[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Winmark Corporation announced an increase in net income and diluted earnings per share for both the second quarter and the first six months of 2025 compared to the prior year periods Net Income and Diluted EPS Performance | Metric | Period | 2025 | 2024 | YoY Change | | :----------------------- | :---------------- | :----------- | :----------- | :----------- | | Net Income | Q2 Ended June 28/29 | $10,601,200 | $10,431,400 | +1.63% | | Diluted EPS | Q2 Ended June 28/29 | $2.89 | $2.85 | +1.40% | | Net Income | Six Months Ended June 28/29 | $20,557,600 | $19,250,400 | +6.79% | | Diluted EPS | Six Months Ended June 28/29 | $5.60 | $5.26 | +6.46% | [Business Overview and Strategic Focus](index=1&type=section&id=Business%20Overview%20and%20Strategic%20Focus) Winmark, a nationally recognized franchisor in the resale industry, reported increased sales performance across its brands and is making significant investments to enhance its market leadership - Sales performance for Winmark's franchise partners across all brands increased during the quarter[3](index=3&type=chunk) - Winmark is making significant investments in operations, technology, marketing, and innovation to enhance its leadership position in the resale industry[3](index=3&type=chunk) - As of June 28, 2025, Winmark had **1,371 franchises in operation**, over **2,800 available territories**, and an additional **77 awarded franchises** not yet open[3](index=3&type=chunk) [Condensed Financial Statements](index=2&type=section&id=Condensed%20Financial%20Statements) [Condensed Balance Sheets](index=2&type=section&id=Condensed%20Balance%20Sheets) Winmark's balance sheet as of June 28, 2025, shows a substantial increase in cash and total current assets, alongside a significant reduction in the shareholders' deficit, compared to December 28, 2024 Selected Balance Sheet Items | Item | June 28, 2025 | December 28, 2024 | Change | | :-------------------------- | :-------------- | :---------------- | :------- | | Cash and cash equivalents | $28,765,200 | $12,189,800 | +136.0% | | Total current assets | $32,199,600 | $15,365,600 | +109.6% | | Total assets | $43,172,700 | $26,844,500 | +60.8% | | Total current liabilities | $7,007,200 | $5,087,900 | +37.7% | | Total long-term liabilities | $73,005,400 | $72,802,700 | +0.28% | | Total shareholders' equity (deficit) | $(36,839,900) | $(51,046,100) | +27.8% (reduction in deficit) | [Condensed Statements of Operations](index=3&type=section&id=Condensed%20Statements%20of%20Operations) For the three and six months ended June 28, 2025, Winmark reported an increase in total revenue, primarily driven by royalties, leading to improved income from operations and net income Revenue Breakdown (Three Months Ended) | Revenue Type | June 28, 2025 | June 29, 2024 | YoY Change | | :---------------- | :-------------- | :-------------- | :----------- | | Royalties | $18,662,100 | $17,774,500 | +4.99% | | Leasing income | $46,600 | $524,400 | -91.13% | | Merchandise sales | $803,600 | $925,500 | -13.17% | | Franchise fees | $338,400 | $366,900 | -7.76% | | Other | $566,100 | $529,200 | +6.97% | | **Total revenue** | **$20,416,800** | **$20,120,500** | **+1.47%** | Revenue Breakdown (Six Months Ended) | Revenue Type | June 28, 2025 | June 29, 2024 | YoY Change | | :---------------- | :-------------- | :-------------- | :----------- | | Royalties | $36,436,700 | $35,043,200 | +3.98% | | Leasing income | $2,354,500 | $1,361,200 | +73.0% | | Merchandise sales | $1,744,900 | $2,036,000 | -14.39% | | Franchise fees | $670,400 | $731,500 | -8.35% | | Other | $1,129,900 | $1,058,300 | +6.76% | | **Total revenue** | **$42,336,400** | **$40,230,200** | **+5.24%** | Profitability (Six Months Ended) | Metric | June 28, 2025 | June 29, 2024 | YoY Change | | :----------------------- | :-------------- | :-------------- | :----------- | | Income from operations | $26,657,600 | $25,235,800 | +5.63% | | Net income | $20,557,600 | $19,250,400 | +6.79% | | Diluted EPS | $5.60 | $5.26 | +6.46% | [Condensed Statements of Cash Flows](index=4&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 28, 2025, Winmark experienced an increase in net cash provided by operating activities, while cash used in financing activities also rose due to common stock repurchases and higher dividend payments Cash Flow Activities (Six Months Ended) | Activity | June 28, 2025 | June 29, 2024 | YoY Change | | :----------------------------------- | :-------------- | :-------------- | :----------- | | Net cash provided by operating activities | $24,123,300 | $21,586,000 | +11.75% | | Net cash used for investing activities | $(105,900) | $(190,600) | -44.44% (less cash used) | | Net cash used for financing activities | $(7,417,000) | $(5,384,500) | +37.74% (more cash used) | | Net increase in cash, cash equivalents and restricted cash | $16,600,400 | $16,010,900 | +3.68% | - Key financing activities for the six months ended June 28, 2025, included **$2,418,700 in common stock repurchases** (compared to none in 2024) and **$6,584,600 in dividends paid** (up from $5,963,700 in 2024)[13](index=13&type=chunk)

