Walt Disney Company First Quarter 2020 Earnings report shows increased spending at the parks and resorts and slight attendance gains

Feb 04, 2020 in "The Walt Disney Company"

Walt Disney Company reported its quarterly earnings for its first fiscal quarter of 2020 today, showing continued revenue gains in the parks and resorts of 10%, and operating income up 6%.

Growth at the domestic parks and resorts was due to higher guest spending and, to a lesser extent, increased attendance, partially offset by higher costs.

Attendance at the domestic parks was up 2%, with guest spending per capita up 10%.

In the resort hotels, per room spending was up 4%, and occupancy levels were at 92%. Looking ahead, resort hotel reservations are up 4% compared to this time last year.

“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”

You can read the full report, and see below for the Parks, Experiences and Products segment.

Parks, Experiences and Products
Parks, Experiences and Products revenues for the quarter increased 8% to $7.4 billion, and segment operating income increased 9% to $2.3 billion. Operating income growth for the quarter was due to increases at merchandise licensing and domestic parks and resorts, partially offset by lower results at our international parks and resorts.

Higher merchandise licensing results were due to an increase in revenue from sales of merchandise based on Frozen, Star Wars and Toy Story, partially offset by lower sales of merchandise based on Mickey and Minnie.

Growth at our domestic parks and resorts was due to higher guest spending and, to a lesser extent, increased attendance, partially offset by higher costs. Guest spending growth was primarily due to higher average ticket prices and an increase in food, beverage and merchandise spending. Higher costs were due to new guest offerings, driven by Star Wars: Galaxy’s Edge, and the impact of wage increases for union employees.

The decrease in operating income at our international parks and resorts was due to lower results at Hong Kong Disneyland Resort, partially offset by growth at Shanghai Disney Resort. Lower results at Hong Kong Disneyland Resort were due to decreases in attendance and occupied room nights reflecting the impact of recent events. At Shanghai Disney Resort, higher operating income was driven by an increase in attendance.

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Article Posted: Feb 04, 2020 / 4:36pm ET
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Corey PFeb 13, 2020

I have a couple of friends with businesses that require inventory. They both have Amex cards with huge limits. These guys having a good month may spend $100-200K on inventory. They paid balances off as the inventory is sold. The upside to that is a whole lot of rewards points for various things. If you mix business with personally is where people go off the rails.

MisterPenguinFeb 13, 2020

You mean... bassoon?

eliza61nycFeb 13, 2020

Sssh Mr. P you said the "B" word. That's not allowed here.

MisterPenguinFeb 13, 2020

...and customer satisfaction goes up since there's 25% fewer other guests. This means that price increases can lead to customer surveys saying they had a better experience. If you were running a business and you raised prices and were making better profits and customers were *happier*.... why would you ever lower them?

WallyWorldFeb 13, 2020

Thought this thread was about Disney Company earnings.....

eliza61nycFeb 13, 2020

understandable. I grew up with a family where no one used credit cards so I never used them. My mother got an American express card and put me as an additional card holder when I went to college only because I went to school out of state and she wanted me to be able to get home quickly in case of an emergency. I was never tempted to use it primarily because my mother had a threat that we believed, she was an attorney and used to say "I will kill you, bury you and get away with the crime". lol I took her at her word. Interestingly enough my husband started his own business and we still never used our credit cards. When we started going to the world when our kids came along we did what I see many of the youngins on the job do. We made our reservations a year out and simply paid down on it. My boss and I talk alot and they do they same. they don't go annually but pretty much they have a vacation account and pay into it just like their 401k, their mortgage and any other bill. The year we purchased our dvc, we pretty much wiped out our savings, talk about doing nothing?? lol no eating out, no movies, nada. lol unfortunately we're two ocd personalities some times. we never really got outta control because we always wanted to retire by 55 so we simply focused on that. unfortunately my hubby had cancer and didn't make it but I think we've instilled good habits on the minions. my kids range in age 26-30 and none of them have any credit card debt, now they did have a leg up because two went to college without loans and the third went to trade school . I put absolutely every thing on my cards mainly because I get the travel rewards. unfortunately I live in the high COL east coast, so I can pretty much wrack up a lot of points. I agree that many do not pay off their bills at the end of each month.

