Thursday, May 11, 2023

Disney Co. ($DIS) filed its latest quarterly report on Wednesday, giving financial analysts yet another opportunity to see how well pandemic-sensitive industries have recovered to their pre-Covid glory days. Specifically: how are the company’s theme park operations doing?

Yes, we know, Disney is also reporting big losses in its streaming TV services. We leave that issue for another day. On this day, when the pandemic emergency formally ends, how is Disney’s segment that deals with people in close proximity to each other? 

We can glean that information from Disney’s segments disclosure, where the company reports both revenue and operating income for a segment it calls “Parks, Experiences, and Products.” This segment includes Disney theme parks, cruises, resorts, and vacation packages; as well as the sale of Disney merchandise and licensing of Disney intellectual property for consumer goods. We don’t know the exact mix of parks and experiences versus merchandise sales, but it’s the best approximation of Disney’s pandemic-sensitive operations an analyst is going to get.

Using the tag history feature we’ve discussed before, we mapped out those disclosures for the last 14 quarters. The result is Figure 1, below.

As we can see, the revenue line has completely recovered from the pandemic, although things took a tumble in the most recent quarter (which ended April 1, 2023). Operating income is almost there, but not quite; operating income was $2.52 billion in the first quarter of 2020, and while recent quarters are coming mighty close, none have topped that figure yet.

Or, if you want to track the segment’s operating margins, see Figure 2, below.

Honestly we did that just to see the vertiginous plunge in 3Q-2020, which aligns with Disney’s summer busy season and the height of pandemic lockdowns that year. More recently, margins are seesawing right around 33 percent, which was the margin at the start of 2020.

Anyway, it’s clear that the theme parks are now moving in a normal direction, just as the country’s pandemic emergency formally ends this week. Perhaps other economic forces will push revenue or operating income back down, but at long last, it seems like we can’t blame the virus any longer.

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