Q: Are Disney's massive theme park investments paying off?
A: Disney had the courage and gumption to invest in its theme park properties during the recession of 2008 and 2009. Other companies were pulling back investment and retrenching. But Disney took the softness in the economy as a chance to upgrade its parks. And now the company is reaping benefits that would make Scrooge McDuck proud.
Disney plowed a record billions into its global network of theme parks. It built a new Fantasyland in Walt Disney World and a Cars Land in the Disney California Adventure park. Just in 2012 alone, Disney invested roughly $3 billion improving, upgrading and enhancing its themeparks.
Having the guts to invest while others were scared has turbocharged Disney's growth now, especially in the theme parks unit. Revenue at the Parks and Resorts unit of Disney rose 6% in the quarter ended Dec. 28, 2013, which outstripped the 4% growth of Disney's largest unit, Media Networks. But where the investment's payoff really shows is in the 16% increase in operating profit at the theme park unit. That profit rise was the result of increased guest spending and higher ticket prices, largely the result of bold investments made in the properties.
These gains aren't being missed by investors. Shares of Disney have skyrocketed 64% since the start of 2013. Shares trade for 22.5 its trailing earnings, more than 30% above the market. Disney is again showing why it's a company that knows how to invest for the future.
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Follow Matt Krantz on Twitter: @mattkrantz.