Warning for retailers as toy firms struggle ahead of Christmas period

By PERRY GOURLEY
Published on 10/11/2012 00:00

DISAPPOINTING updates yesterday from model specialist Hornby and toys group Character raised alarm bells for retailers ahead of the key Christmas trading period.

Hornby, which is behind Airfix and Corgi as well as its model railway brand, admitted it was “undoubtedly facing short-term challenges” as it fell to an operating loss of £265,000 in the six months to 30 September. Stripping out Olympic-themed products, Hornby said that UK sales fell 15 per cent.

It also said it was suffering from “very substantial disruption” to supplies caused by a major rationalisation programme being implemented by one of its largest suppliers in China.

The company has scrapped its interim dividend.

Character Group, which produces toys and games based on the likes of Fireman Sam, Peppa Pig and Scooby Doo, said its sales in October had shown a steep decline.

“The group now considers that it will fall materially short of its budgeted sales to Christmas and therefore, will not be in a position to achieve the market forecasts,” it said.

The company said sales of the AppGear toy range, tipped to be one of the hottest new ranges in the sector, had fallen well short of expectations.

Although Character said it was now expecting first-half results in the current financial year to be disappointing, it remained optimistic to stronger sales in 2013.

Shares in Hornby closed up 2.55p at 60.25p and in Character Group down 3.5p at 131.5p.