Marcus Corp. beats the market

2018 was the worst year for the U.S. stock market since 2008, with the Dow Jones Industrial Average down 5.6 percent, the Nasdaq down 4 percent and the S&P 500 down 6.2 percent.

Stock prices for southeastern Wisconsin’s publicly-traded firms also took a bath in 2018. Of the 36 local stocks followed by BizTimes Milwaukee, only six posted gains in 2018.

Milwaukee-based The Marcus Corp. was a major exception, with its stock price posting the largest gain of any local stock last year. Shares of Marcus Corp. stock rose 44 percent during 2018 to close the year at $39.50.

In its most recent earnings report, Marcus Corp. reported record revenues, operating income and earnings for the first three quarters of 2018. Its revenues for that period were up 9 percent, to more than $532 million, operating income was up 15.2 percent, to $68.5 million, and net earnings attributable to Marcus Corp. were up 46.2 percent, to $44.7 million.

Marcus Corp.’s Hotels & Resorts and Theatres divisions both contributed to the company’s record performance, said president and chief executive officer Greg Marcus.

During the third quarter, group business increased significantly for Marcus Hotels & Resorts. Baseball fans staying at hotels to attend the Major League Baseball playoffs provided a boost to some of Marcus’ markets, including in Milwaukee, with the Brewers almost making it to the World Series.

However, fans following the baseball playoff chase appeared to result in lower attendance for the Marcus Theatres division in some markets, Marcus said. Still, the division’s revenues were up 5.2 percent in the third quarter.

The second-best-performing local stock in 2018 was that of Kohl’s Corp. The Menomonee Falls-based retailer saw its stock price rise 22 percent in 2018, to $66.34 a share.

Many retailers are struggling to adapt as more consumers shift to online shopping, but Kohl’s posted strong results in 2018. The company reported that its net income was up 35.3 percent, to $529 million, and its total revenue rose 2.9 percent, to $13.4 billion, during the first three quarters of 2018.

“We experienced strength across our entire apparel business, and our focus on speed-to-market and inventory management are driving relevancy with our customers, resulting in sales growth, margin expansion and clean inventory levels,” said Kohl’s CEO Michelle Gass. “We are executing extremely well in our stores and our digital channels.”

Despite those bright spots, the vast majority of southeastern Wisconsin’s publicly-held firms suffered significant declines in their stock prices.

The biggest local stock price loser was Milwaukee-based REV Group Inc., which saw its stock price fall 77 percent in 2018 to finish at $7.51.

“Quite frankly, anything that could go wrong, did go wrong and then some,” said Tim Sullivan, REV Group CEO. “It was particularly frustrating since many of the issues were out of our control.”

A fire at a supplier delayed shipments earlier in the year and then tariffs increased costs and lead times, making it difficult for the company to meet customer demand. REV Group said on average, three- to six-week lead times had increased to 10 to 15 weeks by the end of the year.

“You can’t build what you don’t have and you can’t ship what you can’t build,” Sullivan said.

REV Group’s sales increased 5 percent for the year, to $2.38 billion, but net income dropped from $31.4 million to $13 million. 

REV Group went public in 2017. Several law firms filed class action suits against the company in 2018 related to its financial statements ahead of the initial public offering. The firm has made several acquisitions since 2016 and one of the law firms that filed a class action suit said REV Group’s acquisitions made its operational structure inefficient and did not allow it to control costs.

In June, the company announced a $1.9 million restructuring effort.

Milwaukee-area stock performance

All data gathered by Robert W. Baird & Co. from Factset Research Systems. This information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy.