Mike Ashley increases stake in model train maker Hornby

Hornby has struggled with supply issues and rising costs since the pandemic. Photo: pejft/iStock Unreleased

Mike Ashley has increased his stake in model railway maker Hornby, the latest stock market bet by the Sports Direct billionaire.

Hornby said on Friday that Mr Frasers Group Ashley increased his stake in the company from 2.4% to 8.9%, making him its third-largest shareholder. The increased stake has fueled a surge in Hornby's share price, which rose as much as 50% on Friday.

Mr Ashley, Frasers' majority shareholder, has a long history of acquiring shares in retailers and companies he believes are undervalued , and also held major positions in competitors including Currys, AO World, Boohoo and Asos.

He is currently the largest shareholder of Boohoo and AO World after gradually increasing his stake, as well as the second largest shareholder of Asos and the fifth largest shareholder of Currys.

Mr. Ashley has a long history of acquiring shares in companies that he believes are undervalued. Photo: Eddie Mulholland

Mr Ashley's interest in Currys has sparked speculation he could enter a bidding war for the electrical retailer after rejecting a takeover bid from an activist investor. Elliott. Earlier this week, The Telegraph reported that Chinese online retail empire JD.com was also considering a takeover.

Ashley has gradually tightened his control over Frasers in recent years, increasing his stake from 63% at the end of 2019 to 73%. According to the Sunday Times Rich List, Ashley is worth £3.8 billion.

Founded in 1901, Hornby is renowned for its model railways and replicas of historic trains such as the Mallard and the Flying Scotsman. which have developed a cult following among adult collectors over the years. It also owns the Scalextric and Corgi brands.

The company has benefited from a boom in demand during the pandemic as Britons rediscovered model railways during lockdown, returning Hornby to profit after years of losses.

< p>After the pandemic, the company is trying to modernize its products. to boost their appeal, including a new train control system using Bluetooth technology that connects them to phones or tablets.

However, the company has encountered supply problems and increased costs. Before Friday's surge, Hornby's share price had fallen almost 80% from its 2021 highs.

Its sales rose 6% to £23.8m in the six months to September 30 last year, it said company in the report. November, but the company posted a pre-tax loss of £5.1m, largely to blame for higher costs.

Hornby models are already on sale in Frasers subsidiary Game stores. Chris Wootton, Frasers' chief financial officer, said Frasers wanted to explore opportunities for the two companies to work more closely together.

Ollie Raeburn, chief executive of Hornby, added: «We look forward to exploring commercial opportunities.» working together to unlock the full potential of Hornby's beloved brands.»