Yahoo Finance Mike Ashley bounce over for Hornby as share gains after Frasers Group investment wiped out
Model railways manufacturer Hornby is now worth less than it was when Mike Ashley’s retail empire Frasers Group revealed its investment in the brand earlier this year.
The Kent-based company saw its share price surge from 21p to a high of 38.5p following the news in February that the owner of Sports Direct and House of Fraser had significantly increased its stake in the listed business.
Frasers Group acquired more than 11 million shares in the company, taking its total holdings to more than 15 million, or 8.9 per cent.
However, Hornby’s shares have been on the decline since April 19 and are now trading at 20.5p each, lower than they were before the Frasers Group investment news was announced.
Hornby can trace its roots back to 1901 in Liverpool when founder Frank Hornby received a patent for his Meccano construction toy.
More than 70 per cent of Hornby’s shares are held by Phoenix Asset Management Partners, with Artemis Investment Management the next largest shareholder on 16.2 per cent.
In March, Hornby has made its first acquisition since Mike Ashley’s Frasers Group invested in the company.
The business snapped up the assets, trade and intellectual property of The Corgi Model Club (CMC) from Blue 14, an investment vehicle majority-owned by entrepreneur Jim Lewcock.
Also that month, Mike Ashley stepped up his involvement in Hornby after becoming a consultant to its chief executive.
The billionaire majority owner of Frasers Group is to work with Olly Raeburn “in relation to systems, operations, logistics and, where relevant, broader matters of strategy”.
Frasers Group also increased its stake in Hornby to 9.1 per cent in March.
Hornby is expected to announce its full year results in the coming days.
Hornby in the red with net debt ‘too high’
In a trading update issued to the London Stock Exchange in April, Hornby said: “Whilst we close the year in a loss-making position and both net debt and inventory are still too high, we have seen a marked change in trajectory since the half year and aim to continue this positive improvement throughout the current financial year.
“We have invested in new sales and marketing teams, along with adding research, data and loyalty capabilities, which we expect to start improving our revenue and margins positively this financial year through the identification of new customers, opening up of new territories and launch of new product ranges.
“We do, however, remain cautious in our outlook due to the natural challenges facing a business in turnaround, and the uncertainty of the wider economic and socio-political factors affecting all businesses at this time.”
