Vail Resorts Inc. lowered its earnings guidance for fiscal 2014 by 10 percent last week after deciding snow came too late to the Lake Tahoe region to save the season for its 40 ski and snowboard shops in the San Francisco Bay and Lake Tahoe regions.
MTN now expects Resort Reported EBITDA, which includes earnings from ticket, restaurant, ski school and retail/rental operations, to come in between $255 million to $265 million in the current fiscal year, or a whopping $25 million to $30 million below guidance it affirmed in mid-January. The shortfall was attributed almost entirely to lower than expected sales at its eight-store Any Mountain chain in the San Francisco Bay Area and 30 stores in or near its three resorts in Lake Tahoe.
“Obviously we're doing worse in the second half of January and all of February that we might have hoped in the beginning of January,” said Chairman and CEO Robert Katz. “Although we did see a huge visitation increase, we know there are a lot of people that start to make other plans when they start waiting for the snow and don't see it.”
MTN’s reported revenues at the more than 180 specialty retail stores and gear rental shops operated by its Specialty Sports Venture subsidiary grew 2.4 percent in the second fiscal quarter ended Jan. 31 as sales at its Colorado and Utah stores more than offset the impacts of a severe drought gripping the Lake Tahoe region. Revenues reached $85.7 million, compared with $83.7 million in the year earlier quarter. Retail cost of sales fell 3.6 percent to $34.0 million, or 39.7 percent of sales, down from 42.0 percent a year earlier.
For the six months ended Jan. 31, MTN’s retail/revenue were up 3.8 percent to $114.6 million, thanks to a 9.8 percent increase in sales from stores in Colorado and Utah and sales from Hoigaard's, a Minneapolis-area retailer acquired in April 2013. Growth was partially offset by revenue declines at stores in the San Francisco Bay Area and Tahoe resorts as well as the Jan. 5 closing of 02gearshop.com.
As of the Jan. 31, season-to-date snowfall in the Tahoe region was 73 percent below last year, which required closing two-thirds of the trails at three MTN’s ski resorts. By contrast, the resorts had closed just 5 percent of their trails as of Jan. 31, 2012 and 35 percent in midst of the challenging 2011/12 season. As a result, visitation plunged 27 percent during the quarter.
However, an 11.9 percent increase in visitation at the company’s four Colorado resorts pushed up visitor spending on ski schools and dining by 9.7 and 16.0 percent respectively at those resorts and resulted in an overall visitation gain of 9.1 percent for the company.
Vail Resorts subsidiaries operate the mountain resorts of Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Canyons in Park City, Utah; Afton Alps in Minnesota and Mt. Brighton in Michigan; and the Grand Teton Lodge Company in Jackson Hole, Wyoming.