Disney Reports Losses and No Change to Theme Park Capacity During Earnings Call
If you’ve been following along with MickeyBlog you’ll know that today was the quarterly earnings call for the Walt Disney Company! We’ve already shared with you the news that Disney+ has performed better than expected. However, that is counterbalanced by the news that the theme parks unsurprisingly took a hit.
This afternoon, the company reported that Disney’s theme parks division took a $2.6 billion hit this quarter due to the pandemic’s impact on parks across the world. Disneyland Resort has been closed for nearly a year and though other theme parks around the globe have reopened, including Walt Disney World in Florida, others have remained closed or reclosed due to coronavirus spikes including Disneyland Paris and Hong Kong Disneyland!
Photo: Jeff Gritchen, Orange County Register/SCNG
Disney Parks Experiences and Products revenues for the quarter decreased 53% to $3.6 billion and segment operating results decreased to $2.6 billion to a loss of $119 million. Disney cited numerous reasons for the decrease this quarter This includes Disney Cruise Line suspensions, Adventures By Disney tour suspensions and reduced capacity at both domestic and international parks.
During the earnings call, Disney CEO Bob Chapek did confirm that attendance at Walt Disney World currently remains at 35% and was not forthcoming about any timeline for upping this numbers.
These financial figures should not come as a surprise to investors. Disney reported on similar losses during the last three quarterly earnings calls. As we previously reported here at MickeyBlog, during the fourth quarter of 2020, Disney reported that the coronavirus outbreak cost the company around $2.4 billion in lost operating income. In the second quarter the company reported $1 billion in losses and in the third quarter the company reported that as a result of the pandemic operating income had been cut by $3.5 billion.
Photo: CNBC
However, Chapek did convey optimism when it came to the future of the parks saying “Where we have been able to reopen our theme parks with limited capacity, guests have consistently demonstrated a willingness and a desire to visit which, we believe, is a testament to the fact that they feel confident in the health and safety protocols we’ve put in place.” Chapek went on to say that the outlook for the rest of the year will be determined by how quickly the COVID-19 vaccine is distributed to the public which will then have a knock on effect. Chapek said, “That to us seems like the biggest lever that we can maneuver in order to either take the parks that are currently under limited capacity and increase it or open up parks that are currently closed.”
Chief Financial Officer Christine McCarthy added that the parks that were open (including those at Walt Disney World) were able to make a profit from theme park visitors that outweighed the cost of reopening. She also reiterated Chapek’s words that the company is pleased with the number of advanced bookings it is seeing.
So what does the rest of the year hold for Disney’s theme parks? Chapek said that even with vaccination he does expect some level of social distancing and mask wearing for the rest of the year. “Dr. Fauci said earlier today that he hopes there’s vaccines for everyone who wants them by April this year,” Chapek said. “If that happens, that is a game changer, and that could accelerate our expectations and give people the confidence that they need to come back to the parks.”
“Will there be some overlap until we know that we’ve hit herd immunity?” he said. “Sure we will but do we also believe that we’ll be in the same state of 6-foot social distancing and mask wearing in 2022? Absolutely not.”
While Walt Disney World remains open, Disney has been unsuccessfully pushing for Disneyland to be allowed to reopen in Southern California. However, strict health and safety measures have had an impact on Disneyland and Disney California Adventure’s abilities to reopen theme park rides and attractions. As a strategy to bring back Cast Members Disney has expanded the Downtown Disney shopping and dining district into California Adventure to reopen businesses.
Chapek called it, “Not only a year of challenge, but a year of learning.” And with Disneyland Paris, Hong Kong Disney, Disney Cruise Line and Adventures by Disney all suspended, its will continue to be so into the next quarter.
This is a story we’ll continue to follow closely. Readers are encouraged to keep checking back with us for further news and updates!
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