Supply base problems put brakes on Hornby sales

26 September 2012

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26 September 2012 | Adam Leach

Model railway manufacturer Hornby has announced it will not meet sales forecasts as a result of supply chain delays and poor sales of its London 2012 merchandise.

In a trading update published yesterday, the company, which was founded in 1901, explained that it continues to suffer from supply problems in China. Earlier this year, the company revealed it could foresee shipments of supplies disrupted as one of its key suppliers in China was downsizing.

In yesterday’s statement, the company confirmed that it had been significantly affected by the move and would continue to feel the impact. The statement said: “This process is ongoing and it is now clear that the disruption to our supplies for the remainder of the financial year will be substantial.”

The toy manufacturer told investors that it has taken steps to reduce its reliance on single vendors by diversifying its Chinese and Indian supply bases. It admitted that, at one point, around 75 per cent of its purchases were with just one supplier, which it has brought down to below 35 per cent over the past four years.

The London-Stock-Exchange-listed company has said it will break even rather than make a profit. It accepted that it expects to strengthen its supply chain in the long-term, but that problems will continue. “The current disruption is part of a painful process, but we believe that by working with all our suppliers, we will be able to work through this process to arrive at a more balanced supply base for the future.”

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