucial Christmas trading period.

Olly Raeburn told shareholders on Wednesday that Hornby had defied “a difficult economic climate” with strong growth in revenue, margins and gross profits during the “critical” third quarter of its financial year.

Margate-based Hornby has been cutting costs and selling loss-making operations as part of its efforts to return to profitability.

It has racked up significant debt as sales have struggled, costs have risen and trade has been disrupted by maritime attacks in the Red Sea.

But Hornby, which is backed by Frasers Group and has Mike Ashley as a consultant, said the group’s sales for the three months to December 31 were 7 per cent ahead of the same period last year on a of continuous operations.

This compares with a 1.5 per cent year-on-year drop in total UK non-food sales during the period, according to the British Retail Consortium.

Hornby said Black Friday and Christmas contributed to revenue growth of 23 percent and gross profit growth of 38 percent compared to last year for the month of December.

Nearly 50 percent of all Black Friday transactions came from new customers, up from 42 percent in 2023.

The group’s sales so far this fiscal year are 8 percent above last year and gross profits are up 10 percent, Hornby added.

Margins for the quarter were 48 percent, up from 44 percent in 2024, “reflecting both increased direct-to-consumer activities and additional full-price sales.”

Hornby’s net debt fell from £18.8m in September to £18.2m at the end of the year, while the group said it had made a 23 per cent reduction in inventories since the end of March to £16. 6 million.

Horny actions They rose 7 per cent at the open to 27.29 pence, already taking gains more than 20 per cent since the start of the year.

Stocks have been volatile. They have risen 80 per cent in the past 12 months, but are still 25 per cent below the March 2024 high of 38.5p.

Hornby shares remain around 60 per cent below the Covid-era peak of 69.5p in January 2021.

Raeburn said: ‘In a difficult economic climate, we are pleased to be able to report growth in revenue, margins and gross profits during this critical quarter.

‘At the same time, we continue to reduce inventory levels that have built up over recent years and are delivering on our turnaround plans consistently and sustainably.

“Our turnaround is on track as we further reduce core costs, focus on our core brands and improve operational processes across the business.”