Tue. Oct 19th, 2021


Walt Disney Co. Updates

In the early months of the pandemic, FT Alphaville suggested a new economic measure to truly measure when life is back to normal. We called it The Disney Parks Indicator (DPI).

The idea was simple: A visit to one of Disney’s resorts requires several restorations, from psychological to economic. For example, consumers should not only have enough disposable income to pick up $ 1,500 per head on a vacation, but also stand comfortably shoulder-to-shoulder in long indoor queues for rides like Space Mountain. Oh, and it should go well with them that they could possibly catch on fire.

Our thought was that once Disney’s Parks, Experiences and Products segment — which includes the resort in Florida as well as others in Asia, Europe, and the U.S. West Coast — returns to the 2019 income interest rate, it would be fair to say that the pandemic really over.

If we look at the financial statements, it seems that this is far from being the case.

His third quarter results published in early August, showed that although the House of Mouse’s parks have grown more than 300 percent annually due to the fact that many parks were closed in 2020 due to the pandemic, there is still a long way to go. repair.

Indeed, take a step back and compare the figures of 2021 with the third quarter figures of 2019, and things are much uglier. In the third quarter of the fiscal year ending in 2019, Disney’s Parks segment earned $ 6.6 billion in revenue. This means that the division continues to achieve more than a third of sales below its pre-pandemic levels, and on an operating profit basis, four quarters below the likely overcrowded days. And this is because the US economy has almost completely reopened. Yikes.

So, when should we return to normalcy? Like the Wall Street predictions of many businesses exposed to global travel over the past six months, expectations for Disney’s parks business have slowly changed from late 2021, to 2022, and now to 2023, as it became clear that Covid will not always disappear soon.

A note from Deutsche Bank published on Friday is a good example. Its analysts reduce Disney’s “predicted recovery rate in 2022, which may change again as infections and vaccinations progress”. The reason? Their own attendance detection for Disney’s parks has declined in recent weeks, thanks to cancellations “mainly from business conferences and other large groups”.

According to this graph, it actually looks like the back of the 2021 attendance figures at Disney World Florida, the largest resort of the business, looks a lot like 2020s:

By 2023, analysts expect huge $ 9 billion earnings from the segment, more than ten times this year’s estimate. It still feels too optimistic for an economic era that has had more dives, twists and turns than Everest Expedition.

Related links:
Introducing the Disney Park Indicator – FT Alphaville
The Disney Park Indicator: An Update – FT Alphaville



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