Record Disney World attendance helps boost earnings
Walt Disney World's highest fourth-quarter attendance ever was one of the bright spots for the resort's parent company as it reported a record year of revenue and profit Thursday.
More visitors, higher ticket prices and increased spending on food and merchandise all contributed to higher theme-park revenues in the fourth quarter, although costs of MyMagic+ are still having a negative effect on profit.
Overall, Walt Disney Co. reported profit of $1.5 billion, a 7.5 percent increase, on revenue of $12.4 billion for the quarter that ended Sept. 27. Profit for the year was $7.5 billion on revenue of $48.8 billion.
Chief Executive Officer Bob Iger said the results reflect "the extraordinary quality of our creative content" and the company's ability to "adapt to emerging consumer trends and technology."
For theme parks, "the investments we've made over the last couple years, specifically in our domestic business, continue to pay off," Disney Chief Financial Officer Jay Rasulo told analysts.
Disney World unveiled its new Seven Dwarfs Mine Train ride earlier this year, part of its Fantasyland expansion, and this was the first summer MyMagic+ technology was available to all the resort's visitors.
"The new attractions are always what's going to drive the increased excitement in the parks," said Robin Diedrich, an analyst with Edward Jones.
MyMagic's negative effect on profit is less than it had been a year ago. The project is still in "ramp-up mode," Rasulo said. As it continues to roll out, Disney said it hopes financial benefits will begin to offset increasing higher costs from the opening of Shanghai Disney Resort.
The MyMagic+ project includes wristbands that essentially function as park tickets and enable visitors to reserve rides up to two months in advance.
Disney's parks-and-resorts division reported lower vacation-club ownership sales for the fourth quarter compared with the previous year. In 2013, a high bar was set because sales started for The Villas at Disney's Grand Floridian Resort & Spa, Disney said.
Domestic parks performed better than international ones. Disneyland Paris continues to struggle, posting lower attendance despite spending more on marketing. Pre-opening expenses rose at Shanghai Disney Resort. A weaker yen hurt royalties from Tokyo Disney Resort.
Studio entertainment revenue increased 18 percent to $1.8 billion for the quarter. During the next few years, Disney is releasing a slew of films from popular franchises, including a seventh Star Wars movie in December 2015 and a "Finding Nemo" sequel in the summer of 2016. On Thursday, Disney announced "Toy Story 4" will hit theaters in 2017.
All those movies should generate even more interest in Disney's theme parks, Diedrich said.
"I'm thinking Orlando attractions every time they mention one of those," she said. "Certainly that is central to their plan, is that these films will lend themselves directly to the parks."
For the quarter and the year, Disney's parks and resorts revenue jumped 7 percent. Operating income rose 20 percent for the fourth quarter and the year.
The "Frozen" phenomenon continued to boost results, helping increase merchandise-licensing revenue.