One more to consider: DIS - Disney.
Just reported low park attendance and now
this story tonight:
Retail Stores Turning into Another Squeaky Wheel at Disney
From thestreet.com
By Alex Berenson
Senior Writer
Disney (DIS:NYSE) faces yet another trap.
Already plagued with a ratings crisis at ABC and tough competition for its
studio, the Mouse now has a new worry. Sales of Disney-branded merchandise
are tumbling, and a top retail executive is quitting. Disney acknowledges
"concern" and says it's analyzing the problem.
Investors often overlook Disney's licensing and retail operations because
the company lumps their sales in with its "creative content" division,
which includes the film and television studios. But with 700 stores
worldwide, Disney has a significant retail presence. An analysis of
Securities and Exchange Commission filings shows the company grossed about
one-seventh of its total revenue, or $3 billion, in merchandise sales and
licensing fees in fiscal 1998, which ended in September. (By way of
comparison, Gap (GPS:NYSE) reported about $9 billion in sales last year.)
The stores sell apparel and accessories branded with Disney characters like
Mickey and Minnie, as well as videotapes, toys and high-end collectibles
like a Cinderella Anniversary Clock (a bargain at just $165). With lots of
high-margin products, the stores have proven very profitable for Disney,
analysts say. In fiscal 1995, the last year the company reported operating
results for its consumer products segment, the division turned in an
operating profit of $510 million on sales of $2.15 billion. That operating
margin of 24% compared favorably with the company's overall margin of 20%
for the year.
Since then, Disney's retail operations have grown solidly. But now analysts
say the company's stores are showing signs of significant distress. In
Disney's fiscal first quarter ended Dec. 31, operating income for the
creative content division fell almost 40% to $430 million. Revenue was down
2% at $2.9 billion. Ominously, the profit decline came even though Disney
released three hit movies during the quarter.
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