Carol
02-08-2011, 06:41 PM
Disney Profits Leap 54 Percent
By Jason Garcia, Orlando Sentinel
February 8, 2011
A rebound in its theme parks during the final three months of 2010 helped propel the Walt Disney Co. to 54 percent quarterly profit growth, the company announced Tuesday.
Disney said it made $1.3 billion for the three months that ended Jan. 1, the first quarter in the company's fiscal year, up from $844 million a year earlier. Companywide revenue rose 10 percent to $10.7 billion.
The results easily topped Wall Street expectations.
"It's a great start to a new fiscal year," Disney Co. President and Chief Executive Officer Bob Iger said.
Disney's theme-parks business, often viewed as a bellwether for the U.S. economy, turned in its strongest performance since being dragged down by the recession three years ago: The unit posted a 25 percent increase in operating profit — to $468 million — on sales growth of 8 percent — to $2.9 billion.
It was the first quarterly profit growth for Walt Disney Parks and Resorts in two-and-a-half years.
The improvement was driven primarily by gains in guest spending, as Disney continued to pull back the discounts it had used to sustain the business during the recession, and guests bought more souvenirs and food. Combined guest-spending at Walt Disney World and Disneyland climbed 8 percent for the quarter.
But attendance also perked up, by 2 percent, between the two coasts, despite disruptive weather during the quarter that included heavy rains in Southern California and a post-Christmas blizzard that grounded air travel across the Northeast.
Although it did not provide specific figures, Disney said Disney World attendance was up "more than 2 percent" during the quarter while Disneyland, in Anaheim, Calif., was "slightly down" from last year. Disney suggested its Orlando theme parks are benefitting from the huge crowds being drawn to the region by Universal Orlando's hit Wizarding World of Harry Potter.
"They built a great property down there," Iger said during a conference call with analysts. "And I believe when a competitor puts a good property in the marketplace, it brings more people to the market. So I think it stimulates attendance to Orlando and we all know that's good for us. Because we usually get a good piece of all visitation to Orlando."
Combined occupancy in Disney's domestic hotels — roughly 90 percent of which are in Orlando — rose 4 percentage points during the quarter to 85 percent. Average room spending also climbed 4 percent, in a further reflection of the reduced discounting.
Attendance, spending and occupancy also rose at Disney's international resorts.
The increases were partially offset by a decline at Disney Cruise Line, where expenses rose leading up to the January launch of the 4,000-passenger Disney Dream cruise ship and scheduled dry-dock maintenance on one of the company's two existing vessels.
Disney, which is the midst of protracted negotiations with a union representing 20,000 full-time workers at Disney World, also said that the parks division's labor, pension and health-care costs rose during the quarter.
Disney said its gains have continued into this year. Room reservations in its U.S. hotels are currently pacing 3 percent ahead of a year ago piece during Disney's second fiscal quarter.
Still, Iger said consumers haven't completely reverted to the pre-recession habits. He noted that travelers have not yet, for instance, begun booking their trips further ahead of their travel dates.
"You still have an environment that, while less challenging certainly than it was a year ago, still has its challenges," Iger said, though he added that Disney's parks business is better positioned than in previous downturns for a recovery because it has more cheaply priced — or "value" category — hotel rooms.
"We're more accessible and we're more accessibly priced than we were" following the 2000-2001 recession, he said.
Executives also said repeatedly that they are thrilled with early results for the Dream, the first of two new cruise ships Disney is building at a cost of more than $1.8 billion. Disney the ship, which launched last month and can carry nearly 50 percent more passengers than Disney's first two cruise ships, is already 89 percent booked for the year.
"We believe that the fact that the Dream is so booked, particularly during peak periods, has actually driven people whose interest was sparked in part by the addition of the new ship to our other ships and our other itineraries," Iger said.
Analysts have said one of the biggest risks facing Disney's cruise-fleet expansion is that the new ships could cannibalize bookings on the first two vessels.
The Dream is "just blowing the doors off in terms of demand and interest," added Disney Co. Chief Financial Officer Jay Rasulo.
Disney's best-performing business during the quarter was its film studio, where operating profit climbed 54 percent to $375 million thanks to cost-cutting, international DVD sales of the hit movie "Toy Story 3," and fewer poorly performing films.
At Disney's media networks, the company's largest business, operating profit leapt 47 percent to just under $1.1 billion. Disney credited increased ad and affiliate sales at both the cable channels ESPN and Disney Channel.
Operating profit at Disney's consumer-product segment rose 28 percent to $312 million, thanks primarily to sales of Toy Story and Marvel merchandise and improvements at Disney Store North America.
Operating losses at Disney's smallest division, interactive media, grew from $10 million last year to $13 million, as what Disney called strong sales of the console games Epic Mickey and Toy Story 3 were more than offset by the inclusion of Playdom, the recently acquired social-media games developer. Disney recently laid off nearly 200 employees in its video-game unit.
