Hornby off the rails after profits warning

A profits warning from Hornby, maker of the eponymous trains sets, has sent the share price off the rails.

Shares of the toy and hobby products group fell by almost a quarter in early trading on Friday after the company said pre-Christmas sales in the UK were below 2010 while, so far this year, "the rate of growth is below management expectations".

As a result, the company warned that while sales for the current financial year are ahead of the previous year. pre-tax profits in respect of the year to March 31st, 2012, are likely to be below current market expectations.

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Hornby, however, argues its product range still stands it in good stead, with the Scalextric Star Wars set winning one of three best new toy awards at the London Toy Fair, while the company continues to make good progress in growing sales in continental Europe.

The Chairman Neil Johnson emphasised how the business was looking to widen its range of products and geographic spread but said ominously that it is "proving extraordinarily difficult to predict sales accurately in these turbulent markets."

"In anticipation of continuing difficult trading conditions, we have adapted our business to offer a wider range of products at lower price points in categories complementary to our core business," Johnson added.

Net debt at the end of 2011 was down to £8.5m from £12.8m three months earlier and £10.3m at the end of 2010.

BS