The Walt Disney Company reported its Fiscal Year 2019 Third Quarter financial results this afternoon. Disney's acquisition of Fox complicated the numbers for the company overall, but Disney's Parks, Experiences and Products division reported a 7% increase in revenue and 4% increase in operating profit, despite reported lower attendance at its domestic theme parks.
So that perceived drop in attendance at Disneyland this summer wasn't just people's imagination. Attendance really did decline at Disneyland and Walt Disney World from April through June. From Disney's earnings report:
Parks, Experiences and Products revenues for the quarter increased 7% to $6.6 billion and segment operating income increased 4% to $1.7 billion. Operating income growth for the quarter was due to increases at our consumer products businesses and Disneyland Paris, partially offset by a decrease at our domestic parks and resorts. Results included a benefit from a shift in the timing of the Easter holiday. In the current year, the entire Easter holiday fell in the third quarter, while the third quarter of the prior year included only one week of the Easter holiday.
The increase at our consumer products business was due to growth at our merchandise licensing and retail businesses. Growth at merchandise licensing was primarily due to higher revenue from merchandise based on Toy Story, partially offset by a decrease from Star Wars merchandise. The increase at our retail business was due to higher comparable store sales and online revenue.
Higher operating income at Disneyland Paris was primarily due to higher average ticket prices, partially offset by labor and other cost inflation and lower attendance.
The decrease in operating income at our domestic parks and resorts was due to higher costs and lower volume, partially offset by increased average per capita guest spending. Higher costs were driven by labor and other cost inflation and expenses associated with Star Wars: Galaxy’s Edge, which opened at Disneyland Resort on May 31. The decrease in volume was due to lower attendance, partially offset by higher occupied room nights. Guest spending growth was primarily due to higher average ticket prices and increased food, beverage and merchandise spending.
This was the quarter when Disney opened its highly anticipated and hyped Star Wars Galaxy's Edge land at Disneyland. However, the new Star Wars land failed to drive the attendance gains that Disney had anticipated with aggressive price increases and annual pass program changes.
Disney reported that domestic park attendance declined 3% in the quarter but that per-capita guest spending was up 10%, thanks in part to higher ticket prices. Per room hotel spending was up 3% on a 2% increase on occupancy, which stood at 88%.
Disney blamed lower annual passholder attendance for the decline at Disneyland, which Disney said it "managed" to preserve the quality of guest experience. Officials also noted that day-ticket sales were up even as AP attendance declined.
"Attendance was below what we hoped it would be," Disney CEO Bob Iger said. "There was tremendous concern in the marketplace that there were going to be huge crowds [for Galaxy's Edge] so people stayed away."
Iger also blamed higher prices being charged by Anaheim-area hotels as well as Disney's own price increases for discouraging attendance, in addition to Disney opening the land with just one ride instead of its originally expected two.
"That said, guest satisfaction is extremely high. Long term, we have no concerns. We feel great about the product we've created," Iger said. "But it is going to take some time for things to work themselves out as the marketplace reacts."
At Walt Disney World, Disney said that its survey data suggests that fans were postponing their visits awaiting the opening of Galaxy's Edge, though in later questioning, Iger said that "perhaps" Universal Orlando's discounting over the summer might have affected Walt Disney World's attendance, as well.Tweet
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