Disney (DIS 0.78%) reported fiscal 2022 first-quarter operating results after the market closed on Thursday, Feb. 9. The figures show a consumer eager to return to the magic at Disney's theme parks.
Recall, Disney was forced to temporarily close all of its parks to visitors at the pandemic onset. The popular family entertainment destinations welcomed back guests in different phases depending on government regulations. Fans are demonstrating just how happy they are for the opportunity to return as they shell out premium prices for the privilege to experience a Disney theme park.
Fans come back 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 surge resulted from an increase in the number of visitors and the money spent per visitor. Note Disneyland park in Anaheim, California, was closed for the comparable quarter last year, whereas it was open for the quarter ended Jan. 1.
The rise in revenue is flowing to profits, as operating income grew to $2.6 billion in Q1 from a loss of $100 million in the year prior. Already, the revenue and operating income figures are ahead of pre-pandemic levels. An impressive feat considering the coronavirus pandemic is persisting. Interestingly, Disney used the opportunity when the parks were shut down to improve operations. For instance, Disney implemented mobile ordering at restaurants and concession stands at the park, reducing staffing requirements. The enhancements are likely to result in higher profit margins in the long term.
Making the figures look better still is that international visitation 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 trips.
Regardless, domestic guests 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 will know firsthand the high cost of a visit. The fact that guests spent 40% more than in 2019 is remarkable. These increases are coming from various sources, including ticket prices, parking rates, food and beverage, merchandise, and more. Looking ahead, management sees robust demand from fans so far with roughly one month into its second quarter.
What this could mean for Disney shareholders
Fortunately for Disney shareholders, the segment of the business most devastated by the pandemic has reached revenue and profit levels ahead of those before the outbreak. Several catalysts remain that could push it higher still, including the return of international visitors, lesser disruption from the coronavirus, and approval of a COVID-19 vaccine for children ages 0-5.
The segment that includes theme parks generated $26 billion in revenue and $6.7 billion in operating income in the year before the outbreak (2019). The results from Q1 put it well ahead of pace to eclipse those totals in 2022. Investors looking for a stock that will benefit from continued reopening trends can put Disney on the list.