Disney said its profits dropped more than 90 percent in the second quarter of 2020, one in which the COVID-19 pandemic cost the media giant more than $1 billion in sales just in its theme parks division.
In a report to investors on Tuesday, Disney earnings were shown to be uniquely vulnerable to the coronavirus, as the pandemic shuttered theme parks, stopped cruises and prevented new movie releases. The suspension of professional sports leagues also deprived ESPN of fresh content.
The company announced that Shanghai Disneyland, which closed Jan. 25, will reopen on May 11. The park will have safety procedures in place like advanced reservations, required masks for all guests, temperature screenings and social distancing protocols.
“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Bob Chapek, the former parks chairman who took over for Bob Iger in this quarter for the Walt Disney Company. “Disney has repeatedly shown that it is exceptionally resilient.”
Last year, Disney’s Parks, Experiences and Consumer Products segment was its fastest-growing profit center, accounting for 37 percent of the company’s $69.6 billion in total revenue.
In its first quarter report in February, the theme parks were also a bright spot thanks to the opening of Star Wars: Galaxy’s Edge and the new ride Rise of the Resistance. But by March 16, all of Walt Disney World’s theme parks and resorts had been closed. There is no sign they will reopen any time soon.
Disney, of course, is not alone in the attractions industry. Last week, Universal reported a 32 percent drop in its first quarter and warned the second quarter would probably be worse.
One possible sign of life in Florida is that Disney resorts are taking reservations that start on June 1, and guests are being told to expect limited dining experiences at the resorts and the Disney Springs shopping and entertainment district. Analysts have suggested that Disney will slowly open its resorts first, followed by the parks, as it has done at Disney parks overseas.
Disney has furloughed as many as 100,000 workers, mostly park employees.
Lightshed Partners analyst Richard Greenfield on Tuesday downgraded Walt Disney’s stock, arguing there’s too little future earnings to expect while COVID-19 is in the picture.
“Disney is built on shared group experiences. Until there is global comfort health-wise with that behavior again, Disney’s earnings are fundamentally impaired,” Greenfield wrote in a May 5 report.
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