Disney misses 4th Quarter Earnings, investment in parks down $632M in 2021 vs 2020

[Liquidice]

In total, Disney invested about $2.9B into parks and resorts in 2020 and in 2021 (Disney's fiscal 2020 ended on October 2nd, 2021) they invested roughly $2.2B so a drop of over $600M ($632M if you do the math based on the earnings report).

(Note: I previously had this as $4B in 2020 and $3.5B in 2021 and a drop of $548M, but that was a total capital expenditures for Disney and not just for theme parks and resorts).

This is despite 26% revenue growth to $5.45B in the theme parks division for the quarter,

The company missed Wall Street estimates across the board during the quarter ended Oct 2., sending the stock down more than 4% in after-hours trading.

• Earnings per share: 37 cents adj. vs 51 cents expected, according to Refinitiv
• Revenue: $18.53 billion vs $18.79 billion expected, according to Refinitiv

CEO Bob Chapek also expected to add less Disney+ subscribers in the fourth quarter of calendar year 2021 (low single-digit millions) due to "headwinds".

Despite Disney+ membership slowing, Bob Chapek felt that demand in the parks was still great, he said:

“We’re seeing really great demand. Very thrilled with our demand. Not only internationally but especially domestically, but particularly, again, because of our guest experience improvements at numbers that are very, very strong and very, very healthy,” he said. “So not only do a lot of people want to come but when they come they want to really engage in Disney.”

It seems interesting that they are investing less into the parks even though parks are their bread and butter in terms of revenue.

Disney shares are down more than 4% in after hours trading after disappointing the Q4 earnings call.

Source: https://www.cnbc.com/2021/11/10/disney-dis-fiscal-q4-2021-earnings.html
Also during Q4 earnings, Christine McCarthy, the CFO talked about cost cutting measures, despite a 99% increase in Parks revenue compared to Q4 2020 (obviously some parks were still closed during the same quarter last year)...

Interesting data into how many people opted for Genie+ as well...

Christine McCarthy, the Chief Financial Officer, commented that “We can cut portion size, which is probably good for some people’s waistlines,” as one of the possible measures.

“We aren’t going to go just straight across and increase prices. We’re going to try to get the algorithm right to cut where we can and not necessarily do things the same way,” McCarthy said.

During the same call, McCarthy also noted that per capita guest spending increased by 30% over the last quarter. Additionally, nearly 33% of guests paid $15 per person to upgrade to Genie+ services.

 

[Liquidice]

A lot of people have said so long as Bob Chapek is making shareholders happy, he will keep his job. What happens if customers dislike Bob Chapek and shareholders aren't happy with poor earnings resulting in lower share prices (and so far no dividends since 2019)?

This is only 1 bad quarter, and 1 quarter doesn't translate into failure - but I wonder how much past quarters have been things Bob Iger had setup before he stepped down as CEO and what is actually Bob Chapek?

Just wondering how long of a leash do you give Chapek - does another bad quarter mean his job is on the line, 3 bad quarters, 4?

 

[Suzabella]

One can only hope he's in the hot seat now.

 

[ChipnDale79]

A lot of people have said so long as Bob Chapek is making shareholders happy, he will keep his job. What happens if customers dislike Bob Chapek and shareholders aren't happy with poor earnings resulting in lower share prices (and so far no dividends since 2019)?

This is only 1 bad quarter, and 1 quarter doesn't translate into failure - but I wonder how much past quarters have been things Bob Iger had setup before he stepped down as CEO and what is actually Bob Chapek?

Just wondering how long of a leash do you give Chapek - does another bad quarter mean his job is on the line, 3 bad quarters, 4?

I hope it’s a short leash….

 

[The Jackal]

Double post

 

[The Jackal]

Boy, Mr CHEAPek I don’t know why it’s down, I mean your forcing people to spend more money for things that were free. Maybe there are a lot of people who cannot afford your relentless price increases. Just saying. PS you upset a lot of annual pass holders, with your new rules and restrictions and price increases. FYI look at your competition, you make bad choices and they receive the benefits of them. Disney may have a lot of die hards, but a lot of them don’t care if they drive a Ford, Chevy etc. if you put lipstick on a duck, it’s still a duck.

 

[The Jackal]

A lot of people have said so long as Bob Chapek is making shareholders happy, he will keep his job. What happens if customers dislike Bob Chapek and shareholders aren't happy with poor earnings resulting in lower share prices (and so far no dividends since 2019)?

This is only 1 bad quarter, and 1 quarter doesn't translate into failure - but I wonder how much past quarters have been things Bob Iger had setup before he stepped down as CEO and what is actually Bob Chapek?

Just wondering how long of a leash do you give Chapek - does another bad quarter mean his job is on the line, 3 bad quarters, 4?

Just for the Genie + rollout he should be fired. Hey here is a program you have to download tonight and use at 7 AM tomorrow. I mean, who does that. I have used it and can say, it’s not very good. Lots of crashes, not user friendly and kinda confusing. Genie + benefits someone who shows up to the parks at rope drop. Not someone who goes in the afternoon.

 

[Liquidice]

Interesting, during the earnings call the CFO said they have plans to continue cost-cutting measures to increase profits - including reducing food portion sizes (original quotes in the original post).

 

[jjb1974]

Burn stock, burn

 

[ChipnDale79]

Interesting, during the earnings call the CFO said they have plans to continue cost-cutting measures to increase profits - including reducing food portion sizes (original quotes in the original post).

That’s the thing, pay more receive less, the new Disney way. That’s why I want that leash to be short and that’s why Disney isn’t getting our money next year.

