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."