Hornby tanks as it warns on profits again

Shares in Hornby fell sharply after the train set maker said it now expects to report an underlying pre-tax loss of £5.5m to £6m for the year to March.

This is much wider than the £2m loss it mentioned back in November and marks the company’s third profit warning in five months.

The group pointed to a £1m write-off at its warehouse in Hersden, and said the disappointing sales performance experienced in the New Year is expected to result in a trading profit deterioration of between £2.5m and £3m, with around half due to UK performance.

As a result of the wider full year loss expected, the company said there was a risk it will breach a covenant of its banking facility in March.

Hornby said that although like-for-like sales in the UK were up 17% overall year-on-year in the key November and December period, trading since the start of the year has seen a disappointing response to January product promotions.

Chief executive Richard Ames said: "This has been a real year of change at Hornby. Undoubtedly this is a disappointing result, but we have a strong portfolio of brands that we are determined to see flourish.

"The feedback from customers at the recent International Toy Fairs was encouraging and we are facing the future where, with the right platform, we can build value for our shareholders and drive the group's recovery."

The AIM-listed group said it is now analysing the causes and consequences arising from the poor start to the new calendar year and will update the market on the board's progress and its expectations for the outlook in due course.

Numis cut its full-year 2016 pre-tax loss forecast from £2m to £5.8m.

“Despite the clear operational progress being made and strong stable of brands, we move our recommendation Under Review as the 'causes and consequences' of this poor trading period are reviewed.”

At 1134 GMT, Hornby shares were down 52% to 39.28p.