GoofyernmostFeb 13, 2020

It really depends on what stage of their life they are in. I never went myself until I was 35 and that was with a very tight budget. A couple of times later on when both my daughters and my wife were in College the card heated up again. My wife had her own set of CC's that I didn't get to see. She had three that she maxed out to the tune of 30K, I had been paying a lot of bills for my business on credit cards and my debt for CC's alone was 100K. Due to circumstances out of my control I had to close the business and without that cash flow I was unable to keep up the minimum and was forced to file for Bankruptcy. That was the only thing that saved my life. I'd still be paying on that today if I hadn't taken the path. That was in 1998. I was two years where I couldn't have a credit card and when I was finally able to get one again, it had a limit of $2000.00. I made sure that was paid in full every month and over the years have picked up a few more cards with a total credit line of about 20K. But, except for the trip to WDW I brought my family on in 2008 it has never seen more then $1500 per month since then. All paid immediately. There really are very few people that pay off the total every month. Some attempt to do that but succumb to the temptation when things are tight and once that gets started it almost never lets go.

eliza61nycFeb 12, 2020

Ouch, ok better sell my stock ahead of this collapse. As you say we'll have to wait and see. Do young people not save for vacations anymore. The 34 year olds I know are planning their vacations for the 50th. They are (from what they say) are simply saving. Would it be tacky to ask this question on the planning section?? I am intrigued that the great majority of people who go to Disney can't afford it. Very interesting

GoofyernmostFeb 12, 2020

OK, all of that is conjecture just like mine was. What isn't conjecture is that the Federal Reserve has reported that the cumulative independent debt of CC's as of the end of 2019 was 1,098.0 Billion** and rising, just 5 years ago it was 906.7 Billion. That doesn't take into account College Debt which is going to put a substantial kink in the budgets of young people getting started or car payments or mortgages. That means no extravagant vacations unless it is on a Credit Card. Even then as some point it will be impossible to pay that all off. Bankruptcies will increase, less credit will be available and the only people that will be able to fill Disney's very big pockets will be the very wealthy, but the question is will there be enough of the very wealthy willing to put down the caviar and go to a theme park. Disney had to be forced to spend money to upgrade in order to compete with others. They have been thinking only about today and not tomorrow. Most of the big wheels at Disney will be comfortably living on their private islands in the Caribbean after having converted their shares of Disney into cash, yachts and conch shells by the time it all catches up. The demand may stay high but the ability to pay is getting worse and only gets worse when Disney decides that if they build it, they will come no matter what they charge. They may want too, but will they be able too. The piper has to be paid at some point. I hope for the benefit of the youth and young at heart, I am wrong. I'm not a specialist in this area but, I do exercise a degree of common sense which leaves me alarmed. That really is 1 trillion, 98 Billion.

