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Disney warned Wednesday of weaker theme park business in the third quarter.
Disney Experiences, the business unit that includes theme parks, cruises and consumer products, reported revenue of approximately $8.39 billion and operating income of $2.22 billion for the three-month period. Those results represent a 2% increase and 3% decrease year over year, respectively.
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“Segment revenue growth was impacted by a moderation in consumer demand towards the end of the third quarter, which exceeded our previous expectations,” the company said.
Walt Disney Studios in Burbank, California, in February 2018. 9, 2023. (Eric Thayer/Bloomberg via Getty Images/Getty Images)
For its domestic parks, Disney said its performance was “modestly down” but also saw “similar” attendance and higher per capita spending. Meanwhile, Disney Cruise Line, consumer products and some of its international theme parks posted year-over-year gains, the company said.
“I want to emphasize that we actually had 2% revenue growth in the third quarter,” Chief Financial Officer Hugh Johnston said while speaking to analysts and investors Wednesday morning. “The reason, obviously, is that the IP is very strong in our parks. It’s really attracting a strong audience and people are reluctant to cancel vacations. So while we’ve seen a slight moderation in demand, I certainly wouldn’t call it a slowdown.”
The local company said Moderation in demand could impact the next few quarters.
People walk past Cinderella’s Castle at Magic Kingdom Park at Walt Disney World in Orlando, Florida, on May 31. (Gary Hirschhorn/Getty Images/Getty Images)
“While we are actively monitoring attendance and guest spending and aggressively managing our cost base, we expect fourth-quarter Experiences segment operating income to decline by the mid-single digits compared to the prior year, reflecting these underlying dynamics as well as the impacts at Disneyland Paris from the decline in normal consumer travel due to the Olympics and some cyclical downturn in China,” the company said.
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Johnston said he “could characterize this as just a slight slowdown that’s being offset by the entertainment business, both what we’ve seen so far and our expectations for Moana 2 as well as Mufasa.”
During the call, Disney’s CFO also noted that “the lower-income consumer is feeling a little bit of stress” and that “the higher-income consumer is traveling internationally a little bit more.”
“I think you’re going to see more continuation of those trends in terms of the bottom line, and then the bottom line will reflect the fact that we have some one-time costs coming in and out this year and last year,” he said of theme parks. “I expect to see a boost internationally.”
Bookings at Disneyland Paris “will definitely look good” once the Olympics, which the French capital is hosting, are over, Johnston added. The park “felt a bit challenged” during the Games.
The Olympics are scheduled to end on Sunday. The subsequent Paralympics will be held Aug. 28-Sep. 8.
Meanwhile, Disney’s other two segments — entertainment and sports — generated revenue of $10.58 billion and $4.56 billion, respectively. Their operating revenues were $1.2 billion and $802 million.
Attendees are reflected in the Disney+ logo during the Walt Disney D23 Expo in Anaheim, California, on Sept. 9, 2022. (Patrick T. Fallon/AFP via Getty Images/Getty Images)
The combined direct-to-consumer streaming companies — Disney+, Hulu and ESPN+ — reported operating income of $47 million for the third quarter, the first time they have reached profitability.
The company generated $23.2 billion in total revenue during the quarter, with diluted earnings per share of $1.39. Both were above Wall Street estimates.
The headline on an earlier version of this story incorrectly said that attendance at Disney’s theme park was down.