Core Insights - Younger shoppers are reducing their spending, which negatively impacts Winmark, a retailer known for its thrift stores like Once Upon a Child and Plato's Closet [1][2] Group 1: Consumer Spending Trends - In-store and online purchases for the 18- to 24-year-old demographic fell by 13% year-over-year from January to April, according to market research firm Circana [4] - Factors contributing to this decline include revived student loan payments, a challenging job market, and increased credit card pressures, particularly affecting shoppers under 24 [4] Group 2: Impact on Winmark - The decline in spending is particularly detrimental to Winmark's Plato's Closet brand, which targets tween-to-young-20s shoppers, with apparel spending down 11% and accessories down 18% [5] - Winmark's stock is considered expensive, trading at nearly $380 per share, with a price-to-earnings ratio of about 33 times trailing earnings and 30 times trailing free cash flow [6] - Despite high valuations, Winmark's profits declined last year and are projected to grow only 6% this year and 7% next year, according to S&P Global Market Intelligence [6][7]

Company Overview - Winmark is a leading resale goods franchisor, operating under the brand "The Resale Company" and utilizing a franchise model to extend the life of various items such as toys, clothing, and sports equipment [3] - The company has over 1,300 locations and franchises five store brands: Play It Again Sports, Plato's Closet, Music Go Round, Once Upon A Child, and Style Encore [3] Recent Performance - Winmark's shares declined by 16% this week, with no direct news related to the company identified as the cause [1] - The decline in share price is attributed to the company's stretched valuation and concerns over softening consumer spending [2] Financial Metrics - Since 2000, Winmark has been a significant performer, achieving a 130-bagger return; however, its sales and net income have only grown by 3% and 8% annually over the last decade, respectively [5] - The company's price-to-earnings (P/E) ratio increased from approximately 20 in 2015 to nearly 40 before the recent drop, indicating a disparity between growth and valuation [5] Market Sentiment - Winmark is well-regarded by its franchisees, communities, and customers, which contributes to its status as a core holding for some investors [6] - Despite its strong reputation, the company is currently trading at a high P/E ratio of 34, suggesting that it may require improved consumer spending data to reach new highs [6]

Financial Performance - Winmark Corporation reported net income of $9,956,400 or $2.71 per diluted share for Q1 2025, an increase from $8,819,000 or $2.41 per diluted share in Q1 2024, representing a 12.9% increase in net income year-over-year [2]. - Total revenue for Q1 2025 was $21,919,700, up 9.0% from $20,109,500 in Q1 2024, driven by a 3.0% increase in royalties and a significant rise in leasing income from $836,800 to $2,307,800 [11]. - The company generated $15,078,400 in net cash from operating activities for Q1 2025, compared to $13,364,000 in Q1 2024, reflecting stronger operational cash flow [13]. Asset and Liability Management - Cash and cash equivalents increased to $21,828,800 as of March 29, 2025, compared to $12,189,800 at the end of 2024, reflecting a strong liquidity position [7]. - Total current assets rose to $25,775,000 from $15,365,600 at the end of 2024, indicating improved asset management and operational efficiency [7]. - The company’s total liabilities increased to $83,003,800 as of March 29, 2025, compared to $77,890,600 at the end of 2024, primarily due to an increase in current liabilities [9]. - Winmark Corporation's shareholders' equity deficit improved to $(45,941,300) from $(51,046,100) at the end of 2024, showing a positive trend in equity management [9]. Business Expansion and Strategy - The company had 1,363 franchises in operation as of March 29, 2025, with 79 additional franchises awarded but not yet opened, indicating ongoing market expansion [4]. - Winmark Corporation plans to continue focusing on sustainability and small business formation through its franchise model, which is expected to drive future growth [4]. - The company has completed the run-off of its leasing portfolio, which was announced in May 2021, indicating a strategic shift in its business operations [3].

