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Hornby PLC (LSE:HRN), the iconic model train manufacturer, recorded a 10% profit growth for the five months ending 31 August. This performance reflects strong momentum for the company as it continues to expand its product offerings and strengthen its business ties. One of its major backers, Frasers Group PLC (LSE:FRAS), led by Mike Ashley, holds a significant 8.9% stake in Hornby. Frasers increased its holding by purchasing an additional 11.1 million shares in February.
Hornby’s collaboration with Frasers extends beyond shareholding, as its products are also stocked in Frasers-owned GAME stores. Additionally, Mike Ashley plays a strategic advisory role for the company, offering direction to help Hornby navigate the competitive landscape. This partnership has been a key part of Hornby’s recent growth and market positioning.
In its Wednesday trading statement, Hornby provided an update on the outlook for the remainder of the financial year. The company noted that, as is typical in the toy and collectibles industry, the full-year outcome will largely depend on sales during the critical Christmas trading period. This season is traditionally a peak time for model train and hobbyist products, and Hornby’s ability to capitalize on this could determine its annual performance.
The company expressed confidence in its current position, emphasizing that its outstanding order book remains strong. Several new products are set to be released in the lead-up to the holidays, further bolstering Hornby’s outlook. These upcoming launches are expected to attract both hobbyists and collectors, supporting sales growth through the end of the year.
Another highlight from the trading update was Hornby’s continued success in its direct-to-customer (D2C) business. The company reported an 11% increase in D2C invoiced sales compared to the previous year, and a notable 56% rise when measured against the same period in 2022. This shift towards direct sales is part of Hornby’s strategy to engage more directly with customers, enhancing brand loyalty and boosting profitability.
Overall, Hornby’s strong financial performance, combined with its solid order book and growing D2C sales, positions the company well for the coming months. The strategic support from Frasers Group and Mike Ashley also adds a layer of confidence as Hornby gears up for the critical holiday season.
