On the 1 year anniversary of the launch of Disney+, the Walt Disney Company’s stock closed for the day at $135.52 a share before reporting their earnings for the fourth quarter (Q4) and the full fiscal year 2020 which ended on September 28, 2020. Within the first hours of after hours trading the stock rose to over $140/share as the losses were not as drastic as anticipated coupled with the announcement Disney has over 73 million paid Disney+ subscribers as of the end of the 4th quarter. The Walt Disney Company today reported earnings for its fourth quarter and fiscal year ended October 3, 2020.
“Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year.”Bob Chapek, Chief Executive Officer, The Walt Disney Company
Diluted earnings per share (EPS) from continuing operations for the fourth quarter was a loss of $0.39 compared to income of $0.43 in the prior-year quarter. Excluding certain items affecting comparability, diluted EPS for the quarter was a loss of $0.20 compared to income of $1.07 in the prior-year quarter. EPS from continuing operations for the year was a loss of $1.57 compared to income of $6.26 in the prior year. Excluding certain items affecting comparability, EPS for the year decreased to $2.02 from $5.76 in the prior year. Results in the quarter and fiscal year ended October 3, 2020 were adversely impacted by the novel coronavirus (COVID-19). The most significant impact was at the Parks, Experiences and Products segment where since the second quarter of the fiscal year, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended.
The Parks, Experiences & Products (which includes Disney Cruise Line) revenues for the quarter decreased 61% to $2.6 billion, and segment operating results decreased $2.5 billion to a loss of $1.1 billion. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses.
As a result of COVID-19, Disneyland Resort and our cruise line business were closed for all of the current quarter. Shanghai Disney Resort re-opened in May, while Walt Disney World Resort and Disneyland Paris re-opened in mid-July and Hong Kong Disneyland Resort was open for about two weeks at the beginning of the quarter and about one week at the end of the quarter. All of our re-opened parks and resorts operated at significantly reduced capacities during the current quarter.
Disney estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $2.4 billion.
Disney Cruise Line was shut down the entire fourth quarter, along with Disneyland. The cruise line has yet to announce a restart date as it continues to work to move forward under the CDC’s framework for conditional sailing order. The ships are also in Europe with all ships undergoing wet/dry dock in Brest, France. Ultimately, this add to the expense incurred by the cruise line during the shutdown.
During the Q&A portion of the conference all, Bob Chapek addressed the cruise business. Chapek sees the the new guidelines set by the CDC’s conditional sail order as a series of hurdles. However, there is finally a ‘the light at the end of the tunnel’. As for the new ship orders, Chapek reaffirmed the Disney Wish remains on track for a Summer 2022 launch. The 6-month delay, however at the Meyer Werft shipyard will push Ship 6 and Ship 7 from 2022 and 2023 to 2024 and 2024 respectively.
For more information and an overall report click over to the Q4 Fiscal Year 2020 Earnings Report (alternate link – TWDC link was not working at publication). Mark your calendar, because it will take about a year for us to see the financial report for Disney Cruise Line like we recently shared for FY2019.