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Shares of Vail Resorts wipe out for second time in two months as stock dives 13 percent

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Heavier snowfall in November didn’t deliver an expected surge in bookings at Vail Resorts’ properties, causing shares of the Broomfield company to do an ugly face plant on Friday.

“Despite the good conditions, our destination guest visitation was much lower than anticipated in the pre-holiday period, particularly December 1st through December 21st,” CEO Robert Katz said in an update to investors released on Friday.

Investors had expected that heavier snowfalls, which resulted in earlier openings, would translate into stronger bookings into December. But it appears visiting skiers, conditioned to a string of poor starts, held back. And a warmup in December didn’t help things.

“We believe this was driven by destination guests’ concerns from two prior years of poor pre-holiday conditions at our U.S. resorts, and we did not see the pickup in short-term bookings we had expected,” Katz said.

For the second time in two months, Vail shares took a steep dive. Since Labor Day, the company’s shares have lost around 37 percent of their value. Worth $10.1 billion on Halloween, the company’s market value ended Friday at $7.56 billion, according to Bloomberg.

On Dec. 9, Vail shares opened at $258.60 and fell 17.85 percent to $223.25, marking the worst single-day drop since Vail Resorts became a public company in 1997. Friday’s decline wasn’t as bad, but it took shares from Thursday’s close of $214.63 all the way down to $181.96, before closing the day at $187.30, a decline of 12.7 percent.

Season-to-date lift ticket sales at the company’s North American resorts are up 12.2 percent compared to a year ago. Ski school revenues are up 9.5 percent, dining revenues up 12 percent and skier visits up 16.9 percent, the company said.

“Improved conditions across our western U.S. resorts helped drive a strong rebound in visitation and spending, particularly during the key holiday weeks,” Katz said.

So why weren’t investors happy? It was all about expectations. The company had forecast a stronger start this season after two bone-dry Novembers in 2016 and 2017. Things were up, but not as much as the company predicted they would be.

Stifel analyst Brad Boyer was among those upset the company didn’t give investors a heads up sooner that revenues in the early part of the season weren’t going to meet expectations, saying in a note that the delay “inflicted collateral damage on the stock.”

The company said its investor guidance for the rest of the season would come in below the range that the company had forecast in late September of last year. That’s assuming the economy holds up and the U.S. dollar doesn’t get so strong it drives foreign visitors away.

Vail Resorts operates 18 resorts and its Colorado properties include Vail, Beaver Creek, Breckenridge, Keystone and Crested Butte. Individual breakouts for the Colorado resorts weren’t included, but the company did say that Whistler Blackcomb in British Columbia, Canada, and Tahoe resorts on the California-Nevada border didn’t do as well as anticipated.


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