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Disney (DIS) shares dip 2% on plans to cut 28,000 jobs
Walt Disney Co. (DIS) shares dipped 2% on Tuesday after the entertainment company revealed plans to lay off thousands of workers at its US theme parks.
Disney said that it had come to the “very difficult decision” to reduce its workforce by 28,000 employees due to theme park closures.
The global pandemic forced Disney to shut down all 11 of its worldwide theme parks, and though the vast majority have since reopened, many are still operating at a limited capacity.
Disney’s Q3 report highlighted the scale of the challenge after revenues cratered 85%.
Disney Parks’ unit chairman Josh D’Amaro said that the company had “worked tirelessly” to prevent layoffs, with cutbacks and the suspension of capital projects among the preventative actions taken.
However, he said that Disney “cannot responsibly” remain fully staffed in the current climate.
There will now be a considerable number of layoffs of domestic employees, of whom 67% work part-time.
While theme parks have been a thorn in Disney’s side this year, its streaming service has exceeded expectations.
Disney+ launched to widespread acclaim and continues to prosper as consumers turn to digital content in the absence of blockbusters released at cinemas.
Reports claim that live action film Mulan, which is available exclusively on Disney+, has already generated $300m in revenues.
Credit Suisse analysts expect around 9m homes to eventually buy the movie owing to the recent popularity of the Disney+ service, but noted that $440m in sales would be required to cover the previous forecast for box office returns.
DIS shares were trading 1.09% lower on Wednesday after news of the layoffs broke.
Shares were valued at $124.66 at midday ET on the Nasdaq.
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