Shares jumped 5% as firm behind Scalextric said its turnaround plan was progressing well
Shares in Hornby, the hobby products retailer, jumped 5% on Friday after the Group gave a positive pre-close trading statement on performance since February and told investors its turnaround plan was making progress.
The AIM-listed microcap fell 72% in February last year after announcing that pre-tax losses had widened to £13.5m in its third profit warning in five months, precipitating the departure of then CEO Richard Ames.
Since then, the company behind Scalextric has focused on restructuring its UK and European businesses, improving its cost base, re-engaging with independent retailers, and improving its cash flow.
"The business is focused strongly on improving cash flow and at 31 March 2017 net cash on the balance sheet was £1.1m (31 March 2016 net debt £7.2m) which was ahead of management's expectations. This has resulted from sound underlying trading combined with a carefully managed programme of stock reduction and the successful sale of the Group's Margate site. "
The Group's revenues are forecast to fall to around £44m for FY17 and £43m in FY18, but with losses falling to £5m this year before a profit the following year. Since February, Revenue performance has been slightly ahead of the Board's plan.
CEO Steve Cooke said he was pleased with how the turnaround plan was progressing, adding that he felt it was providing a strong base to build upon:
"It has been a challenging time... Improving our customer focus has been a key part of the plan and I am particularly pleased that we have now begun to restore our leading position with our core hobby retail customers."