Walt Disney Company reports Q3 2021 earnings showing a return to profit for Disney Parks, Experiences and Products

Aug 12, 2021 in "The Walt Disney Company"

Posted: Thursday August 12, 2021 4:16pm ET by WDWMAGIC Staff

With the reopening of Walt Disney theme parks around the world in this past quarter, the company has not surprisingly seen a return to profitability at the Disney Parks, Experience and Products segment.

Disney Parks, Experiences and Products revenues for the quarter increased to $4.3 billion compared to $1.1 billion in the prior-year quarter. Segment operating results increased $2.2 billion to income of $356 million.

"We ended the third quarter in a strong position, and are pleased with the Company's trajectory as we grow our businesses amidst the ongoing challenges of the pandemic," said Bob Chapek, Chief Executive Officer, The Walt Disney Company. "We continue to introduce exciting new experiences at our parks and resorts worldwide, along with new guest-centric services, and our direct-to-consumer business is performing very well, with a total of nearly 174 million subscriptions across Disney+, ESPN+ and Hulu at the end of the quarter, and a host of new content coming to the platforms."

At Walt Disney World third quarter attendance levels were at or near the daily capacity levels which increased throughout the quarter. Currently 70% of Walt Disney World Resort hotels are available for guest stays.

CFO Christine McCarthy said during the earnings call, "Guest spending at the domestic parks has been exceptionally strong with third quarter per capita up significantly versus fiscal 2019 at Walt Disney World and Disneyland. They have benefited from demand and favorable guest mix, driving higher admissions per cap and as well as spending on products related to Star Wars Galaxy's  Edge, and Avengers Campus. Looking forward theme park resolutions remain strong. We continue to utilize our yield management strategy to deliver the optimal guest experience and provide flexibility to the guests during the dynamic times. All while driving economic margin for the shareholders."

When asked about how the Delta variant of COVID019 has impacted the parks, Chapek said "In terms of Delta variant, we see strong demand for our parks continuing. The primary noise that we're seeing right now is around group or conference cancellations. Right now we're seeing above the Q3 attendance levels, they were pretty darn good. We're still bullish about our park business going forward. I may suggest that we've implemented a reservation system that's going to enable us to spread our demand, increase the yield, and improve the guest experience at the same time. In terms of the long-lasting impacts that you mentioned, I think some of the cost implications that we need to do for hygienic purposes are going to be relatively short lived. In the grand scheme of operating our parks, not all that material. What will be the long-lasting impact is the improvement that we're making with guest personalization and guest choice affecting the tremendous yield benefits that we've been able to extract over the last few quarters. That's only going to grow in the future with our ability to do world class yield management system through the new reservation management system."

With regard to increasing capacity and staffing, Christine said, "We're expecting the parks to be fully staffed by the end of the calendar year 2021. We're going to be increasing capacities as we have the demand and we're also being able to thoroughly train our employees as they come back in. This is a never-changing landscape with COVID. We're going to be particularly careful and also going to bring our capacity online aggressively and measured. We're not going to just open up the doors and fling them open. We're doing this in the measured fashion for the health and safety of not only our guests, but also our cast members in the parks."

You can view the full earnings report here, and below is the Parks, Experiences and Products statement.

Disney Parks, Experiences and Products

Disney Parks, Experiences and Products revenues for the quarter increased to $4.3 billion compared to $1.1 billion in the prior-year quarter. Segment operating results increased $2.2 billion to income of $356 million. Operating income for the quarter reflected increases at our domestic and international parks and experiences businesses and at merchandise licensing and retail.

Growth at our parks and experiences business was due to the reopening of our parks and resorts. Walt Disney World Resort and Shanghai Disney Resort were open for the entire quarter. In the prior-year quarter, Walt Disney World Resort was closed for the entire quarter and Shanghai Disney Resort was open for 48 days. Hong Kong Disneyland was open for 72 days in the current quarter and 10 days in the prior- year quarter. Disneyland Resort and Disneyland Paris were open for 65 days and 19 days respectively, during the current quarter, whereas these businesses were closed for all of the prior-year quarter. During the periods our parks and resorts were open, they were generally operating at reduced capacities.

Growth in merchandise licensing was primarily due to higher revenue from merchandise based on Mickey and Minnie, Star Wars, including The Mandalorian, Disney Princesses and Spider-Man. The increase at our retail business was due to higher results at Disney Stores, most of which were closed in the prior-year quarter and the comparison to the write-down of store assets in the prior-year quarter.

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MisterPenguinAug 23, 2021

Transcript's available... https://thewaltdisneycompany.com/app/uploads/2021/06/q3-fy21-earnings-transcript.pdf

Figments FriendAug 15, 2021

Walt dAug 15, 2021

Im glad that we are profitable again, but as a share holder, were is our yearly check? No covid now, with good people Numbers!