Franchise Operations - As of December 28, 2024, Winmark operates 1,350 franchises across the United States and Canada, with over 2,800 available territories[16] - The company had a net store growth of 47 new stores in 2024, with a total of 1,350 franchised stores, achieving a renewal rate of 98%[26] - Winmark has signed 79 new franchise agreements, with the majority expected to open in 2025[33] - Over the past three years, the company has successfully renewed over 99% of franchise agreements up for renewal[51] - The company has 118 franchise agreements expiring in 2025, 116 in 2026, and 104 in 2027 across its brands, highlighting the importance of renewals for financial performance[72] Financial Performance - System-wide sales for 2024 reached $1,610.2 million, reflecting a growth from $1,589.0 million in 2023 and $1,534.3 million in 2022[24] - Total revenue for the year ended December 28, 2024, was $81.3 million, a decrease of 2.3% from $83.2 million in 2023[115] - Net income for 2024 was 49.1% of total revenue, compared to 48.3% in 2023, reflecting a slight decrease of 0.6%[114] - The franchising segment's operating income increased by $2.2 million, or 4.5%, to $51.6 million in 2024 from $49.4 million in 2023[126] - Cash flow from operating activities provided $42.2 million in 2024, down from $44.0 million in 2023[129] Royalties and Fees - The total royalties and franchise fees for 2024 amounted to $73.7 million, which is 90.7% of consolidated revenue, up from 86.2% in 2023[26] - Royalties from franchisees increased by $2.0 million, or 2.8%, compared to 2023, indicating a positive trend in franchise performance[107] - Royalties increased to $72.2 million in 2024, up 2.8% from $70.2 million in 2023, primarily due to additional franchise stores[116] Marketing and Advertising - Franchisees are required to spend a minimum of 5% of their gross sales on approved advertising and marketing initiatives[42] - The e-commerce platform developed for Music Go Round, Play It Again Sports, and Style Encore enhances marketing and sales opportunities for franchisees[24] - Franchisees are required to pay an annual marketing fee of $1,500 and spend 5% of gross sales on advertising, with a potential increase to 6%[46] Employee Development - The company employs 89 individuals as of December 28, 2024, with no employees covered by collective bargaining agreements[65] - The company recognizes that employee development is critical, offering competitive salaries and benefits, including a 401(k) plan with matching contributions[66] Competition and Market Risks - The company faces significant competition from larger retailers and online marketplaces, which may impact franchisee sales[52][79] - The company is subject to various federal and state franchise laws and regulations, which may impose additional costs or burdens in the future[85] Financial Condition and Liquidity - The company maintains cash assets that may exceed FDIC insurance limits, posing a risk to liquidity and financial condition[81] - Total contractual obligations as of December 28, 2024, amounted to $73.8 million, with significant payments due in the next 1-3 years[132] - The company ended 2024 with $12.3 million in cash, down from $13.4 million at the end of 2023[129] Leasing Operations - The leasing operations are in a run-off phase, with anticipated decreases in leasing revenues and cash flows[59] - Leasing income net of leasing expense for the fiscal year 2024 was $1.8 million, a significant decrease from $4.4 million in 2023, as the company continues to run off its middle-market leasing portfolio[113] Dividends - In 2024, the company declared and paid quarterly cash dividends totaling $3.50 per share, amounting to $12.3 million, along with a special cash dividend of $7.50 per share totaling $26.5 million[214] - In 2023, the company declared and paid quarterly cash dividends totaling $3.10 per share, amounting to $10.8 million, along with a special cash dividend of $9.40 per share totaling $32.9 million[215] - In 2022, the company declared and paid quarterly cash dividends totaling $2.55 per share, amounting to $8.9 million, along with a special cash dividend of $3.00 per share totaling $10.4 million[215]

