The Walt Disney Company stock closed for the day at $117.18 a share before reporting their earnings for the third quarter (Q3) of fiscal year 2020 which ended on June 27, 2020. The Walt Disney Company’s third quarter was hit much harder this quarter by Coronavirus as it included the bulk of the full shutdown of the theme parks across the globe, the continued shutdown of the cruise ships, and the closure of movie theaters delaying some films and pushing other to Disney+.
For some perspective, Q2 spanned December 29, 2019 – March 28, 2020. The domestic parks and cruise line only account for about 2 weeks of the Q2 COVID issues. Q3 started March 29th, with theme parks gradual reopening towards the end of the quarter. Two notable absences are Disneyland Resort and Disney Cruise Line with both remain offline.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The global reach of our full portfolio of direct-to-consumer services now exceeds an astounding 100 million paid subscriptions — a significant milestone and a reaffirmation of our DTC strategy, which we view as key to the future growth of our company.”
Chapek, Chief Executive OfficerChapek, Chief Executive Officer
Diluted earnings per share (EPS) from continuing operations for the quarter was a loss of $2.61 compared to income of $0.79 in the prior-year quarter. Excluding certain items affecting comparability , diluted EPS for the quarter decreased 94% to $0.08 from $1.34 in the prior-year quarter. EPS from continuing operations for the nine months ended June 27, 2020 was a loss of $1.17 compared to income of $5.97 in the prior-year period. Excluding certain items affecting comparability , EPS for the nine months decreased 53% to $2.22 from $4.74 in the prior-year period. Results in the quarter and nine months ended June 27, 2020 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Parks, Experiences and Products segment as most of our theme parks and resorts were closed for the entire quarter and our cruise ship sailings were suspended.
The Parks, Experiences and Products segment (which includes Disney Cruise Line) saw revenues for the third quarter decreased 85% to $1.0 billion, and segment operating results decreased $3.7 billion to a loss of $2.0 billion. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses and to a lesser extent, at our merchandise licensing and retail businesses.
As a result of COVID-19, the domestic parks and resorts, cruise line business and Disneyland Paris were closed for all of the current quarter. Disney’s Asia parks and resorts were closed for a portion of the current quarter, as Shanghai Disney Resort re-opened in May and Hong Kong Disneyland Resort re- opened in late June (Hong Kong Disneyland Resort closed again in July).
The decrease at licensing and retail also reflected the impact of COVID-19, which resulted in decreases in licensing earned revenue and lower minimum guarantee shortfall recognition, the closure of our Disney Stores for most of the quarter and the write-down of store assets.
Disney estimates the total net adverse impact of COVID-19 on Parks, Experiences and Products segment operating income in the quarter was approximately $3.5 billion.
The COVID-19 Impact on the Walt Disney Company
The impact of COVID-19 and measures to prevent its spread are affecting TWDC’ segments in a number of ways, most significantly at Parks, Experiences and Products Disney closed the theme parks and retail stores, some of which have now re-opened, suspended cruise ship sailings and guided tours and have seen an adverse impact on our merchandise licensing business. In addition, Disney delayed, or in some cases, shortened or cancelled theatrical releases and suspended stage play performances at Studio Entertainment and have experienced an adverse impact on advertising sales at Media Networks and Direct-to-Consumer & International. TWDC experienced disruptions in the production and availability of content, including the deferral or cancellation of certain sports events and suspension of production of most film and television content. Many of these businesses have been closed consistent with government mandates or guidance. The most significant impact in the current quarter from COVID-19 was an approximately $3.5 billion adverse impact on operating income at our Parks, Experiences and Products segment due to revenue lost as a result of the closures. The negative impact at Parks, Experiences and Products was partially offset by a positive impact at Media Networks. The benefit at Media Networks was due to the deferral of sports programming rights to future quarters when we currently anticipate the events will air, partially offset by lower advertising revenue. The impacts at Direct-to-Consumer & International and Studio Entertainment were less significant as lower advertising revenue at Direct-to-Consumer & International was partially offset by the deferral of sports programming costs, while lower amortization, marketing and distribution costs at Studio Entertainment were largely offset by lower revenues as a result of theater closures. In total, TWDC estimates the net adverse impact of COVID-19 on our current quarter segment operating income across all of our businesses was approximately $2.9 billion, inclusive of the impact at Parks, Experiences and Products.
We will update this post if we hear anything during the earnings call and Q&A.
For more information and an overall report click over to the Q3-2020 Earnings Report.
Walt Disney Co Q3 2020 Earnings Results was originally published on August 04, 2020 at 04:18PM by Scott Sanders from Disney Cruise Line Blog. Far Beyond Infinity Travel Blog takes no responsibility for errors in syndicated content.