Hornby PLC (LSE:HRN) shares fell 10% after the toy train maker reported smaller operating losses for the first half of its financial year as it continues a turnaround overseen by Sports Direct founder Mike Ashley.
The model trains and cars maker, in which Sports Direct parent Frasers Group PLC (LSE:FRAS) owns a 9% stake, reported revenues up 10% to £25 million for the six months ended 30 September, with underlying losses shrinking slightly to £3.8 million from £4.1 million a year ago.
Statutory pre-tax losses came to £5.1 million, which was up from a loss of £4.9 million last time, and net debt crept up to £18.9 million from £14.8 million.
Operational developments as part of the restructuring included cutting costs by £1.5 million, with a logistics move to enhance efficiency and the appointment of a new operations chief.
A brand rationalisation of its portfolio, including the sale of Oxford Diecast to generate capital, also reduced the inventory position and has allowed a greater focus on Corgi diecast collectables.
Chief executive Olly Raeburn said: "We continue to make good progress with our turnaround strategy."
He said the strategic and structural changes aimed at operational efficiencies and cost savings may not all have an impact until the next financial year, "We are firmly focused on right-sizing the business for sustainable growth".
"Revenue performance versus last year has been solid, and we exit the half year with a clear, and aggressive, plan for maintaining that momentum through the critical Black Friday and Christmas trading periods."
He said the current period, the third quarter, is "a crucial one".
After Frasers took a stake in February this year, Ashley became a consultant in March through his vehicle, Mash Holdings.
The Sports Direct founder's presence was welcomed by Raeburn, to which Ashley has provided support and offered guidance relating to the wider business including the systems, operations and logistics of the organisation.
Shares in Hornby, which rose from 21p to 38p in the days after Frasers bought its stake and had meandered their way to 26p at yesterday's close, fell 13% to 22.6p in early trading on Wednesday.
** Update: Adds share price **