Model maker Hornby expects to make an underlying loss of £2 million this year after the introduction of new IT systems disrupted the company.

The toy brand, which also produces Scalextric, Corgi and Airfix, said its loss could be lower depending on how long it takes its international business to recover.

It comes after revealed it had returned to profit for the first time in three years in June, with underlying profits of £1.6 million in the year to the end of March, a turnaround from a £1.1 million loss in the previous 12 months.

The company has been following a radical turnaround strategy since its chief executive Richard Ames was appointed in February last year after poor sales in the Olympics and supply chain issues in China hit the company hard.

It moved its warehouse operations from its traditional Margate headquarters to Hersden, near Canterbury, and transferred its office staff to Discovery Park in Sandwich.

Only its visitor centre remains in Margate, where it had been based for more than 60 years.

In a trading update, the firm said its UK business was impacted during July and August by the roll out of its Enterprise Resource Planning system, designed to improve its data capabilities across sales, logistics and finance.

The company said that although this was a “disappointing short term development” it remained committed to its turnaround plans.

It said UK revenues for the 10 weeks from early September to Sunday, November 8, increased by 9% compared to last year.

It also plans to accelerate the reorganisation of its European businesses – restructuring its supply chain and putting distribution under the management of DS Logistics, the company which runs its warehouse facility in Hersden.

Chief executive Richard Ames said: “The performance of our UK business since we modernised our distribution set up has been very encouraging and this demonstrates that the strategy to turn Hornby around is working.

“Since the implementation of the new ERP system, we have further improved the platform on which we can build the group’s recovery. Whilst there has been a short-term impact, we are already seeing the tangible benefits of these changes.

“We set out in detail at the time of our recent fundraising our strategy to improve the structure of the group’s operations in Europe.

“Buoyed by the recent improvement in UK performance, we have now taken the decision to accelerate the reorganisation of our European businesses.

“While this will impact upon this year’s performance, we will be unlocking significant year on year cost savings and the Board is confident that the accelerated plan will leave us very well placed by the end of the financial year.”