Vail Resorts, Inc. reported its brick-and-mortar retail sales declined $5.3 million, or 9.5 percent, for the second quarter of fiscal 2012 ended Jan. 31, 2012. The decline was attributed primarily to stores near its Tahoe resorts and its Any Mountain stores in the San Francisco bay area, which were down a combined $4.0 million resulting from unseasonably warm weather in the San Francisco bay area and a decline in skier visitation to the company's Tahoe resorts..


The company said total revenue for its Retail/rental businesses decreased $500,000, or 0.6 percent, for the three months ended Jan. 31, 2012 compared to the same period in the prior year. The decline was primarily driven by a decline in rental revenue of $1.1 million, or 5.9 as skier visits declined at the two Tahoe resorts. Partially offsetting the decline in rental revenue was an increase in retail sales of $600,000, or 1.2 percent due primarily to O2GearShop.com, an online retailer acquired in July 2011 that generated $5.9 million in retail sales during the three months ended Jan. 31, 2012.

 

One of most challenge years ever for industry
“This has been one of the most, if not the most, challenging winters for the U.S. ski industry,” said CEO Rob Katz. “We have seen the lowest snowfall levels in over 30 years for our Colorado resorts and weather patterns in Tahoe that have not been seen since the late 1800s. Given that backdrop, we are very pleased with the strength and stability shown by our operating model, as we reported only modest declines across our major revenue lines in what many would consider a worst case weather scenario, which followed last season's record setting snowfall.

 

“First, the strength of our season pass program continues to pay significant dividends, with pass sales increasing approximately 12% this season buffering the impact of the decline in visitation on lift revenue.

 

“Second, the continuous investments that we have made to ensure that our assets are the highest quality, including significant snowmaking capabilities that enabled us to have more terrain open than other resorts in the region, and in creating amenities for our guests to enjoy both on mountain and at our resort villages, kept our guests engaged during their vacations.

 

“Third, these investments helped support our ability to increase prices, which contributed to a 9.1% increase in ETP excluding season pass holders, in the quarter. Fourth, our resorts attract a high income demographic that allowed us to benefit from the enhanced consumer spending, especially in the luxury segment, resulting in significant increases in guest spending per visit on our ancillary businesses, including ski school, dining and retail, as well as solid results from our Lodging business, which had an ADR increase of 13.8%. Collectively, these factors stabilized our business even as snowfall conditions were at historical lows and only limited terrain was available throughout the holiday period and into mid-January.”


Katz added, “While the early season was difficult, beginning in mid-January the conditions in Colorado have improved to more normal snowfall levels, allowing us to open nearly all of our Colorado terrain by quarter end, including Vail's Back Bowls. Snowfall in Tahoe, however, remained scarce, which had a lingering impact on visitation in that region. Visits to our Colorado resorts declined 8.8 percent during the quarter, while Tahoe reported a 32.6 percent drop in visitation.

 

 
Skier visits and other metrics
The company provided an update on the ski season metrics for the comparative periods from the beginning of the ski season through Sunday, Feb. 26, 2012, and for the similar prior year period through Sunday, Feb. 27, 2011, which includes interim period data and is subject to fiscal third quarter end review and adjustments.

 


  • Season-to-date total lift ticket revenue at the company's six mountain resort properties was down approximately 1.5 percent through Febr. 26, 2012, compared to the prior year season to date period ended Feb. 27, 2011.
  • Season-to-date total skier visits for the company's six mountain resort properties were down approximately 12.3 percent through Feb. 26, 2012, compared to the prior year season to date period ended Feb. 27, 2011.
  • Season-to-date revenue from ski school is up 0.3 percent, dining is down 4.7 percent, and retail/rental is down 1.4 percent through Feb. 26, 2012, compared to the prior year season to date period ended Feb. 27, 2011.  
  • Revenue per visit from ski school is up 14.4 percent, dining is up 8.7 percent and retail/rental is up 6.2 percent.
     

