Update:
On Friday Goldman Sachs interpreted the results as positive for the parks, despite the drop in revenues. Analysts there said that attendance is turning positive (though barely, and only if you adjust the calendar), spending per capita is up 6% and hotel reservation are up 5%. Goldman raised its price target from $42 to $43 and reiterated a Buy rating.
Previously:
How goes the succession question at Disney?
The news out of Disney parks on Thursday comes 10 months after former CFO Tom Staggs was handed the keys to the Magic Kingdom division, and the results were not good.
In fact, they were pretty bad.
Also read: Disney Earnings Slide as ESPN, Parks Take a Hit.
Profit at Walt Disney Parks and Resorts was down 7 percent year over year, and down 8 percent quarter over quarter.
The first financial results coming under Bob Iger’s golden boy and presumed chosen successor, they weren't what Mom and Dad might have hoped.
Attendance was off 6 percent, too, though it was up slightly if you adjust for the extra week in fiscal 2009.
Not surprisingly, Disney argued that this drop in profit was fully expected.
The parks had begun easing ticket prices back up to normal after offering “value package” pricing during the recession.
“We were fully expecting to see a downturn as a result of that as we worked through that transition,” said a Disney spokesman.
On the other hand, the drop comes off another recession year, 2008, which might have been expected to lead to an upswing this year.
Meanwhile, revenue is up and attendance is on the rise at Disney's biggest competitor, Universal’s theme parks, with the successful launch of a “Harry Potter” ride in Florida and the “King Kong” extravaganza in Universal City.
“California Adventure’s expansion did represent a misfire. That’s a lot of capital comittment and is one albatross,” said Matthew Harrigan, an analyst at Wunderlich Securities, “But a lot of it was outside of his (Stagg’s) control.”
Staggs was made chairman of Walt Disney Parks and Resorts in January of this year, after an 11-year, successful run as CFO, swapping roles with Jay Rasullo. Most interpreted the move as reflecting company chairman Iger’s desire to give Staggs company-wide experience as part of a strategy to groom him as a successor.
Brent Lang contributed to this report.