Model maker Hornby has warned shareholders its sales for the first half of the year will be lower than last year but said its business restructure is on target.

Its decreased expectations are due to disruption caused by a reorganisation plan and European supply problems.

However it says the company’s Enterprise Resource Planning (ERP) restructuring programme, which began last year, is on track.

It said its turnaround plan is continuing to make good progress to "deliver sustainable, long-term improvement in performance".

However trading was impacted throughout July and August by the implementation of ERP, as expected, "against a backdrop of a weaker general retail environment".

It said: “This was in line with our expectations, but we are pleased with how the system has bedded down and encouragingly run rate volumes have since improved.

“They are now back to levels which are higher than last year. UK trading is now also benefiting from manufacturing production being ahead of plan in trains and Scalextric.”

New products for the company’s Christmas trading season include the Hornby Silver Jubilee Collection Limited Edition set and the Scalextric James Bond Spectre set.

However the company, which moved its headquarters from Margate to Sandwich this year, said European sales are being impacted by ongoing problems with supply of international model rail.

Following a sale of shares this summer, the company’s net debt was £3.9m in August compared to a net debt of £7.5m in March.

Despite the challenges of managing the group’s planned turnaround strategy, we are confident that Hornby will emerge as a stronger and more robust business - Richard Ames, Hornby

Chief executive officer Richard Ames said: “We have made good progress on the planned restructuring and implementation of the new ERP system to help us manage our group stock.

“We are a couple of weeks from our half year end and look forward to updating the market on our progress in more detail with our interim figures on November 26.

“The group is now looking ahead to the important Christmas trading period. Early indications from our customers are positive and we have an exciting pipeline of new products that are being well received.

“Despite the challenges of managing the group’s planned turnaround strategy, we are confident that Hornby will emerge as a stronger and more robust business.”