The Walt Disney Company reported its FY 2009 second quarter earnings on Tuesday. The numbers show a 46% drop in profit from the same period in FY 2008. The Parks and Resorts division, which includes Disney Vacation Club, was particularly hard-hit with a 50% decline in earnings.
The Disney Co. was hurt on many fronts is its film unit, consumer products and interactive media divisions all showed lower numbers in a year-to-year comparison. Overall profit declined from $1.1 billion in 2Q 2008 to $613 million in 2Q 2009.
Despite strong attendance numbers at its domestic theme parks, promotional offers like the "seven-for-four" offer at Walt Disney World resorts drastically impacted profits. The parks division saw its profit drop from $339 million in 2008 to $171 million in the same period for 2009. Guest spending fell 6% due to lower average room rates and lower merchandise sales.
Also impacting the numbers was movement of the Easter holiday from the 2nd quarter 2008 to the 3rd quarter 2009.
According to a report by the Orlando Sentinel, Disney Vacation Club profit fell due to the credit market and "fewer contract extension sales." In the second quarter 2008 Disney Vacation Club was actively marketing 15-year contract extensions to owners at Disney's Old Key West Resort.
Still, the Sentinel quotes Disney CFO Tom Staggs as saying that they are "pleased with the pace of sales."
The 2Q results beat Wall Street estimates and President and CEO Bob Iger said that signs indicate their business is stabilizing:
On the parks side, we haven't seen a trend downward for a few months. The trends that we've seen this year .|.|. seem to be continuing and not worsening, But we're not suggesting we're seeing signs of improvements in that business yet.
The Sentinel reports that bookings for the remainder of the year are on pace with 2008 numbers. Disney execs would not rule out additional incentive programs at its theme parks.