Disney has repeatedly shown it is “exceptionally resilient” says ceo, as company estimates COVID-19 impact on operating income at Parks, Experiences and Products segment was $1 billion in latest results.
The Walt Disney Company has reported its second quarter and six month earnings for fiscal 2020, which show the impact that COVID-19 is having on the business.
Bob Chapek, ceo of The Walt Disney Company, said that, while the pandemic “has had an appreciable financial impact” on a number of its businesses, the company is confident in its ability to withstand the disruption and “emerge from it in a strong position”.
He commented: “Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”
The impact of the pandemic has been seen most significantly in the company’s Parks, Experiences and Products segment, with it having to close its theme parks and retail stores, suspend cruise ship sailings and guided tours and experienced supply chain disruptions.
It has also delayed, or in some cases shortened or cancelled theatrical releases and suspended stage play performances at Studio Entertainment and has seen advertising sales impacts at Media Networks and Direct to Consumer & International.
Disney estimates that the COVID-19 impact on operating income at its Parks, Experiences and Products segment was approximately $1.0 billion, primarily due to revenue lost as a result of the closures.
In total, it estimates that the COVID-19 impacts on its current quarter income from continuing operations before income taxes across all of its businesses was as much as $1.4 billion (inclusive of the impact at the Parks, Experiences and Products segment).
Looking at the Parks, Experiences and Products segment (which includes merchandise licensing), revenues for the quarter ending March 28, 2020 decreased 10% to $5.5 billion, while segment operating income decreased 58% to $639 million.
The lower operating income for the quarter was due to decreases at both the domestic and international parks and experiences businesses and to a lesser extent, at the games and merchandise licensing businesses.
The decrease in merchandise licensing operating income was due to lower minimum guarantee shortfall recognition and a decrease in revenue from merchandise based on Mickey and Minnie and Avengers, partially offset by higher revenue from Frozen merchandise.
Revenues from merchandise based on Mickey and Minnie in the prior-year quarter included the benefit of Mickey’s 90th birthday. Merchandise licensing results for the current quarter were adversely impacted by COVID-19.
In total, The Walt Disney Company reported revenues for the quarter ending March 28, 2020 of $18,009 million, while income from continuing operations (before income taxes) stood at $1,060 million (a decrease of 85% on the $7,237 million reported for the quarter ending March 30, 2019).
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