Walt Disney Company Second Quarter 2019 Earnings report shows continued gains in the parks and resorts

May 14, 2019 in "The Walt Disney Company"

Posted: Tuesday May 14, 2019 11:12am ET by WDWMAGIC Staff

Walt Disney Company reported its quarterly earnings for its second fiscal quarter last week, showing continued gains in the parks and resorts of 15%.

“We’re very pleased with our Q2 results and thrilled with the record-breaking success of Avengers: Endgame, which is now the second-highest grossing film of all time and will stream exclusively on Disney+ starting December 11th,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “The positive response to our direct-to-consumer strategy has been gratifying, and the integration of the businesses we acquired from 21st Century Fox only increases our confidence in our ability to leverage decades of iconic storytelling and the powerful creative engines across the entire company to deliver an extraordinary value proposition to consumers.”

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

Parks, Experiences and Products revenues for the quarter increased 5% to $6.2 billion and segment operating income increased 15% to $1.5 billion. Operating income growth for the quarter was due to growth at our domestic theme parks and resorts, increases at our consumer products business and cruise line and higher attendance and occupied room nights at Hong Kong Disneyland Resort. Results included an adverse impact from a shift in the timing of the Easter holiday. In the current year, the entire Easter holiday falls in the third quarter, while the second quarter of the prior year included one week of the Easter holiday.

Operating income growth at our domestic theme parks and resorts was due to increased guest spending and higher attendance and occupied room nights at Walt Disney World Resort, partially offset by higher costs. Guest spending growth was primarily due to increases in average ticket prices and food, beverage and merchandise spending. Higher costs were due to labor and other cost inflation and costs for new guest offerings.

The increase at our consumer products business was driven by growth at our games business, partially offset by a decrease at our merchandise licensing business. Operating income growth at our games business was due to the sale of rights to a video game and royalties from the licensed title Kingdom Hearts III, which was released in the current quarter. The decrease at our merchandise licensing business was driven by lower minimum guarantee shortfall recognition due to the adoption of ASC 606 (see page 5), partially offset by a favorable foreign currency impact.

The increase in operating income at our cruise line reflected the impact of the dry-dock of the Disney Magic in the prior-year quarter and higher average ticket prices.

Results at Shanghai Disney Resort were comparable to the prior-year quarter as an increase from higher average ticket prices was largely offset by lower attendance.

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winstongatorMay 17, 2019

With Comcast as basically a 33% owner, any big decisions that are made as it relates to investment or expansion would have to be done with their cooperation. And again, I think we would probably both share a bullish outlook about Hulu, but we can't do it on our own. That quote aged quickly. Also, 14 mentions of ‘margin’. That’s the limiter on investment.

MisterPenguinMay 17, 2019

Transcript... https://www.thewaltdisneycompany.com/wp-content/uploads/2019/03/q2-fy19-earnings-transcript.pdf

seascapeMay 15, 2019

yes, but hotel occupancy was 93% last quarter. Putting that in perspective means each room was empty less than 7 days last quarter. That is unbelievable given the number of rooms they have.

mwlillieMay 15, 2019

The question I have is that if you raise ticket, room and food/drink prices by over 7 percent, on average, during the past year, and you only see 5 percent revenue growth, doesn't that mean that said "growth" is declining?

winstongatorMay 14, 2019

Thanks for the correction.

MisterPenguinMay 14, 2019

It's 2Q, not 3Q. :) Transcript still not available yet.

Walt dMay 14, 2019

Gee hard to Believe earnings are up when you charge over $100 to get in .

winstongatorMay 09, 2019

Listening to the call now. Took 18 minutes for the first talk of synergy. When will the synergies happen? Edit Another question about a Marvel land in the US. Had the person heard about the California Marvel land? Also, lots of questions on margins...

jt04May 09, 2019

Not if ticket sales were fixed. And reservations required.

winstongatorMay 09, 2019

Exceeding pandora, Diagon Alley & galaxy’s edge sounds like westworld to me. If you had a park with pandora, Diagon Alley and galaxy’s edge it would be insanely crowded!

jt04May 09, 2019

They are building dedicated bus lanes so that should be very efficient. Just hope the new park tries to surpass Pandora, Diagon Alley and Galaxy's Edge. That is what is necessary. IMO.

winstongatorMay 09, 2019

They are working on Fantastic Worlds, another park, as well as hotels that seem like good options when visiting Universal. The drawback of their new park is it isn't walkable from the existing two and city walk.

jt04May 09, 2019

Yes. The opposite of what some said on these boards 10 years ago has become the reality. I would feel bad for Uni but I know the parent company has the resources to rebalance things. They need to spend more on developing attractions. IMO.

seascapeMay 09, 2019

Disney Parks and Resorts are crushing it. They appear to be the only themepark company growing in both attendance and revenue by any significant amount. Universal was basically flat. Disney is about to open up SW:GE on both coasts and watch their attendance grow. Universal is not going to respond with their major additions until 2023. They will be left way behind. Universal needs to take action sooner or their market share will continue to decline and Six Flags will pass them in worldwide attendance.