Disney Comments on Impact from Inflation and Supply Chain Issues

Disney just had its Q2 earnings call, and we found out a lot of news and updates.

Disney’s Animal Kingdom

The company gave an update on the amount of Disney+ subscribers they now have, their expectations for the Star Wars Hotel, and they commented on the future of the Park Pass Reservation System. Disney also spoke about the recent inflation and how it’s affecting them as a company.

During the Q&A portion of the earnings call, Disney was asked about inflation and how it’s been impacting the domestic theme parks and their streaming service, Disney+.

Hollywood Studios

Disney’s Senior Executive Vice President and Chief Financial Officer, Christine M. McCarthy, spoke about the challenges they face with inflation. She said they do pay close attention to all of the recent inflationary pressures, which could affect everything in the theme parks from merchandise to food and beverage.

50th Anniversary Merchandise

One example she gave on how they’re dealing with inflation is with the increase costs in fuel. McCarthy said they have a very robust fuel hedging program at Walt Disney World which reduces risk and minimizes volatility in the cost of fuel.

Disney buses

The program was shut down when the parks shut down in 2020, but now, she said that program has been reopened and that they’re doing what they can to minimize the impact regarding the rising cost of fuel.

If only we could have these pretend gas prices

McCarthy also spoke about supply chain issues, saying that Disney is not immune to challenges. One thing she said they’re doing is working to diversify some of their suppliers. And, they are working with shippers to expedite the time to receive things through shipping.

Disney Springs

She finally said that right now it’s very difficult to accurately forecast the potential financial impact due to the fluidity of the situation. But, McCarthy also said to trust that Disney is fully aware of the situation and are working hard to mitigate any pressure on the margins.

Magic Kingdom

Executives were also asked about how inflation could affect Disney+. Disney CEO Bob Chapek spoke about how they’re carefully watching their content cost growth. He also said that Disney+’s content should drive more subscribers to the streaming service that will lead to driving profits.