eliza61nycFeb 12, 2020

So I will admit, my sampling pool is very small. I apologize, I do know that many people use credit, heck I use credit also. the question becomes if one uses it wisely. again I try to always admit that my sampling size is only a few hundred folks who I either work with or worship with. Kodak is gone for the very reasons we are pointing out, failure to change. the size doesn't matter, big or small any business that fails to change and give it's customers what it wants dies. Right now Disney is delivering. We may not like what they are offering but it's extremely obvious that many folks do. also change does not mean collapse. Will Disney change, morph and the parks look totally different? absolutely? actually I'm hoping the sell off the parks division but that ain't happening either. I can wish though. No one has said the economy is "bullet proof" in fact most have said a correction is coming. but a correction is not a COLLAPSE. corrections are the normal part of the economic cycle. Again many have said that when the next bear market comes, whenever it comes the mouse world will adjust accordingly. Yes I do think there are enough "non swimming in debt" folks to maintain the parks. Exactly what are these things that are trending that portends collapse. I admit I use the normal economic indicators. I work for a company the size of Disney although I'm in chemicals which is a bit different than entertainment but generally we do our objectives on a 5, 6 year outlook. not 25 years and trying to predict the state of the economy further than that is more adventurous than I am. So I'll just end it on folks have been predicting the demise of Disney, pretty much every year whenever there is a price increase. I specifically remember the arguments about Disney going under if the ticket price went over 100 and yet here we are what 5-6 years later as popular as ever. People have also been saying that it's unattainable for the "middle class" for a long time. I'm predicting in 2030 years we'll be on this site pretty much saying the same thing but I will concede your point. Yes any thing could happen. the corona virus could blow through and wipe out the entire population, we could have another world war. there could be some thing catastrophic to make wdw close it's gates in the near future however one defines that period.

GoofyernmostFeb 12, 2020

Yea, I know that we all see the word Billion and think that is just not exhaustible. With companies the size of Disney it would only take one major mistake for it all to be gone quickly. The idea of asking for a date this will happen is unbelievable. I can't see into the future in detail, I can only look at the why things are trending vs history and because of that know that no economy is bullet proof. If you think everyone is comfortably employed your vision is pretty nearsighted. Just because your neighbors just got a new car in no way tells you what their financial condition really is. Credit is an enabler. Of course not everyone that goes to Disney parks are deep in debt, but are there enough of them to sustain the place by themselves? Ask the farmers that had to shut down or have their livelihood declined or had to take a socialistic handout from the government in order to survive because of miss directed tariffs, manufacturing closing, many high paying white collar jobs being downsized. Remember how big Kodak was at one time? It was huge, it is now gone. Nothing can survive the change in technology or perhaps the creation of something better. Talking about it for 5 years? Do you consider that a long time in the grand scheme of things? Obviously your farsightedness requires a new prescription. The big picture is much more vulnerable then narrow vision. Things can happen and history shows that they will as some point. We have not solved the problems that trigger that stuff, if anything we have made it worse. I will be worm food before long myself and there is a chance that even I might see it happen. Not as likely as my children and grandchildren, but I don't see how it can be so easily dismissed as never being able to become a reality.

HauntedPirateFeb 12, 2020

The “Parks, Experiences, & Products” division.

eliza61nycFeb 12, 2020

Hey HauntedPirate, I apologize if this is a simple question but whats PEP?

eliza61nycFeb 12, 2020

Ok seriously?? So lets go with the vaudeville premise, if you really think about it vaudeville didn't so much as die as it morphed and changed as technology changed. we use to have the old Beta max tapes (lol, I just found a box of them) now we are into live streaming. The reason why they spend billions is because it's exactly what companies do when the recognize they need to update. I would argue that they should have done it years ago. Now sorry folks have been threatening the "future" demise of the parks and the economy for the last what?? at least 5 years and we are currently in a 10 year bull market that will definitely last through 2020, the economy is strong, not just for the wealthy. Jobs are secure and working folks are enjoying watching their 401Ks grow. Now I am wondering how student loan debt will effect spending say in 20 years but that's another thread. Of course at some point there will be a correction. then we will see what we always see with any company, deep discounts and a slow period. I always ask this, what time period are you suggesting 5 year? 10 years? now sure in 50 years the parks are certain to be different, but I'll be grass fertilizer by then. I do think in 50 years the parks will be totally different so maybe they do "die" and reinvent themselves. I love how everyone assumes that the people who go to Disney are deep in debt. now I don't know about who you know but everyone I know goes on vacation the old fashion way, they save up during the year. I know a bunch of friends who are credit card savvy and use points to get a bunch of stuff paid for. My trip in August? got three flights free with my American airlines visa points.