ES in Hornby plunged 34 per cent yesterday after poor sales of its London 2012 branded goods prompted the iconic toy maker to issue a surprise profit warning.
The company had hoped its Olympic-branded model trains, taxis, buses and Scalextric sets would drive an increase in profits.
But lower than expected sales meant major retailers resorted to deep price discounting and cancelled repeat orders for the products.
In a second blow to the company, it also said yesterday it expects substantial disruption at one of its major suppliers in China for the rest of the year.
Where the group had originally hoped the Olympics would provide a £7m boost in sales and £2m of profit, it will deliver a £1m loss.
As a result, Hornby said it only expects to break even for the year to March 2013. This compares with profits of £4.3m last year.
In June, the company said sales of Olympic memorabilia were gathering momentum and expected products like its Great British Classics die cast vehicles to continue to sell after the games.
“Whilst, prior to the games, major account listings for our products were strong, and consumer purchases were encouraging, the major retailers had also purchased substantial quantities of London 2012 merchandise from other licensees,” said Hornby.