Hornby has said the first stage of its turnaround plan has been completed, with the troubled toymaker showing early signs of a recovery.
A string of profit warnings has resulted in Hornby's shares plummeting over the past year as the firm has struggled with falling sales.
The Scalextric-to-Airfix firm, best-known for its model railways, has embarked on a painful turnaround, which has seen it reduce product ranges and cut back on investment as part of plans to shore up the balance sheet.
Hornby said on Friday that it has restructured its UK and European operations, resulting in "structural improvements to the cost base".
Encouragingly, Hornby added that revenues in the fourth quarter showed an improving trend and that it has re-engaged with its core independent retailer base as part of the new strategy.
Boss Steve Cooke said: "I am pleased to report that the first stage of our turnaround plan has been successful and this provides a strong base from which Hornby can build.
"Improving our customer focus has been a key part of the plan and I am particularly pleased that we have now begun to restore our leading position with our core hobby retail customers.
"Coupled with the considerable improvement in our financial position, I am confident that we have set the group on the right course to generate value for all our stakeholders."
Hornby flagged "sound" underlying trading and said it is confident in the momentum ahead of the next phase of its turnaround plan.
However, Neil Wilson, senior market analyst at ETX Capital, said: "Model train sets are not the source of pride and envy among kids that they once were.
"It has completed phase one - placing the group on a sound financial footing. It now needs to grow the brand. This could be more challenging. Its 'iconic' brand has value for oldies but does an Airfix model Spitfire quite set the pulses racing like they used to?
"Chugging along managing a slow and steady decline may be all that Hornby can hope for."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here