The Walt Disney Company has just released its first-quarter earnings for Fiscal 2021, with a drop of 50% in revenue for the Disney Parks.
In Q4 of 2020, we reported that The Disney Parks lost $2.4 billion, due to the pandemic. Now, Disney is reporting that the revenue for the quarter has dropped 53% to $3.6 billion.
Since late in the second quarter of fiscal 2020 and continuing into fiscal 2021, COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at Disney Parks, Experiences and Products.
The report continued:
Disney Parks, Experiences and Products revenues for the quarter decreased 53% to $3.6 billion, and segment operating results decreased $2.6 billion to a loss of $119 million. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses.
As a result of COVID-19, Disneyland Resort was closed and our cruise business was suspended in the current quarter. Disneyland Paris closed on October 30, 2020 and Hong Kong Disneyland Resort closed on December 2, 2020. Walt Disney World Resort and Shanghai Disney Resort were open in the current quarter. Our parks and resorts that were open during the quarter operated at significantly reduced capacities.
At our consumer products business, operating income growth was driven by an increase in games licensing revenue reflecting the release of Marvel’s Spider-Man: Miles Morales.
We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $2.6 billion.
While on the earnings call, Bob Chapek discussed the theme parks that have reopened, stating “Guests have consistently demonstrated a willingness and desire to visit, which we believe is a testament that they feel confident in the health and safety protocols we have put in place”.
Chapek added, “Given the demand we are seeing now, we are confident it will only grow once the pandemic is behind us.”
Bob Chapek ended his portion of the call with some encouraging words, saying “While these remain challenging times, we are more confident than ever that we will emerge from this crisis in a strong position”.
Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, also spoke on the earnings call about the Parks and Resorts. McCarthy explained how the current pandemic continues to significantly impact the theme parks, saying:
We continue to see significant impacts from the COVID-19 pandemic across many of our businesses. While some Operations have resumed, our parks experiences and product segments has undoubtedly been hard hit by COVID.
In the first fiscal quarter we estimate the pandemic adversely impetted DPEP operating income by approximately 2.6 billion due to revenues lost as a result of closures and reduced operating capacities. Operating income at parks experiences and products declined significantly versus the prior year to an operating loss of $119 million.
As a reminder, Walt Disney World Resort and Shanghai Disney resort were open for all of the first quarter. Disneyland resort was closed, and our cruise business was suspended for the full quarter. Disneyland Paris was open until the end of October, or for about a third of the quarter, and Hong Kong Disneyland was opened until the beginning of December or for about two-thirds of the quarter.
Our Parks and Resorts that were open during the quarter all operated at significantly reduced capacities. Yet all achieved a net incremental positive contribution for the periods during which they were open, meaning that revenue exceeded the variable costs associated with opening.
At Walt Disney World, as Bob mentioned earlier, average daily attendance grew significantly from Q4 into Q1. Benefitting from typical seasonality factors as well as solid underlying demand trends. At the same time our Operations team found innovative ways to responsibly increase capacity while still maintaining rigorous COVID protocols. Per caps were also up double-digits year-over-year.
We continue to be pleased with the rate of reservation bookings we are seeing in the current quarter. And consumer sentiment around visiting our domestic theme parks over a longer period of time remains strong.
Disney Parks Around the World
Due to the coronavirus outbreak, Disney Parks around the world were forced to shut down, and even though some of them have reopened since (while others reopened and re-closed and one hasn’t even reopened yet), it has been over 365 days since all six Disney Parks were simultaneously open.
Currently, there are three Disney Parks open to Guests at this time — Walt Disney World Resort in Orlando, Florida, Shanghai Disney Resort in Shanghai, China, and Tokyo Disney Resort in Tokyo, Japan.
Hong Kong Disneyland has recently re-closed in light of a rise in COVID-19 cases in the area. This is the third time that Hong Kong Disney has had to close during the pandemic. And, Disneyland Paris has also closed for a second time due to restrictions set by the government due to rising coronavirus cases. They initially had planned to reopen but just recently they announced a delay in their plans, which you can read more about here.
Additionally, as we mentioned earlier, despite being ready to reopen since July, the theme parks in Disneyland Resort in California remain closed due to the state protocols and regulations.
Stay tuned to Inside the Magic for more information.
This article has been updated since originally published.