Milwaukee-based
Marcus Corp. reported total revenue growth of 7.4% in the first quarter of fiscal 2025, but several factors including higher costs, an underperforming film slate, and the Hilton Milwaukee renovation project created some operational headwinds.
Revenues for the first quarter totaled $148.8 million, up from $138.5 million for the first quarter of fiscal 2024.
The company reported a net loss for the quarter of $16.8 million, or 54 cents per share, compared to a net loss of $11.9 million, or 38 cents per share, for the same period in fiscal 2024.
"Our first quarter is always a seasonally challenging quarter in both of our businesses, with typically a lighter movie slate coming out of Hollywood and slower leisure travel at our Midwest hotels during the winter months," Marcus Corp. CFO
Chad Paris said during the company's earnings conference call Tuesday. "As we headed into this year, we expected several dynamics to influence our results -- some positive, some negative -- with a net result that would achieve growth in our first quarter."
The company noted that Q1 revenues were positively impacted by the addition of four operating days to the period, due to a previously announced change in the fiscal calendar. Two of those days were during the busy holiday season between Christmas and New Years, which helped boost theater sales, and the other two days were during a slower period in March.
Marcus' theaters division saw revenues jump 7.5% year-over-year but reported an operating loss of $6.3 million, compared to an operating loss of $5.7 million for the first quarter of fiscal 2024. Contributing to the loss was a weaker-than-expected film slate starting off the year, higher film costs as a percentage of admissions revenues due to a stronger carryover of holiday blockbuster films compared to the prior year's first quarter, and an increase in labor expenses, primarily due to an increase in operating hours compared to the prior year's first quarter, according to a news release.
Things have since turned around for the division thanks to the several successful releases of "
A Minecraft Movie" in late March and "Sinners" in early April. The 20th anniversary re-release of "Star Wars: Revenge of the Sith" earned $25 million at the U.S. box office when it hit theaters for just one week in late April, serving as an "example of just how much audiences prefer to see movies on the big screen,"
said Greg Marcus, CEO of Marcus Corp.
"With a stronger slate of highly anticipated films just around the corner, we expect this excitement will continue throughout the remainder of the year, ” said Marcus.
For Marcus Hotels & Results, Q1 results were impacted by the ongoing $40 million renovation of the Hilton Milwaukee hotel in downtown Milwaukee. The project took a "significant number" of guest rooms offline for the quarter, which brought down occupancy and RevPAR, which at company-owned hotels only increased 1.1% year-over-year.
"While this project is intentionally being done during our slower months and we have the unique capability to shift business to our two other hotels in the market (The Pfister and Saint Kate), we knew this was gong to be an operational challenge," said Paris.
The division's total revenues
before cost reimbursements were $52.3 million, an 8.9% increase over the prior year's first quarter, benefiting from the continued return of group business and a stronger ski season at Grand Geneva Resort & Spa. Division operating loss was $6 million, compared to an operating loss of $5.1 million for the same period last year.
The Hilton Milwaukee project is the most extensive renovation in company history and will upgrade the hotel’s lobby, guest rooms and 34,000 square feet of meeting and event space. The guest room renovation began in the fourth quarter of 2024. As of today, said Greg Marcus, nearly 65% of the 554 guest rooms being renovated are complete and back online.
"We are on track to have the remaining rooms back ready by June 30, with the meeting space and ballroom renovations continuing into the summer," he said.
As part of the project, 175 rooms located in the Hilton's west tower — added to the building in 2000 — will no longer be utilized and eventually removed from inventory. The Hilton Milwaukee is located across Wisconsin Avenue from — and connected via skywalk to — the newly expanded Baird Center.
"Looking ahead to the busy summer travel and convention season, we expect to continue to benefit from strong bookings at our recently renovated hotels," said Marcus. "We were also pleased to repurchase an additional $7.1 million of shares during the quarter, reflecting our continued confidence in both businesses and commitment to returning capital to shareholders."