Walt dAug 15, 2021

I

LilofanAug 14, 2021

Yes , that Goldman Sachs fraud drama in around 2010 was bottom of the barrel to mislead and defraud customers.

skypilot2922Aug 14, 2021

as long as they profited from the deal GS would not give a tinkers damn about what people thought. Remember this is the same outfit that sold tranches of mortgage debt and at the same time sold CDI’s on the probability that the debt THEY were selling would go bad. not that any of the other investment banks are any different in their strategies

skypilot2922Aug 14, 2021

Considering I’ve spent my career in this field building large scale systems for household names. I’m very familiar with what trading systems are capable of. in the outer boroughs of new york there are hundreds of datacenters dedicated entirely to HFT because these locations have a few hundred microseconds less latency to the Wall St systems than do the retail trading outfits in CT and NJ. I think you far underestimate what modern trading systems are capable of. If a stock is selling for 1.00 and someone puts in a large buy order for 1.05 the HFT systems will buy at 1.00 and sell at 1.05 the transaction will be done before the retail investing houses are even aware of the Buy order. Yeah its only a few pennies but the volume is massive. I’d suggest the book ‘Flash Boys’ it’s an approachable book on High Frequency Trading Dont read it before bedtime because you will not be able to sleep.

LilofanAug 14, 2021

If Goldman dumps their entire stock of TWDC the Dow Jones would react big time in a negative way. I don't see that happening.

el_superAug 14, 2021

OK so look at this another way: why haven't they yet? If it's so obvious that they could undercut all the Hollywood studios and take all the prize winnings for themselves, why are they struggling so hard to just show some random Thursday night football and the WBA? Please let us know what they have missed, so that we can set them on the right path. This seems to be a real misunderstanding of what computers can do. You think Goldman Sachs would risk a programming error dumping ALL of their stock in seconds?

skypilot2922Aug 14, 2021

as long as the institutional investors can sell their Disney stock for more than they paid for it they dont care if Disney ceases to exist tomorrow. Investment by the biggies is almost entirely AI driven, If Goldman-Sachs AI detects a bad trend it will dump its entire position in seconds. There is no emotion or nostalgia there only zeroes and ones in a data center somewhere in the tri state area

skypilot2922Aug 14, 2021

One reason and one reason only. The FAANG’s have the bucks, Apple could buy every share of Disney stock and still only spend a third of its cash hoard. The legacy media no longer have that kind of money they did but managed to blow it by becoming PR departments for one or the other of the US’es political parties, It’s the definition of stupid to do stuff that makes half your customers run away. If Apple or Amazon want the NFL games they will get them by outbidding everyone and the NFL will count the bucks.

MisterPenguinAug 14, 2021

Winter Olympics right around the corner!!! Show me the quads!!!

el_superAug 14, 2021

When did they ever say exploited? That whole yield management thing is just a way of communicating something that I have felt for a long time: I would rather pay MORE for a better experience than accept a discount on a reduced experience. In the pre-pandemic days I started to spend the extra money to go to the Disneyland After Dark events, simply because it was the only way to experience the park with almost no crowds in a way that I was accustom to for the last 40 years. Yeah I was paying more (about $100 for 5-6 hours in the park), but the value was absolutely there for me. There biggest problem park side right now, is balancing the people who want to pay more for a better experience, and the people who just want access for the lowest price. Their yield management solutions absolutely make sense in that regard: they are going to change pricing and use reservations to force the discounted access groups to the days/seasons where people typically don't show up, while still providing a better experience on the weekends/busy season for a higher price. At least.... I hope that's what they're planning. Yes this was aimed for the investor group, but no one in that group is so naive to think that Disney doesn't have to work to convince people to spend their money there. It's still the same proposition it always was: is the experience worth the money. Disney and their investors both know that if there is no value in the experience, they will end up losing more. They still have to offer a product people want.

el_superAug 14, 2021

You're putting way too much weight into this idea. Yes sports scores and highlights can be automated, and probably to some extent already are. The internet exists and cable channels aren't the sole source for content anymore. That situation though, exists today, right now, and it hasn't had the negative impact on Disney that you seem to think it will. The value of ESPN (or Hulu or Disney+ even) isn't necessarily in the specific content, but in the distribution. ESPN is successful because it's been long established as a channel for sports content, and that gives them an advantage in negotiating broadcast rights from the major players/franchises. More games = more viewers. More viewers = more games. Sure the NFL could easily sell the rights to their games over to a tech company for a large boatload of money. Amazon can't automate a football game, so if they want to play they'd have to buy the rights that Disney currently owns. But there is this prevailing wisdom that, going into an unknown streaming model could reduce viewership, and reduce interest in the games/sport, so why take the chance? ESPN is established and still have millions of viewers, so why put your games on AppleTV where fewer people have access to it? That idea seems to be supported by the fact that Amazon is already trying to gain traction in showing live sporting events, but yet Disney still hasn't fallen.