Model railway maker Hornby (LON:HRN) warned full-year profit and revenue will fall short of expectations as it ramps up its turnaround effort in Europe.
The company, which also makes Scalextric car racing sets, said a senior management shake-up in Italy, France and Spain as well as the UK, had caused significant disruption.
It is also revamping its supply network across Europe, following the success of its UK turnaround.
It will roll out a new logistics and distribution system across Italy, Germany and France this month, having done similar in Spain last month.
While stock levels of European products are expected to recover over the next two months, the changes mean European sales will now be “materially lower than the original plan for the full year”.
UK trading stayed in line with expectations, with sales of new product lines including the Scalextric James Bond Spectre slot-car racing sets proving popular, the company said.
Overall, the company forecast an underlying pre-tax loss of around £2mln, from just £200,000 a year ago, but this may be lower depending on the speed of recovery in Europe.
It added that it is confident it will recover next year, as it reaps the benefits of the changes.
Richard Ames, chief executive, said: “While this will impact upon this year's performance, we will be unlocking significant year-on-year cost savings.
"The board is confident that the accelerated plan will leave us very well placed by the end of the financial year."