Shares of Hornby plc (GB:HRN) skyrocketed over 40% this morning after Frasers Group PLC (GB:FRAS) increased its investment in the company. Frasers bought an additional 11.10 million shares of Hornby, taking its total to 15.18 million shares for an 8.9% stake. Hornby shares touched a fresh 52-week high of 30.00p on the news.
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Hornby Plc is a British model railways manufacturing company with operations across the UK, Europe, and the U.S. Hornby is engaged in developing, designing, sourcing, and distributing hobby and interactive products. Meanwhile, Frasers Group is an FTSE 100-listed company and one of the largest sporting goods and clothing retailers.
Hornby’s models and collectibles are already available in Frasers-owned GAME stores. The renewed interest in Hornby could signal further potential partnership deals. Commenting on the investment, Hornby CEO Olly Raeburn said that the company is looking forward to “exploring commercial opportunities” with this investment.
For Frasers, the move is aligned with its aim of “pursuing strategic interests” to bolster shareholder value. The company has recently increased its stake in several other British companies.
Is Hornby Profitable?
Hornby is undergoing a strategic restructuring that involves margin improvements and increasing revenues. The company forecasts a “high single-digit to low double-digit revenue growth” rate for 2024. At the same time, profitability is expected to remain under pressure for the six months ending March 31, 2024, expecting to return to profitability in the later part of 2024. HRN stock has remained under constant pressure in the past couple of months, as it’s lost over 19% in the past year (excluding today’s gain).
