Retail tycoon Mike Ashley is to advise Hornby after building up a stake in the historic model train business.

The toy company told shareholders on Wednesday that the Frasers Group founder and majority owner has “entered into a consultancy arrangement” with the business.

“Mike will be available to support Olly Raeburn, chief executive officer of Hornby, and the wider business, particularly in relation to systems, operations, logistics and, where relevant, broader matters of strategy,” it said.

Hornby added that there will be no payment to Mr Ashley’s business for the consultancy services.

Shareholders will hope the move can help spark a financial turnaround at Hornby, after it posted a £5.1 million pre-tax loss in the half-year to September.

Shares in the company slipped to their lowest price for decades at the end of last year as a result.

Mr Ashley’s Frasers Group significantly increased its stake in Hornby in February this year, driving a jump in the firm’s share valuation.

The Sports Direct owner acquired more than 11 million shares in Hornby to take its stake in the the Margate-based company to 8.9%.

The move makes Frasers the third largest shareholder in the business, behind Phoenix Asset Management and Artemis Investment Management.

Hornby shares rose 7% on Wednesday morning following the update, taking its shares to 38p. It gives the business a market value of around £64 million.