Collectables giant Hornby says it ended the latest financial year in a “loss-making position” with both “net debt and inventory too high” but says it expects to see a “marked change in trajectory” during the next 12 months.

The Margate-based firm - which includes the brands Scalextrix, Airfix and Corgi in its portfolio - struck an overall optimistic tone for its financial year ending March 31.

It said group sales were £56.2 million - up 2% on the year before.

But it blamed an 8% drop in sales in the fourth quarter on a combination of Easter falling early and delivery delays as a result of delays impacting container vessels in the Red Sea.

The trading route has been plagued by problems as a knock-on effect of the conflict between Israel and Palestine. It resulted, says Hornby, in some “high-value” containers being pushed into April rather than March.

Direct-to-consumer sales were 18% ahead on the previous year. However, debt levels have increased - up to £14.3m from £5.5m at the end of March 2023. It blamed that on the trading loss and capital expenditure.

In its outlook it said it aims to continue “positive improvement” with an investment in sales and marketing teams hoping to be seen in a revenues uptick and its margins, along with new product ranges and moving into new territories.

It did, however, say it remains “cautious” in its outlook “due to the natural challenges facing a company in turnaround and the uncertainty fo the wider economic and socio-political factors affecting all businesses”.

Its full preliminary report into the year will be published in June.