Hornby (LSE: HRN) owns up to slow sales and no profits.
Hornby (LSE: HRN) crashed 33p, or 37%, to 56p in early London trade this morning after admitting its sales had been "adversely affected by a number of factors".
The toy manufacturer, which makes the famous train sets and slot-car Scalextric system, added that it would produce "an approximately break-even" performance for the current year.
Prior to today, Hornby's broker, Numis (LSE: NUM), had forecast the small-cap would produce a £6m pre-tax profit for the year to March 2013.
Hornby partly blamed lower-than-expected sales of its London 2012 products for today's warning. Major retailers apparently purchased too much London 2012 merchandise from a number of suppliers, and resorted to deep price discounting to shift slow-moving stock.
The toy-train group added that one of its significant suppliers in China was continuing to reorganise its facilities, and the resultant disruption for the remainder of the financial year would be "substantial".
Hornby also referred to "continued depressed consumer spending" for good measure.
Looking ahead, the firm did say:
"Against this challenging background we have redoubled our efforts in innovation and product development, building on our core brand strengths and also extending our reach based on newly developed technologies. At the same time we are implementing a rigorous cost control regime in order to align overheads more closely with our future business."
"In conclusion, whilst we face some significant short term challenges, we are working hard to address these and in doing so, establish a base from which the Group can grow more securely in the future."
Investors with long memories will recall that Hornby has suffered problems before. Back in 1999, profits collapsed and the shares drifted to as low as 23p during 2000.
However, a turn in fortunes catapulted the shares to as a high as 300p by 2007 -- resulting in a 1,204% gain for investors smart enough to spot the recovery potential.
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> Maynard does not own any share mentioned in this article.