Hornby issues profit warning as Europe turnaround gets underway

Hornby warned on Tuesday that full year profit and revenue was likely to be lower than expected as the European turnaround plan gets into full swing.

The toy manufacturer said it expects to post an underlying group loss before tax of £2m, but this could be lower depending on how long it takes the new teams in the international businesses to recover their performance levels.

Hornby said although stock levels of European products are expected to recover close to originally planned levels over the next two months, the roll-out of the new logistics and distribution system and management changes caused significant disruption to trading, meaning European sales will now be materially lower than the company had originally anticipated.

“Although this is a disappointing short term development we are fully committed to continue with the transformation programme which will provide a platform for significant growth in the medium term, and we are confident in the trading outlook for the business,” it said.

Hornby said that while UK trading was impacted during July and August, the trend in UK revenue growth since early September has been very encouraging and it is expected the UK business will deliver a result broadly in line with expectations for the full year.

At 1420 GMT, Hornby shares were down 2.1% at 95p.