Disney responds to negative financial forecast
Feb 4, 2008
Disney shares were downgraded following Citigroup's sell recommendation based on projected theme park attendance.
Citigroup's analyst Jason Bazinet based the forecast on Walt Disney World resort room availability and discounting during the final three months of 2007.
Bazinet stated "This suggests the calendar [fourth quarter] demand Disney anticipated did not materialize, prompting last-minute rate reductions to fill vacant rooms."
In an uncharacteristic move, Disney Chief Financial Officer Thomas Staggs responded to Citigroup by saying: "Thus far, we are pleased with the pace of business at our parks, especially given the fact that we had record attendance at our domestic parks last year," Staggs said in a prepared statement.
"Currently, our room reservations at our domestic resorts for the remainder of our fiscal year are modestly ahead of where they were at this time last year. Thus far, pricing of rooms at our domestic resorts is tracking slightly above last year."
Bazinet did state that Citigroup had the same concern for 2007 which did not materialize. With this year's projection, he continued by commenting "But now, as we enter 2008, we are getting increasingly concerned that Disney's strategy and strong execution may simply get overshadowed by macroeconomic forces. That is, as energy costs remain stubbornly high, the housing market falters, and equity values pull back, we think it's only natural for consumer spending to slow."