The Walt Disney Company (DIS 0.18%) was crushed at the pandemic's onset when it was forced to turn away visitors to its theme parks temporarily. The segment is a lucrative source of revenue for the company, so the closures were harmful to the bottom line.
While most of its parks have reopened and stayed open, its park in Shanghai has been closed for several months following an outbreak of COVID-19 in the region. Fortunately, the spread of the virus has subsided, and Shanghai Disneyland reopened on June 30.
Shanghai Disneyland has reopened
That's great news for Disney. Management noted that the closure of the Shanghai park could hit operating income to the tune of $350 million in the upcoming quarter. Over three months, the $350 million comes to roughly $117 million per month in losses. Disney's fiscal third quarter will end around July 2, so the benefits of reopening Shanghai Disneyland will fall into its fiscal fourth quarter.
Still, despite the disruptions, Disney's segment that includes the theme parks is thriving. Revenue in the most recent quarter, which ended on April 2, more than doubled to $6.6 billion. The boost in revenue propelled operating income to expand to $1.76 billion from a loss of $406 million in the year prior.
In the six months ended April 2, the theme park segment's revenue jumped to $13.9 billion, while operating income soared to $4.2 billion. To put those figures into context, Disney reported revenue of $69.6 billion in all of fiscal 2019, with an operating income of $11.8 billion.
DIS Revenue (Annual) data by YCharts
Pent-up demand from consumers looking to get out of their homes could fuel revenue and profit growth in Disney's theme park segment for the next several years. CFO Christine McCarthy noted that guest spending at the domestic theme parks is up by 40% compared to the same quarter in 2019 and 20% in 2021. The park in Shanghai has not had a chance to gain that kind of momentum because of continued government-mandated restrictions. If Disney's park in the region stays open for good this time, it will work to sustain the momentum in the lucrative theme parks segment.
An excellent time to buy Disney stock
DIS PS Ratio data by YCharts
When measured by the price-to-sales ratio, Disney's stock has hardly ever been cheaper in the last decade. That makes this an excellent time for investors to start a position. Disney is in an ideal place to benefit from changing consumer behavior that prefers away-from-home experiences.
