Model railway manufacturer Hornby says its future looks brighter despite reporting losses of £700,000, up from £200,000 last year.

In its half-yearly report, the Margate-based firm detailed a restructuring in which it is opening 35 concessions in WHSmith and Hawkins Bazaar.

Turnover for the six months to September 30 was £22.5m, down from £23.5m the year before.

But it reported good performance in its new Swindon Outlet Centre and its gross profit margin increased to 47.5% from 45%.

The company also highlighted issues with its supply chain, which it says have been resolved and will lead to better performance going forward.

Chairman Roger Canham said: “The future for Hornby is looking brighter as the transformation we have embarked upon progresses.

“I am confident that this will feed through to a more robust financial performance and deliver value for our shareholders.

“We also remain on track to meet market expectations for the full year.”

He added: “As we approach Christmas, we have a promotional programme in place that is keeping our products at the forefront of consumers’ minds.

“We are encouraged that trading over the last couple of months has been positive and remain focused on managing the reliability of the supply chain which continues to impact model rail product.

“As our model rail supply chain disruption is settled, we are confident we will see a much more robust performance across the group.”

Hornby owns a number of model railway and slot car brands, including Airfix models, Humbrol paints and Corgi die cast models.