By Jason Garcia, Orlando Sentinel
February 8, 2011
A rebound in its theme parks during the final three months of 2010 helped propel the Walt Disney Co. to 54 percent quarterly profit growth, the company announced Tuesday.
Disney said it made $1.3 billion for the three months that ended Jan. 1, the first quarter in the company's fiscal year, up from $844 million a year earlier. Companywide revenue rose 10 percent to $10.7 billion.
The results easily topped Wall Street expectations.
"It's a great start to a new fiscal year," Disney Co. President and Chief Executive Officer Bob Iger said.
Disney's theme-parks business, often viewed as a bellwether for the U.S. economy, turned in its strongest performance since being dragged down by the recession three years ago: The unit posted a 25 percent increase in operating profit — to $468 million — on sales growth of 8 percent — to $2.9 billion.
It was the first quarterly profit growth for Walt Disney Parks and Resorts in two-and-a-half years.
The improvement was driven primarily by gains in guest spending, as Disney continued to pull back the discounts it had used to sustain the business during the recession, and guests bought more souvenirs and food. Combined guest-spending at Walt Disney World and Disneyland climbed 8 percent for the quarter.
But attendance also perked up, by 2 percent, between the two coasts, despite disruptive weather during the quarter that included heavy rains in Southern California and a post-Christmas blizzard that grounded air travel across the Northeast.
Although it did not provide specific figures, Disney said Disney World attendance was up "more than 2 percent" during the quarter while Disneyland, in Anaheim, Calif., was "slightly down" from last year. Disney suggested its Orlando theme parks are benefitting from the huge crowds being drawn to the region by Universal Orlando's hit Wizarding World of Harry Potter.
"They built a great property down there," Iger said during a conference call with analysts. "And I believe when a competitor puts a good property in the marketplace, it brings more people to the market. So I think it stimulates attendance to Orlando and we all know that's good for us. Because we usually get a good piece of all visitation to Orlando."
Combined occupancy in Disney's domestic hotels — roughly 90 percent of which are in Orlando — rose 4 percentage points during the quarter to 85 percent. Average room spending also climbed 4 percent, in a further reflection of the reduced discounting.
Attendance, spending and occupancy also rose at Disney's international resorts.
The increases were partially offset by a decline at Disney Cruise Line, where expenses rose leading up to the January launch of the 4,000-passenger Disney Dream cruise ship and scheduled dry-dock maintenance on one of the company's two existing vessels.
Disney, which is the midst of protracted negotiations with a union representing 20,000 full-time workers at Disney World, also said that the parks division's labor, pension and health-care costs rose during the quarter.
Disney said its gains have continued into this year. Room reservations in its U.S. hotels are currently pacing 3 percent ahead of a year ago piece during Disney's second fiscal quarter.
Still, Iger said consumers haven't completely reverted to the pre-recession habits. He noted that travelers have not yet, for instance, begun booking their trips further ahead of their travel dates.
"You still have an environment that, while less challenging certainly than it was a year ago, still has its challenges," Iger said, though he added that Disney's parks business is better positioned than in previous downturns for a recovery because it has more cheaply priced — or "value" category — hotel rooms.
"We're more accessible and we're more accessibly priced than we were" following the 2000-2001 recession, he said.
Executives also said repeatedly that they are thrilled with early results for the Dream, the first of two new cruise ships Disney is building at a cost of more than $1.8 billion. Disney the ship, which launched last month and can carry nearly 50 percent more passengers than Disney's first two cruise ships, is already 89 percent booked for the year.
"We believe that the fact that the Dream is so booked, particularly during peak periods, has actually driven people whose interest was sparked in part by the addition of the new ship to our other ships and our other itineraries," Iger said.
Analysts have said one of the biggest risks facing Disney's cruise-fleet expansion is that the new ships could cannibalize bookings on the first two vessels.
The Dream is "just blowing the doors off in terms of demand and interest," added Disney Co. Chief Financial Officer Jay Rasulo.
Disney's best-performing business during the quarter was its film studio, where operating profit climbed 54 percent to $375 million thanks to cost-cutting, international DVD sales of the hit movie "Toy Story 3," and fewer poorly performing films.
At Disney's media networks, the company's largest business, operating profit leapt 47 percent to just under $1.1 billion. Disney credited increased ad and affiliate sales at both the cable channels ESPN and Disney Channel.
Operating profit at Disney's consumer-product segment rose 28 percent to $312 million, thanks primarily to sales of Toy Story and Marvel merchandise and improvements at Disney Store North America.
Operating losses at Disney's smallest division, interactive media, grew from $10 million last year to $13 million, as what Disney called strong sales of the console games Epic Mickey and Toy Story 3 were more than offset by the inclusion of Playdom, the recently acquired social-media games developer. Disney recently laid off nearly 200 employees in its video-game unit.