Conditions better in Colorado

“Our ski season-to-date metrics reflect visitation improvement from the metrics released earlier in the season due primarily to improving trends at our Colorado resorts,” Katz continued. “Visits at our Colorado resorts are down 7.0 percent season to date as compared to the total visitation decline of 12.3 percent.  We have benefited from increased pass sales and ETP, excluding season pass holders, resulting in a much lower decline in lift revenue relative to the decline in visitation.  Similarly, revenue from our ancillary businesses has performed better than the visitation decline as we continue to see strong guest spending trends.  In addition, our lodging bookings through our central reservations and directly at our owned and managed properties continue to track ahead of last year's levels.”
 
Lowered fiscal 2012 Resort EBITDA guidance
“The slow start to the season extended well into January causing a larger-than-anticipated impact on visitation,” Katz said. “Although visitation levels have improved overall, Tahoe continues to track below expectations.  As a result, at this time we are reducing our fiscal 2012 Resort EBITDA guidance.  Our revised guidance calls for Resort Reported EBITDA to be in a range of $205-$215 million.  It is important to note that included in our estimates for Resort Reported EBITDA for fiscal 2012 is a $7.2 million seasonal loss associated with owning Northstar, which did not occur in fiscal 2011, and $2.0 million of estimated seasonal losses and transaction/transition expenses relating to the acquisitions of Kirkwood and Skiinfo.com (based on an expected close in late March for the Kirkwood acquisition). 

 

However, fiscal 2012 will not include $4.1 million of one-time Northstar acquisition related expenses that occurred primarily in the first quarter of fiscal 2011.  Finally, the first fiscal quarter of 2011 benefited from a $2.9 million favorable litigation settlement in the Lodging segment.

 

Adjusted for these items, we are forecasting fiscal 2012 Resort EBITDA to be in a range of down 4 percent to up 1 percent compared to fiscal 2011.  Our Real Estate EBITDA guidance is modestly higher.  For fiscal 2012, we are anticipating net proceeds from real estate sales to total $35-$45 million partially offset by Real Estate Reported EBITDA of between negative $13 million to negative $21 million, including approximately $3 million of non-cash stock compensation expense, resulting in estimated net positive cash flow from real estate of $20-$30 million. Net income attributable to Vail Resorts, Inc. is now forecast to be in a range of $13-$23 million.” 









































































































































































































































































































































Vail Resorts, Inc.

 


Mountain Segment Operating Results and Skier Visits

 


(In thousands, except Effective Ticket Price)

 


(Unaudited)







Three Months Ended

Percentage

Six Months Ended

Percentage


January 31,

Increase

January 31,

Increase


2012

2011

(Decrease)

2012

2011

(Decrease)

Net Mountain revenue:
















Lift tickets

$

153,699

$

155,173

(0.9)%

$

153,699

$

155,173

(0.9)%

Ski school

37,252


37,296

(0.1)%

37,252

37,296

(0.1)%

Dining

24,722


26,405

(6.4)%

30,369

30,512

(0.5)%

Retail/rental

73,850


74,320

(0.6)%

100,814

96,373

4.6%

Other

26,415


25,083

5.3%

43,474

39,702

9.5%

Total Mountain net revenue

$

315,938

$

318,277

(0.7)%

$

365,608

$

359,056

1.8%

Mountain operating expense:
















Labor and labor-related benefits

$

72,108

$

72,438

(0.5)%

$

101,648

$

97,120

4.7%

Retail cost of sales

29,427


28,983

1.5%

44,957

41,641

8.0%

Resort related fees

16,738


16,812

(0.4)%

17,820

17,636

1.0%

General and administrative

32,415


31,657

2.4%

58,910

55,846

5.5%

Other

44,801


41,334

8.4%

70,709

62,117

13.8%

Total Mountain operating expense

$

195,489

$

191,224

2.2%

$

294,044

$

274,360

7.2%

Mountain equity investment income, net

178


138

29.0%

608

918

(33.8)%

Mountain Reported EBITDA

$

120,627

$

127,191

(5.2)%

$

72,172

$

85,614

(15.7)%


















Total skier visits

2,900


3,395

(14.6)%

2,900

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