Disney (DIS) outlined the key levers it can use to fight a possible recession – as the media giant’s theme park business showed signs of weakness in the fourth quarter.
During the earnings call after the disappointing results, Disney chief financial officer Christine McCarthy noted that the company has tools, new and old, that it can use to keep its parks business afloat if consumers reduced their spending.
According to the executive, one of the tools includes discounting – something McCarthy noted the media giant has used in the past as an “effective lever to manage performance.” Still, she said the company won’t use discounts to the extent it did during the last recession in 2009.
The latest advancements include an updated reservation system that manages and tracks attendance, allowing the company greater flexibility when it comes to making real-time adjustments.
She added that a tiered seasonal pricing structure, coupled with a redesigned annual pass business model, as well as technology advancements on the spend side (mobile ordering, contactless check-in), add to this flexibility.
McCarthy noted that Disney has permanently cut a significant amount of park operating expenses during the pandemic, telling investors the move “positions us better right now as we enter uncertain economic environments.”
The company said it will actively assess costs going forward and look for efficiencies to better streamline its operations.
Park operations fall short of expectations amid recession fears
Disney’s theme parks, which have seen a rapid COVID rebound amid increased attractions, price hikes and updated technology like the Genie+ app, have missed expectations during the quarter as recession fears put pressure on consumer demand.
Revenue from the company’s parks, experiences and consumer products division was $7.43 billion (vs. estimates of $7.59 billion), with operating profit reaching $1.51 billion dollars (against estimates of $1.9 billion). 19 protocols. The company revealed that it had “no visibility on the reopening date” for the Shanghai site.
Despite the setback, McCarthy said the media giant is anticipating a “strong” holiday season at the parks in the first quarter of 2023.
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