Lack of winter catching up to Vail Resorts

Vail Resorts curbed its expectations for the upcoming winter, despite reporting an uptick in early pass sales.
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Vail Resorts (NYSE:MTN) curbed its expectations for the upcoming winter, despite reporting an uptick in early pass sales.

The Colorado-based ski resort company, which operates Vail, Breckenridge, Keystone, Beaver Creek, Heavenly and Kirkwood, said pass sales for the upcoming 2012/12 season were up approximately 5 percent in units and 8 percent in dollars, compared to a year ago, adjusted as if its recently acquired Kirkwood were owned in both periods.

But those gains, which won’t be completely reported until the next two quarters, were slowing from earlier in the year as warm weather persisted, particularly in Colorado. Recent strong snow in Tahoe at Heavenly and Kirkwood could boost final early-season pass sales there. Meanwhile, Vail’s retail sales — it owns numerous retailers in its resort towns — have slipped, compared to strong preseason sales a year ago, officials said.

"In September, we issued guidance of 27-32 percent growth in Resort Reported EBITDA,” Vail CEO Robert Katz said in the Dec. 4 earnings release. “Based on some of the most recent booking trends we are currently seeing, we believe that it will be more difficult to achieve that guidance than we anticipated in September. We will know more about the season after the holidays and intend to address our fiscal 2013 guidance when we release our ski season metrics in mid-January."

For its fiscal first quarter, which doesn’t include any of those pass sales, Vail reported revenue essentially flat at $116.4 million. It’s quarterly net loss, widened to $60.6 million versus a quarterly net loss of $55.7 million a year ago. Since the quarter includes no winter revenue, it typically runs at a loss, officials said, and while summer visitation was up this past year, those lower retail sales, coupled with higher expenses, lead to the wider loss.

Similar to outdoor gear manufacturers, the lack of snow last winter might be catching up to Vail this winter.

A year ago, Vail’s season pass sales skyrocketed because of the excitement of strong snow the year prior. So, despite a poor snow season last year, Vail’s earnings remained strong as it leaned on those strong early pass sales.

This year, as SNEWS suggested back in March, the opposite may prove true with less excitement fueling season pass sales.

“The total growth of the program is slightly below our expectations,” Katz noted, “as we believe that the amount of sales that we pulled forward to earlier selling periods was somewhat larger than expected and that weather was still a concern for those purchasers who delayed their purchasing decisions.”

Investors sent Vail's stock down 10 percent by mid-day trading, Dec. 4, following the earnings report.

Still, officials remained upbeat, saying the complete picture won’t come until after the holiday season.

“We are very pleased with the results of our pass sales effort this year, particularly given the challenging weather last season and the record performance we had in passes last year,” Katz said.

--David Clucas



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