(News Bulletin 247) – The entertainment specialist is starting its new 2024-2025 financial year on a dull note, with a sharp drop in sales in the first quarter (ending at the end of June). Innelec anticipates better market dynamics for video games in the coming months.

True to form, Innelec unveils its activity report for its first quarter ending at the end of June in mid-August, the group being in a staggered financial year (ending at the end of March).

And for now, this is a false start for the specialist in the distribution of gaming products, accessories and derivative products. The group has in fact recorded a sharp decline in its sales, by 57% over one year, to 15.6 million euros for the first quarter of the 2024-2025 financial year (April to June 2024).

A sharp decline in sales

Innelec had already warned that it expected a sharp decline in its activity at the start of the year, when the group’s annual results were published on June 12. The company is counting on the release of new consoles such as Sony’s PS5 Pro or Nintendo’s Switch 2 to “stimulate consumer purchases” in the coming quarters.

While the publication of a sharp decline in sales in the first quarter of 2024-2025 is not a “surprise”, for In Extenso, the research office is surprised by the significant magnitude of the decline in sales over one year, which is “more severe than expected”.

The group’s sales followed the trajectory of consumer sales on the French market, explains Innelec. In detail, sales of games consoles fell by -50% in value and by 52% for games in physical format.

The decline in sales was less marked for the group’s other activities contributing to the gross margin, namely licensed derivative products (-12%) and accessories carried by Konix, its proprietary brand (-17%).

This drop in sales is linked, according to Innelec, to an unfavorable base effect for games since the first quarter of the 2023-2024 financial year had been boosted by the release in May 2023 of The Legend of Zelda: The Tears of Kingdom from Japanese video game giant Nintendo.

A savings plan

Regarding its outlook, the group anticipates better market dynamics in the coming months, with the new products announced by console manufacturers and game publishers. This renewal of the offer will, according to Innelec, promote a rebound in sales across the entire ecosystem.

The group added that it had also identified room for improvement for its e-commerce division after conducting a periodic review of its activities. An action plan has thus been put in place by Innelec to gradually improve its online sales platform and its presence in this “important sector” in France and Europe.

Finally, the group says it is confident in its ability to seize new opportunities for “profitable business in the future”.

In Extenso has for its part reduced its forecasts on the basis of a sharp decline in quarterly turnover and limited visibility on the activity. Maud Servagnat, the analyst in charge of covering the file, is once again adopting “a more cautious view” in her figures, and is therefore forecasting an annual turnover down 15% over one year to 160.5 million euros.

Management also recalled the implementation of a savings plan intended to anticipate the repercussions of this market contraction in the first half of the financial year.

This cost-cutting programme includes €1 million in cuts in overheads over the financial year and a redundancy plan, effective since the end of July, which should generate overall gross savings of €1 million on an annual basis and €0.4 million net over the current financial year.

On the Paris Stock Exchange, Innelec suffered one of the biggest declines on the Paris Stock Exchange on Wednesday, the day after the announcement of a sharp drop in its sales in the first quarter. The stock fell by 12%, to 4.535 euros at around 10:15 a.m., which brings its deficit since the start of 2024 to 27%.