Consumer spending increases at Disney theme parks

disney (NYSE: DIS) released fiscal 2022 first quarter operating results after market close on Thursday, February 9. The numbers show a consumer eager to return to the magic of Disney theme parks.

Recall that Disney was forced to temporarily close all of its parks to visitors at the start of the pandemic. Popular family entertainment destinations have been welcoming guests back in different phases based on government regulations. Fans are showing how happy they are to have the opportunity to return as they shell out high prices for the privilege of experiencing a Disney theme park.

Image source: Getty Images.

Fans return to Disney parks with a roar

Indeed, the segment that contains Disney’s theme parks reported revenue of $7.2 billion in its most recent quarter ended Jan. 1. That’s double the $3.6 billion it generated in the same quarter the year before. The increase is the result of an increase in the number of visitors and the money spent per visitor. Note Disneyland Park in Anaheim, Calif., was closed for the comparable quarter last year, while it was open for the quarter ended Jan. 1.

Rising revenue is feeding through into profits, with operating profit hitting $2.6 billion in the first quarter, compared with a loss of $100 million a year earlier. Already, revenue and operating profit figures are above pre-pandemic levels. An impressive feat considering the coronavirus pandemic persists. Interestingly, Disney took the opportunity when the parks were closed to improve operations. For example, Disney has implemented mobile ordering at restaurants and concession stands in the park, reducing staffing requirements. The improvements should result in higher profit margins over the long term.

What makes the numbers look even better is that international attendance remains muted at Disney parks, typically a group that makes up 20% of the overall total. Due to the pandemic, international travelers still face a myriad of inconveniences when crossing borders, reducing their interest in booking travel.

Either way, domestic customers are more than making up for the shortfall, spending 40% more per visit compared to 2019. If any of my readers have taken a family trip to a Disney park, you’ll know of first hand the high cost of a visit. The fact that customers spent 40% more than in 2019 is remarkable. These increases come from a variety of sources, including ticket prices, parking rates, food and beverages, merchandise, and more. Looking ahead, management expects strong fan demand so far with about a month into its second quarter.

What it could mean for Disney shareholders

Fortunately for Disney shareholders, the segment of the business most devastated by the pandemic has reached higher levels of revenue and profits than before the epidemic. There remain several catalysts that could push it even higher, including the return of international visitors, less disruption from the coronavirus, and the approval of a COVID-19 vaccine for children aged 0-5.

The segment that includes theme parks generated $26 billion in revenue and $6.7 billion in operating revenue in the year before the outbreak (2019). The first quarter results put it well ahead of eclipsing those totals in 2022. Investors looking for a stock that will benefit from continued reopening trends can put Disney on the list.

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