Model maker Hornby has warned shareholders it is likely to report weaker than expected results after poor sales in the summer and increased competition in the UK.

In a trading update ahead of its annual general meeting on Wednesday, bosses said there is a risk it would be unable to recover the shortfall in sales, even over the busy Christmas period.

The company suffered a 15% collapse in its share price to 27p immediately following the news.

Bosses said some new product releases had been put back to the second half of the year.

The Sandwich headquartered firm said it had reduced promotional activity and cut the amount of discounts it was offering.

The update said: “It is expected that trading this year will be more heavily weighted to the second half than last year due to the relative timing of the new product releases year-on-year and to the significant stock reduction in the first half of the previous financial year.

“Whilst the group still has the important Christmas trading period to come and significant opportunities remain to improve trading performance there is a risk that the shortfall in performance to date may not be recovered fully over the remainder of the financial year.”

It is the latest turmoil to hit the company, which received a takeover offer after it reported widening annual losses in June despite carrying out a two-year turnaround plan.

It increased underlying losses by 10% to £6.3 million in the year to the end of March and reported a 15% cut in revenues to £47.4 million.

The company also faced a shareholder revolt over its chairman in the spring.

Its largest shareholder Phoenix UK Fund – part of Phoenix Asset Management – increased its stake in the company to 71% after making a takeover bid.