Even the Magic Kingdom can't wish away bad economic times.

Walt Disney

(DIS) - Get Report

on Wednesday warned that it won't meet the lofty financial goals it set for itself earlier this year. Tourism at its theme parks is off because of war and terrorism fears, while sales at its retail stores have been hit by the slowdown in consumer spending, the company said.

"At the beginning of the year we set earnings targets predicated on a continued improvement in the economy and the travel industry, but that improvement has stalled, which will likely result in more moderate growth for this year," Tom Staggs, the company's chief financial officer, told shareholders at the company's annual shareholder meeting in Denver.

The decline in tourism has had a particularly strong effect at the company's Walt Disney World resort in Florida, Staggs said. The company's largest resort, Walt Disney World, has seen advance reservations drop from last year, he said.

In contrast, the company's smaller Disneyland Resort in California has seen a rise in advance ticket sales, Staggs said. Meanwhile, the company is keeping a lid on labor and operating costs at the resorts to maintain the bottom line, he said.

Disney had previously projected that its operating earnings and its earnings before one-time gains and losses would grow 25% to 35% in 2003. In its fiscal year ended Sept. 30, 2002, Disney earned 53 cents a share before one-time gains and charges. On this basis, the company earned 97 cents a share in fiscal 2001. Disney didn't give any new growth projections.

As with its theme parks, the company is seeing somewhat mixed results with its consumer products division. Staggs said the company's merchandise licensing business is "gaining traction," but growth in that division is not making up for soft sales at the company's retail stores.

Disney is in the middle of a turnaround with its ABC network. The company's media networks division, which includes ABC, saw its operating profit fall by 49% last fiscal year.

"The goal for this season was to halt the decline in our overall ratings delivery and improve our performance on key nights and so far that has happened, although our challenge here is not yet over," Staggs said.

Disney stock closed up 39 cents, to $16.97, in regular trading on Wednesday.