Disney (NYSE: DIS) did better than expected. According to the company, EPS rose 35% to $.58. Revenue was up 10% to $8.71 billion. Wall Street focused on the success of Disney's theme parks, believing they are a good indication of consumer spending. If so, economists should be happy.
Revenue for the company's parks and resorts moved up 11% to $2.725 billion. Operating income was up 33% to $339 million.
Nice picture, if it is true.
The consumers who go to Disney theme parks tend to be affluent. That is in the sense that they can spend several hundred dollars or more on tickets, food, and hotels. That leave out all of the people who did not come. That would include those who could not afford the airplane tickets, gas, and toys for their kids.
Economists will seize the theme park numbers and hail them as good news. They will say the consumer is OK. But, the increase in revenue for these operation was less than $300 million. That is hardly a bounce in the consumer sector.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.
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Reader Comments (Page 1 of 1)
5-07-2008 @ 9:02AM
Ken Nelson said...
Doug,
You just can't face good news can you??? Well, I have an interesting surprise for you, the 2nd quarter numbers will be even stronger!
Most of the people I know, don't consider a Disney vacation to be a vacation for affluent people. In fact, they make fun of all the rednecks at Disney... Why go to Epcot, when you can see the real deal???
I was one of those rednecks 10 days ago. I was at Disney (Wide World of Sports) for a week at the World Cheerleading Competition held last week. (My girlfirends daughter is a very good cheerleader). Everyone and their families went to the parks throughout the competition. Most people never left the Disney properties.
I remember this same event from two decades ago, when my buddies and I picked up some U of Ga cheerleaders at Disney. That event was tiny in comparison...
The parks were jammed every day! One night, they had an after hours party for the cheerleaders, coaches, and their families. They packed Animal Kingdom with over 100,000 cheerleaders... Another night all the cheerleaders went to MGM - It was wall to wall cheerleaders... This event grows each year.
In the first quarter, they hosted a Soccer showcase (along with the Chelsea club in the English Premier league) with similar results. These sporting events keep growing each year and bring many middle class families with children who play sports to Disney. The tie in with ESPN (Disney owned), and the agreement to televise the event on ESPN will keep drawing these competitions... (Look for the 2008 cheerleading World and Dance Competition on ESPN2 in a few months - yes there were a handful of teams from China, Germany, Mexico, Brazil...)
We're not just talking about affluent upper middle class people. I was involved in a multivehicle caravan that brought many of the families who couldn't afford to fly. We drove through the night each way... It was very cost effective. The affluent families flew, the rest drove through the night...
That Disney trip probably was a big strain on some of these families annual budgets. The team held a series of fundraisers to help pay for this trip.
Disney is doing an increasingly better job at getting middle class (and lower middle class people) to attend their theme parks. Afterall, who wouldn't send their kid to participate in a World Championship...
The 1st quarter was not a fluke!
P.S. The economy grew 3.2% in the 1st quarter on an absolute basis, 0.6% if you adjust for the 2.6% annual inflation rate... From the tome of Doud's post, I bet he won't accept the fact that the economy is growing...