Disney Misses Profit Estimates

Walt Disney shares took their worst tumble in nearly four years after the opening of the most highly anticipated theme-park attraction in the company’s history fell flat, hammering results in its latest quarter, according to Bloomberg.

Profit at the company’s domestic resorts slumped in the period, which was marked by the ballyhooed opening of Star Wars: Galaxy’s Edge, the largest addition ever to the Disneyland resort in Anaheim, California. A second version of the space-themed land opens in Florida this month.

The report came after markets closed Tuesday, and the entertainment titan’s high-flying shares fell as much as 6.8%, the most since August 2015. The earnings shortfall was a shock to investors who were counting on Disney’s market-dominating theme parks and films to shoulder the burden of growth as the company goes head to head with Netflix in streaming. Spending on movies and TV shows for new online services led to a $553 million loss in Disney’s direct-to-consumer division.

Christine McCarthy, Disney’s chief financial officer, acknowledged on a call that fewer annual pass holders visited the company’s California resort. She also said some potential visitors to Florida parks put off their trips to await the opening of the new Star Wars land there. Disney shares were up 29% this year through Tuesday’s close, compared with 15% for the S&P 500 Index, even though the company had warned of high costs in the years ahead as it presses into streaming.

Disney’s profit, excluding some items, slumped to $1.35 a share in the quarter ended June 29, missing the $1.75 average of analysts’ estimates compiled by Bloomberg. Revenue missed forecasts by more than $1 billion, with the company saying the lower attendance led to reduced profit at its domestic parks.

Profit at the TV division, Disney’s biggest, rose 15%, buoyed by the cable division, which absorbed Fox channels including FX and National Geographic. Disney incurred restructuring charges of $207 million related to the Fox acquisition following the first full quarter of ownership.