It's always difficult to evaluate seasonal businesses during their slow periods of the year, and investors in ski resort operator Vail Resorts (NYSE:MTN) have to deal with the ups and downs of its business every summer and fall. Even though winter conditions have been amazing so far at many of Vail's most lucrative properties throughout the western U.S., the company still has to get through the parts of the year when there's no snow on the ground in most of the areas it serves.

Coming into Friday's fiscal first-quarter financial report, Vail Resorts investors wanted to see steady growth in sales even as they prepared for the losses that the company consistently suffers during the late summer and early fall. Yet they weren't prepared for Vail to report a revenue decrease, and that was enough to cause short-term concerns despite promising numbers on the season-pass front for the 2018-19 winter season.

Lone skier on a trail with trees on a snow-covered mountain.

Image source: Vail Resorts.

Vail Resorts' autumn sales fall

Vail Resorts' fiscal first-quarter results were problematic even in light of adverse seasonal factors. Total revenue was down 0.4% to $220 million, which was far worse than the roughly 6% top-line growth that most investors were expecting to see. Vail lost $107.8 million for the quarter, translating to $2.66 per share, and that was considerably worse than the $2.47 per share in red ink in the consensus forecast among those following the stock.

Vail saw mixed results in its key business segments. For the mountain segment, revenue dropped 2%, with the company blaming most of the decline on adverse exchange-rate movements for its Perisher resort in Australia. August to October is the last part of the ski season in Australia, and Vail relies on Perisher during this part of the year. Without the adverse currency impact, Perisher saw a nearly 5% rise in local-currency sales. Yet substantial increases in corporate overhead and certain operational losses led to a substantial widening of losses for the segment on an operating basis.

However, on the lodging side of the business, things looked a little better. Net revenue for the segment rose almost 4% compared to the year-ago quarter. Moreover, even though lodging lost money, the loss was less severe than it was the same time last year.

CEO Rob Katz explained the situation: "Our first fiscal quarter historically operates at a loss, given that our North American mountain resorts are not open for ski operations during the period." Katz noted that summer business at Whistler Blackcomb in British Columbia was quite strong, and he highlighted the solid performance in the lodging segment for offseason visitors.

Big moves for Vail Resorts lie ahead

Katz spent much more time talking about the future. Season pass sales are up 21% in units and 13% in dollar terms through Dec. 2, with roughly 3% average price increases on all but its military-pass sales. Some of the incremental growth in season passes is due to new discount options for military members, but even excluding that impact, dollar revenue from season passes is up 10% year over year. In addition, lodging bookings are in line with previous years, and most of the company's resorts in both the West and Northeast are seeing good conditions. Only Whistler is struggling from limited snowfall.

Vail has also made huge capital improvements to entice visitors. Among them are $42 million in capacity expansion at Whistler, new features at Park City and Heavenly, and greater spending on snowmaking equipment to boost conditions early in the season at Vail Mountain, Keystone, and Beaver Creek. Other measures should also contribute to the overall experience for Vail Resorts customers across its network of locations.

Even with some tough conditions to start the fiscal year, Vail didn't see any need to make changes to its full-year guidance. As Katz put it, "the North American ski season has just begun, with our primary earnings period still in front of us."

Vail Resorts investors weren't happy with the sales shortfall, and the stock dropped 12% in morning trading following the announcement. Yet if winter goes as well as many are hoping, the sluggish beginning to fiscal 2019 could soon be forgotten -- if Vail Resorts can jump on the opportunity like an expert descending a triple black diamond trail.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Vail Resorts. The Motley Fool has a disclosure policy.