Losses for the year to 31st March have widened to £10.1m, as shares fall more than 17% in early trading. 

The model railway brand announced revenue of £35.7m for the year – a near 25% fall from the £47.4m reported in 2017, with a reported loss before tax of £10.1m, compared to last year’s £9.5m.

It reported exceptional items of £2.3m, down from 2017’s £3.3m, including costs relating to the restructuring of the business and refinancing.

Hornby said that group sales for the 10 weeks to 8th June have come in “lower than we expected” due to “the ongoing impact of insufficient investment in tooling” in the past, and late placing of purchase orders with suppliers.

It noted that there was also a backlog of stock at its retailers from previous decision to bring sales forward by discounting, and that would “take time to work through”.

However, gross margin for the 10 weeks to 8th June was five percentage points higher compared to the same period last year, which Hornby said reflected the absence of discounting efforts since October 2017.

Lyndon Davies, Hornby chief executive and interim chairman, commented: “In the first seven months that I have been at Hornby, we have assessed our position and confronted the reality of the situation in which we find ourselves. Tough decisions have now been taken and we are currently laying down the foundations for our future success. There is a new energy in the business, and I am excited with our plans as we re-engage across both domestic and international markets with these well-loved brands.”