Diving sales may derail Hornby as recovery plan hits buffers

Hornby was on the brink of collapse today as bosses at the beleaguered model-railway business admitted dreadful sales could mean the company will be unable to pay its bank loans.

Issuing a fourth profit warning in three years, chief executive Richard Ames admitted that a turnaround and major investment was not working, as sales in January sunk with customers disinterested in the toy maker’s promotions.

Most concerning was the revelation that the company’s banking covenants would be missed next month, with Hornby directors in negotiations with its lenders to avoid bankruptcy.

The shares fell 36.5p, or 45%, to 44.5p — their lowest level to date, valuing the entire company at just £24.5 million.

A major investment to shore up Hornby’s troublesome supply chain and a raft of new products gave a slight improvement in November and December with sales up by 17%, but bosses admitted this “masks some volatility within the period”.