Hornby (LON: HRN) shares tumbled early on Tuesday after it said a challenging consumer economic climate will impact its full-year figures.
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Shares of the manufacturer of model and hobby products plunged as much as 20% following its trading update for the period from October 1 to December 31.
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The company revealed that sales for the third quarter, covering the Christmas trading period, were ahead of last year and, as a result, cumulative group sales for the financial year to date are up 6%, driven by better stock availability stock, price increases, and e-commerce platform and digital media investments.
However, it also stated that the sales figures are “behind budget” due to the difficult consumer economic climate, which will impact the company’s full-year figures.
Even so, Hornby’s order book “remains strong,” and its direct-to-consumer sales are 44% ahead of the same period last year.
Net debt at the end of December was £7.6 million compared to £4.9 million at the end of September.
Nevertheless, Hornby remains cautious in its outlook for the full year and beyond due to various macroeconomic factors such as inflation and mortgage costs for consumers weighing on spending. However, “with employment expected to remain high, we are hopeful that the confidence in consumer spending remains,” the company said.
The company expects to report a “modest” underlying loss before tax for the year and will announce its preliminary results in June.
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