 

[DisneynBison]

I hope it's down massively for 3 or 4 more quarters and a new CEO is ushered in. Short term pain for long term gain

 

[AnnaKristoff2013]

Apparently on the earnings call one of the executives indicated that they were going to look at cutting food portion sizes at the parks to increase profits. I am not making this up.

 

[Jimmy Mouse]

I am really disappointed in Disney stock right now. I'm still on the plus side but even after the decline a share is still 3 times the price of Comcast and Disney only pays $.72 Dividend/ Yield while Comcast pays $1.82. As a whole, what I do own in stocks really sucks right now including Disney. My only saving grace is my Dogecoin and Shiba Inu.

 

[Jimmy Mouse]

Apparently on the earnings call one of the executives indicated that they were going to look at cutting food portion sizes at the parks to increase profits. I am not making this up.

That's crap. As it is now, even though you get a good size quantity, It's over priced.

 

[Jrb1979]

Am I the only one who likes this? It's nice to see a CEO tell it to your face that guests are just a $. People just need to accept this is what Disney is now.

 

[Liquidice]

Am I the only one who likes this? It's nice to see a CEO tell it to your face that guests are just a $. People just need to accept this is what Disney is now.

Just for comparison's sake ... here is what Amazon's new CEO, Andy Jassy said during their most recent quarterly earnings call ...

"In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs--all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season,"

Source: https://www.inc.com/minda-zetlin/amazon-third-quarter-profits-down-andy-jassey-customers.html

In other words, they are sacrificing profits to try to help ensure customers get their orders on time and support sellers on the Amazon marketplace.

He also said ...

"We've always said that when confronted with the choice between optimizing for short-term profits versus what's best for customers over the long term, we will choose the latter,"

Just contrasting with what Bob Chapek said during Disney's quarterly earnings. I've seen a lot of people say Disney is a company and that they need to make money - and increasing prices and creating less value for customers by upcharging is A-OK because Disney is a company and all companies need to do this to make money ... yet there are companies who value the customer experience - even at the expense of profits, and aren't going out of business.

They're in different businesses, so it isn't apples to apples, but both are customer service companies first. The Disney of old actually reminds me a lot of what Amazon strives to be, despite all of the bad press Amazon gets.

Anyway, my point is, Disney doesn't need to just think of customers as dollar signs to be a profitable and successful company. There are plenty of examples of companies that are successful without making their customers continually feel like crap.

 

[Jrb1979]

Just for comparison's sake ... here is what Amazon's new CEO, Andy Jassy said during their most recent quarterly earnings call ...



Source: https://www.inc.com/minda-zetlin/amazon-third-quarter-profits-down-andy-jassey-customers.html

In other words, they are sacrificing profits to try to help ensure customers get their orders on time and support sellers on the Amazon marketplace.

He also said ...



Just contrasting with what Bob Chapek said during Disney's quarterly earnings. I've seen a lot of people say Disney is a company and that they need to make money - and increasing prices and creating less value for customers by upcharging is A-OK because Disney is a company and all companies need to do this to make money ... yet there are companies who value the customer experience - even at the expense of profits, and aren't going out ofno business.

They're in different businesses, so it isn't apples to apples, but both are customer service companies first. The Disney of old actually reminds me a lot of what Amazon strives to be, despite all of the bad press Amazon gets.

Anyway, my point is, Disney doesn't need to just think of customers as dollar signs to be a profitable and successful company. There are plenty of examples of companies that are successful without making their customers continually feel like crap.

While all that is true, this is what Disney is now. Nothing is going to change til people stop going.

 

[Jimmy Mouse]

While all that is true, this is what Disney is now. Nothing is going to change til people stop going.

I don’t think that will happen until another depression.

 

[Aprilshack]

Interesting, during the earnings call the CFO said they have plans to continue cost-cutting measures to increase profits - including reducing food portion sizes (original quotes in the original post).

And i'll be eating off property next year then. Disney dining credits will be used on snacks if possible, if not when i've used them up i'll hop in the car for a proper meal elsewhere. It's headed towards the point now that any holiday after next years will involve staying off property unless some great perk comes along & going out trying other theme parks. Disney's loss, someone else's gain.

 

[Liquidice]

While all that is true, this is what Disney is now. Nothing is going to change til people stop going.

I don't think it will go on forever, perhaps Q4 earnings is the start of a trend where they will realize cost cutting can't continue to raise profits forever, eventually there will be nothing left to cut...

Disney over the last 2 years seemed to be shifting their focus onto Disney+ and streaming to produce revenue, but with their latest forecast it has become apparent that coming out of the pandemic, streaming will not be an ever growing revenue stream. The travel bubble that Disney has enjoyed so far will also burst - a new one is coming now that International travel is open again, but it too will burst soon.

These things tend to be cyclical in nature imho. Companies go through times of cost cutting and sometimes even lose their way of what is fundamental to their company, why people choose to spend their money with them. That can only go on for so long before the company either goes out of business or gets bought out -- or they choose a new direction.

Disney is big enough that they won't go out of business, but if they're not careful and things continue down a bad path - they could get bought out. I don't think they'd let it get that bad though. Disney has always done its best when they have a big thinker / idea person in charge and it doesn't seem like Chapek is a big idea guy - most of the successes he has been credited with were big ideas that someone else had and he simply executed (and in most cases throughout the execution, cut costs on). He would have probably been more successful as a number 2 to control costs for someone with big ideas, the "money guy" like Roy Disney was to Walt or Frank Wells to Michael Eisner.

Instead what we're seeing is what the "money guy" would do if he were in charge without any bright ideas - taking existing ideas and "re-imagining" them to be a new revenue stream or taking existing IP and building rides or lands.