Winmark Corporation

What they do

Winmark franchises Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round, all of which buy and resell gently used clothing, children's goods, sporting goods, and musical instruments. The company does not own or operate any corporate stores; all 1,389 locations at June 27, 2026 are owned by franchisees under 10-year agreements. Revenue comes primarily from royalties on franchisee sales, plus franchise fees, limited merchandise sales, and other income. Fiscal 2025 system-wide sales across the five brands were $1,682.0 million.

Revenue drivers

• Royalties — The largest revenue line at 88.7% of total revenue in fiscal 2025 and 92.0% of revenue in the first six months of 2026, generated from a percentage of franchisee sales; fiscal 2025 royalties rose 5.8% year over year.
• Franchise fees — 1.8% of fiscal 2025 revenue and 1.8% of first-half 2026 revenue, tied to new franchise agreements and renewals; $0.4 million in Q2 2026 versus $0.3 million in Q2 2025.
• Merchandise sales — 3.8% of fiscal 2025 revenue, down 8.8% year over year; the smallest of the operating revenue lines and related to limited new merchandise sold to franchisees.
• Leasing income — Contributed 3.1% of fiscal 2025 revenue, but the leasing portfolio run-off ended as of December 27, 2025; no leasing income was recorded in Q2 2026 versus $46,600 in Q2 2025. Fiscal 2025 leasing income included $2.2 million from settlement of outstanding customer litigation.

Recent performance

For Q2 2026 ended June 27, 2026, Winmark reported revenue of $22.0 million versus $20.4 million in Q2 2025, with royalties of $20.1 million, up 7.8% year over year. Net income was $10,394,800, or $2.81 per diluted share, compared with $10,601,200, or $2.89 per diluted share, in Q2 2025. For the first six months of 2026, net income was $19,649,600, or $5.31 per diluted share, versus $20,557,600, or $5.60 per diluted share, in the prior-year period; 2025 year-to-date results included $2.2 million of leasing income from customer litigation settlement. First-half 2026 royalties rose 8.1% to $2.9 million higher than the prior-year period, while SG&A increased 9.6%.

Strategy

Management states it is investing ahead of the Plato's Closet North American Ad Fund launch and in technology and innovation initiatives across the network, per CEO Brett D. Heffes. Winmark's stated growth model depends on supporting franchisees to produce higher revenues, opening new franchises, and controlling SG&A. The company completed the orderly run-off of its leasing portfolio as of December 27, 2025. It has an e-commerce platform for Music Go Round, Play It Again Sports, and Style Encore that lets franchisees sell in-store inventory online. Franchise renewals remain a focus: 98% of agreements up for renewal were renewed in fiscal 2025, and 50 of 50 were renewed in the first half of 2026.

Risks

• Franchisee concentration — Substantially all revenue is royalties from franchisees, and Winmark owns no corporate stores, so weak franchisee retail sales directly reduce royalty revenue.
• Rising SG&A — SG&A rose 13.7% in fiscal 2025 and 9.6% in the first half of 2026, outpacing revenue growth of 5.9% in fiscal 2025 and compressing operating margin.
• Store closures and renewals — In fiscal 2025, 27 franchised stores closed and 116 agreements came up for renewal; a decline in the 98%-99% renewal rate would reduce future royalties.
• Consumer and retail conditions — Franchisee sales are tied to discretionary consumer spending on used clothing, toys, sporting goods, and musical instruments, which affects royalty revenue.

Outlook

Management has not provided specific financial guidance in the excerpts. The company said it continues to invest ahead of the Plato's Closet North American Ad Fund launch and in technology and innovation. First-half 2026 royalty growth of 8.1% and a 100% first-half renewal rate are the operating indicators management highlights, while the leasing portfolio has wound down completely and will no longer contribute revenue. An additional 87 franchises have been awarded but were not yet open as of the July 15, 2026 release.