Rising costs and weaker-than-hoped sales set models and collectibles retailer Hornby on track for a sharp fall in shares after a "modest" full-year loss.

The Kent-based company, which employs 210 and was incorporated in 1981, indicated shares down by almost seven per cent to 21.9p towards market close on Tuesday. In all, shares have shed 37% of value over the last year.

Net debt to the end of March 2023 was £5.8million, while net cash came to £3.9million at the end of March 2022.

The retailer blamed increased inventories at year end and a shortfall in sales.

A spokesman said: 'We remain cautious in our outlook due to a level of uncertainty around the impact of several factors on our sales such as inflation, mortgage increases and the rising cost of living for all consumers."

Full-year results are due to be posted by Hornby in June. The company began trading in 1901 in Liverpool after Frank Hornby patented his construction toy, Meccano. He subsequently produced his first clockwork train in 1920 and the unique 00-gauge trains in 1938. 

In 1964, Tri-ang bought the company but, after it went into receivership, Hornby Railways became independent again. Phoenix Asset Management stepped in to become majority owners in the wake of financial difficulties in 2017. Its current brand portfolio includes Corgi and Scalextric.

Speaking at the launch of 2023's product range, Hornby sounded an optimistic note.

Lyndon Davies, executive chair, said: "Sales at Hornby continue to grow with a stream of new products in the pipeline," he said. "We look forward to the continued growth in direct relationships with our customers."

In 2021, Forbes reported that some vintage train sets fron Hornby can be valued at thousands of pounds.

Peter Jenkinson, toy market expert said: "Almost everyone has some memory or another about a train, whether from real life, an iconic film, or simply from playing with a toy set as a child. Trains can be hugely romantic, with all that promise of travel and adventure, and they make many of us nostalgic."