If your costs are in US dollars /Chinese yuan, then if sterling falls against the USD, the sterling price must rise pro -rata. It's not that the price/cost in the currency in which they are made have changed
Certainly this will mean fewer sales in sterling markets, but that's the way devaluations work to reduce imports. However that's only one part of Hornby's business now - in so far as the euro has fallen only modestly against the USD/yuan , their prices in euros for Jouef/Lima/Rivarossi/Arnold/Electrotren will only be modestly higher . While their HO prices are substantially higher than we're used to they are lower than other manufaturers in those markets. I remember seeing a comment on the Loco Revue forum when Hornby rereleased the Jouef range - "la retour du Jouef democratique!": it was about a 20% cut on the prices from Rivarossi before they went bust. If Jouef prices are now back to where they were in the latter days of Rivarossi 5 years ago , no doubt that market will live with it as it did before
Sterling, thanks to devaluation, is another matter
I expect that Hornby's main focus will be on medium term survival - if their costs (as expressed in sterling) rise sharply they have to recover them through higher prices. Interestingly , the BBC website report is has a much more positive take on the announcement - Hornby's sales haven't collapsed, they are still within the range of the profit forecasts, if they face cost pressure they will be recovering it .
The slump in their share price suggests the City (in pessimistic mood) was assuming a collapse in sales ,and a collapse in profit as costs soar
Price increases will cost volume, as German HO has amply demonstrated, but if the costs are climbing prices will follow - I don't think this is profiteering or increasing margins, just attempting to limit the damage to margins in the face of rising cost . If you express the increased sterling price in US dollars, at the current exchange rate , you'd probably find the USD price is actually lower than it was 12 months ago.
"The pound in your pocket.." and all that
No doubt we will see exactly the same from Bachmann , who have their costs in the same currency
Certainly this will mean fewer sales in sterling markets, but that's the way devaluations work to reduce imports. However that's only one part of Hornby's business now - in so far as the euro has fallen only modestly against the USD/yuan , their prices in euros for Jouef/Lima/Rivarossi/Arnold/Electrotren will only be modestly higher . While their HO prices are substantially higher than we're used to they are lower than other manufaturers in those markets. I remember seeing a comment on the Loco Revue forum when Hornby rereleased the Jouef range - "la retour du Jouef democratique!": it was about a 20% cut on the prices from Rivarossi before they went bust. If Jouef prices are now back to where they were in the latter days of Rivarossi 5 years ago , no doubt that market will live with it as it did before
Sterling, thanks to devaluation, is another matter
I expect that Hornby's main focus will be on medium term survival - if their costs (as expressed in sterling) rise sharply they have to recover them through higher prices. Interestingly , the BBC website report is has a much more positive take on the announcement - Hornby's sales haven't collapsed, they are still within the range of the profit forecasts, if they face cost pressure they will be recovering it .
The slump in their share price suggests the City (in pessimistic mood) was assuming a collapse in sales ,and a collapse in profit as costs soar
Price increases will cost volume, as German HO has amply demonstrated, but if the costs are climbing prices will follow - I don't think this is profiteering or increasing margins, just attempting to limit the damage to margins in the face of rising cost . If you express the increased sterling price in US dollars, at the current exchange rate , you'd probably find the USD price is actually lower than it was 12 months ago.
"The pound in your pocket.." and all that
No doubt we will see exactly the same from Bachmann , who have their costs in the same currency
