Why Disney Is Closing Stores This Year

On Wednesday, Disney released a statement on closing their stores, formally announcing that they plan on closing 20% of their brick-and-mortar locations before the year ends.

Disney has around 300 stores worldwide, so the close will likely impact approximately 60 North American establishments. 

European stores may also see closures, but locations in Japan will not. Disney has not released a statement on how many employees will be laid off by the closures. 

Luckily, investors shouldn’t have any cause for worry. In general, a company announcing that they’re closing their stores is a bad thing, as it usually indicates a lack of on-hand cash. However, this is not the case for Disney.

Because of a recent 32% increase in e-commerce sales during 2020, Disney is moving operations towards their online stores instead of honing in on physical retailers. 

Stephanie Johnson, president of Disney’s consumer products, games, and publishing, stated the following: 

“We now plan to create a more flexible, interconnected ecommerce experience that gives consumers easy access to unique, high-quality products across all our franchises.”

As worldwide services begin their shift into online efficiency, platforms like Amazon will become the normative form of shopping. While in-person retailers will likely never go away, a large portion of a previously massive market will be gravitating towards purchasing products online. 

From this, they also hope to expand their market by moving online, given that many of its stores were targeted towards children. However, on their site, Disney will begin incorporating a new catalog of products, including many that will appeal to adult shoppers. 

Disney’s push to become primarily online is also showcased through the recent release of Disney+, a platform that is giving Netflix a fierce competitor in the home-tv market. 

No impact has been seen on Disney stock ($DIS), with the price remaining stagnant in after hours.