Walt Disney is planning to lay off 28,000 workers in its parks, experiences and consumer products segment. The massive job reduction comes as the media and entertainment company is struggling to operate with limited capacity. Shares of Disney are down 2.4% in Wednesday’s pre-market trading.
Josh D’Amaro, Disney’s (DIS) head of parks, said that out of 28,000 domestic employees, around 67% are part-time. “We have made the very difficult decision to begin the process of reducing our workforce at our Parks, Experiences and Products segment at all levels, having kept non-working Cast Members on furlough since April, while paying healthcare benefits,” D’Amaro said.
D’Amaro also added “We’ve cut expenses, suspended capital projects, furloughed our cast members while still paying benefits, and modified our operations to run as efficiently as possible, however, we simply cannot responsibly stay fully staffed while operating at such limited capacity.” Last week, D’Amaro urged the state of California to allow the Disneyland Resort to reopen, which was closed to curb the risk related to COVID-19. (See DIS stock analysis on TipRanks)
On Sept. 24, Needham analyst Laura Martin maintained a Hold rating on the stock. She said “We lower our FY4Q20 revenue estimate by 26% to $14.6B, and we double our projected EPS loss to $0.69 based on the continuing negative COVID-19 impacts on DIS’s revenue, profitability and asset mix.”
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 11 Buys, 6 Holds and 1 Sell. The average price target of $133.29 implies upside potential of about 6.3% to current levels. Shares have declined about 13.3% year-to-date.