Slow Start At Europe’s Disneyland

The New York Times

Euro Disneyland, which opened with immense fanfare almost two months ago, has encountered teething problems, and its normally ebullient executives are backing away from their unbridled optimism.

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Euro Disney stock plunged 5 percent Friday, to 109.5 French francs on the Paris bourse, more than 20 percent below its price when the park opened and more than 30 percent below its high.

The fall followed a report issued Thursday in which Euro Disney said it was having difficulty attracting people from the Paris region and suggested that it might not be profitable in the fiscal year that ends on Sept. 30. Reaction in New York

Euro Disneyland is 49 percent owned by the Walt Disney Company, whose stock fell $1.875 a share on the New York Stock Exchange on Thursday, and another 75 cents Friday, closing the week at $36.50.

On the eve of the park’s opening on April 12, its chief financial officer, John Forsgren, had said in an interview that the park would show a profit in the period to Sept. 30, guaranteeing that Euro Disney would make money in the fiscal year.

“It’s going to be a small profit, but that’s still something of an achievement,” he said at the time.

But the company’s view seems to have shifted since then. In Thursday’s report, Euro Disney said, “In light of the operating uncertainties, there can be no assurance as to whether the group will achieve profitability during the fiscal year.” Income From Interest

For the first half, the company announced net income of 74.57 million francs ($14 million), essentially from interest on the cash it is holding.

The report said attendance at the park and guests at Euro Disney’s six hotels there had fluctuated considerably during the period. “Activity on weekends and holidays has significantly exceeded that of midweek periods,” it said. It promised new advertising and tight management of costs in response to the situation.

Euro Disneyland’s opening was accompanied by a barrage of withering critiques from French intellectuals. Left-of-center newspapers have been quick to seize on small indications that things are not going as planned, like statements by workers on the rail line leading to the park that the trains are empty.

Up to now, Euro Disneyland has vehemently denied the talk. But Thursday’s report said that surveys in France “indicate that misleading reports of traffic jams and overcrowding have led many, especially residents of the Ile-de-France region, to postpone until the fall their plans to visit the resort.” The Ile-de-France is the area around Paris.

When it opened, Euro Disney said it hoped to attract 11 million people in its first year. Since then, 1.5 million people have come, but the company said on Thursday that it was impossible to extrapolate meaningfully from initial results.

Paul Slattery, an industry analyst at Kleinwort Benson, said the report was not surprising given that most European economies were in a mild recession. The price of admission at Euro Disneyland is $48 for adults and $28 for children. Lunch of a hot dog, soda and bag of chips is about $6.50; an ice cream bar about $3.

Mr. Slattery said he expected Euro Disney shares to fall “at least another 10 percent.”

Many analysts believe the critical test for the park will be to attract visitors in the winter, something no theme park in France has done.

Euro Disney also said it was postponing the opening of Disney MGM Studios Europe, the second phase of its project, to 1996 from 1995.

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