So how should they measure finical success or failure today if not net profit? GP% is indeed used as a measure but GP% has never been more important than NP% in any business I have been involved in.
From what I have read there are more turns at the gate than ever before, the increase in revenue is not driven by price increase alone but by more bodies at the parks as well.
For Disney, the primary difference between net profit and gross profit is income tax. A company such as Disney does not report net profit on a division-by-division basis. Net profit is reported for the company as a whole. However, Disney does report operating income on a per division basis. Since this thread is titled "Bloomberg - No Disney Fun for Orlando Workers as Poverty Nears 20%", it is necessary to examine how well Disney's theme park business is being run to understand what effect it has on wages in Orlando.
The Walt Disney Company is going to have a record year largely because of
Frozen.
Frozen is a tremendous hit but its success in FY2013 does not necessarily translate into higher pay for Cast Members working in Orlando. Again, we need to focus on Parks & Resorts to understand pay in Orlando.
It used to be that large conglomerates viewed customers and employees as allies. Corporations such as Disney considered them as valuable assets to be nurtured, friends to be partnered with.
That attitude changed this century. Companies now try to squeeze their customers and employees for every last cent.
It would be one thing if these companies took these pennies and invested them in growth initiatives, producing a robust economy that benefited not only these same mega corporations but also ‘the little guy’.
Instead, they’ve taken that money and buried it back in stock buybacks, arguably the worst long-term use of profits.
Since Bob Iger took charge in 2005, net income has totaled
$42.4B. Over that same period, stock repurchases have totaled
$38.3B.
Iger is taking company profits and using it to pump up the stock price.
Of course Iger and CEOs like him collect more than half their compensation in stock and stock options, while fund managers who are supposed to be looking out for the best interests of those who have invested play along because their jobs are dependent on today’s stock price.
The end result? Companies with record profits and a stock market bubble, even as Median Household Income languishes, the exact situation we have today.
The reality is that companies like Disney and the stock market have set themselves up for yet another crash, a crash that could have been avoided if executives and fund managers were less focused on today’s stock price and more focused on tomorrow’s growth.
Now imagine $5B of that stock repurchase money being used to build a 5th theme park at WDW. New construction resulting in upward pressure on pay. New jobs and new revenue for the company for decades to come, encouraging further gains in family income.
Long-term, customers, employees, and the company all benefit from a 5th gate.
Disney’s Parks & Resorts revenue has grown an average of only 5.7% under Iger, a mediocre number almost wholly attributable to higher theme park ticket, food, beverage, and merchandise prices. If you don’t believe me, please read the company’s earnings reports. It’s what they report quarter-after-quarter, year-after-year.
It's an unusual quarter when they attribute revenue growth primarily due to increased attendance. Since Iger's first year, theme park attendance has grown only an average of 2% annually, not a particularly exciting number.
My point? Bad management making shortsighted decisions not only results in disappointing long-term company growth and stock volatility for shareholders but, ultimately, poor pay for employees.
So, when someone attempts to defend a company like Disney because they are “in business to make money”, I point back to historical data to show that they are not doing it particularly well right now in Disney's Parks & Resorts segment, directly affecting the pay of those Cast Members working in Orlando.
