Hornby posted today a 33 percent drop in half-year profit, hitting its shares. Hornby said it made pretax profit of 1.8 million pounds ($2.9 million) in the six months to Sept. 30, down from 2.7 million pounds in the same period last year.
The group blamed tough trading conditions and a 1.3 million-pound increase in overheads following its recent purchase of model car maker Corgi for 8.3 million pounds in May 2008.
"The retail markets are undoubtedly more challenging. However the hobby sector has distinctive defensive characteristics, which will help us in a more difficult economic environment," said Frank Martin, Hornby's chief executive.
According to industry analysts, Europe's toymakers should buck the economic downturn better than many other retailers.
'Typically if you look at history, the toy industry has weathered the recessions and financial pressures very well in the past, ' said Bryan Ellis, chairman of Toy Industries Europe earlier this week.
Hornby hopes to drive its Christmas sales with a set of James Bond Scalextric cars, including the Aston Martin DBS and Alfa Romeo 159 as seen in the latest film in the long-running franchise, 'Quantum of Solace'.
"The strength of the Bond franchise and the Scalextric brand name should override difficult economic conditions," said Paul Chandler, Scalextric marketing manager.
Thankfully, Hornby are not blaming any losses on the financial crisis and the current economic downturn. That may change is the profits continue to fall.
Is it all doom and gloom though? I think that the hobby market will survive the financial crisis without much loss. I think that in these sort of times we buy less new cars, go on fewer exotic holidays, perhaps eat out less and stay at home and get on with homely activities that may include your hobby if you have one. It is a good time to start a model railway layout or a Scalextric track if you have been always thinking of doing it.
On Model Rail Forum, we have seen a rise in visitors since June with a marked rise in visitors and forum activity since the beginning of September (when the world economy seemed to do down the toilet) bucking the seasonal statistics and proving that perhaps there are other factors at play affecting the figures. I see this on SlotForum too and I'm sure that more people are taking cover from the downturn and spending more time on their hobbies. It follows on that they spend more too on their hobbies. Perhaps not large amounts - like brand new expensive trains, but definitely more on other items: expanding their existing collection or doing a bit of scenery...
What do you think about this?