Hornby: share price - and Mike Ashley's model train set hobby company advisory role explained

After building up a stake in the historic model train company, retail tycoon Mike Ashley is to advise Hornby.

The founder and majority owner of Frasers Group has "entered into a consultancy arrangement" with the business, the toy company told shareholders on Wednesday (20 March).

“Mike will be available to support Olly Raeburn, chief executive officer of Hornby, and the wider business, particularly in relation to systems, operations, logistics and, where relevant, broader matters of strategy,” it said.

Hornby went on to say that Ashley's business will not be compensated for the consulting work. Shareholders will hope the move can help spark a financial turnaround at Hornby, after it posted a £5.1 million pre-tax loss in the half-year to September.

Shares in the company slipped to their lowest price for decades at the end of last year as a result. Ashley’s Frasers Group significantly increased its stake in Hornby in February this year, driving a jump in the firm’s share valuation.

The Sports Direct owner acquired more than 11 million shares in Hornby to take its stake in the Margate-based company to 8.9%.

The move makes Frasers the third largest shareholder in the business, behind Phoenix Asset Management and Artemis Investment Management.

Hornby shares rose 7% on Wednesday morning following the update, taking its shares to 38p. It gives the business a market value of around £64 million.

The British company is renowned for its production of model railways and associated accessories, and was established in 1901 by Frank Hornby under the name Meccano Ltd.

The company initially focused on manufacturing metal construction sets before expanding into the world of model railways and today stands as an iconic brand synonymous with miniature locomotives, carriages, track systems, and scenic elements.

Hornby has remained at the forefront of the model railway industry, and caters to enthusiasts of all ages and skill levels, offering everything from starter sets designed for beginners to highly detailed locomotives and intricate accessories.