What Do Disney’s Numbers Say About the U.S. Economy?

You might think that in a weak economy, consumers would cut back on things like trips to Disney’s (DIS) theme parks. However, its theme park revenues and earnings for the quarter ended March 31, released on Tuesday, were impressive. Its revenues were up 11%, and operating income was up 33% (DIS FY 2Q Earnings Release (pdf file)).

But, there are a couple of caveats. The press release noted:

Higher attendance was primarily driven by the benefit of the shift of the Easter holiday.

The other caveat was that the number of foreign visitors to Disney’s U.S. theme parks was up 25% compared to the year ago period, the Wall Street Journal cited CEO Bob Iger as saying "Disney Parks Flourish Despite Economic Drought” (subscription required), The Wall Street Journal, Wednesday May 7, B1).

The latter really got me thinking. Disney’s report is supposed to be a sign that the domestic economy isn’t really as weak as some people are saying, but how much of Disney’s domestic theme park strength was driven by a weak dollar and foreign visitors? If that’s what’s driving it, then this is consistent with a weak U.S. economy.

Disclosure: Top Gun has no position in Disney (DIS) shares.

Comments

[woody34]

There is also a large segment of the U.S. population that may cut back on foreign and higher end domestic travel in favor of a Disney vacation. Although the park by no means is cheap, there is still a lot of bang for the buck value in a Disney vacation.

[Tom Q]

Disney is still #1 in family entertainment at its theme parks despite the other diversified holdings of this conglomerate. It's always clean, always friendly and always welcoming regardless of the time of year.