Core Insights - Winmark reported Q4 2024 earnings below analyst expectations, indicating challenges and strategic shifts in its business model [2][6] - The company's focus on sustainable growth remains evident despite financial misses [2] Financial Performance - For Q4 2024, Winmark's diluted Earnings Per Share (EPS) was $2.60, below the expected $2.65 and slightly down from $2.64 in Q4 2023, representing a year-over-year decrease of 1.5% [3] - Total revenue for Q4 2024 was $19.55 million, falling short of the anticipated $20 million and reflecting a 2.4% decrease from the previous year [3] - Net income decreased to $9.58 million, down 1.4% from $9.72 million in Q4 2023 [3] - Royalties increased by 2.7% year-over-year, reaching $17.64 million [3][8] Company Overview - Winmark specializes in franchising retail resale of used goods, operating brands such as Plato's Closet and Once Upon A Child, with 1,350 franchise stores as of the end of 2024, up from 1,319 the previous year [4] Strategic Developments - The company is phasing out its leasing segment, which has narrowed revenue margins, and is focusing on its core franchise operations [5][6] - Leasing income dropped significantly to $1.81 million in 2024 from $4.77 million previously, contributing to the revenue shortfall [6] Franchise Expansion - Winmark awarded 79 new franchises, increasing the operational franchise count to 1,350, with over 2,800 untapped territories available for future development [7] Brand Performance - Key brands like Plato's Closet and Once Upon A Child continue to be significant contributors to revenue, with royalties being a major revenue source [8] Future Outlook - Management maintains a cautiously optimistic outlook with planned franchise expansions and emphasizes the importance of executing franchise growth and e-commerce evolution for long-term success [9]

Financial Performance - Net income for the year ended December 28, 2024, was $39,954,200, or $10.89 per diluted share, compared to $40,178,100, or $11.04 per diluted share in 2023, representing a decrease of 0.6%[1] - Total revenue for the year ended December 28, 2024, was $81,289,100, down from $83,243,500 in 2023, reflecting a decline of approximately 2.4%[1] - The fourth quarter 2024 net income was $9,583,100, or $2.60 per diluted share, compared to $9,716,800, or $2.64 per diluted share for the same period last year, indicating a decrease of 1.4%[1] - Net cash provided by operating activities for the year was $42,157,900, compared to $43,994,300 in 2023, a decrease of about 4.2%[9] - The company paid dividends totaling $38,865,900 during the year, down from $43,664,200 in the previous year, reflecting a decrease of approximately 11%[9] Franchise Operations - As of December 28, 2024, there were 1,350 franchises in operation and over 2,800 available territories, with an additional 79 franchises awarded but not yet opened[2] Royalties - Royalties for the fiscal year ended December 28, 2024, amounted to $72,198,500, an increase from $70,230,700 in 2023, representing a growth of approximately 2.8%[7] Cash and Liabilities - The company reported a decrease in cash and cash equivalents to $12,189,800 as of December 28, 2024, down from $13,361,500 in 2023, a decline of about 8.8%[5] - Total current liabilities decreased significantly to $5,087,900 as of December 28, 2024, from $10,461,600 in 2023, a reduction of approximately 51.3%[5] Shareholders' Equity - The company’s total shareholders' equity (deficit) improved to $(51,046,100) as of December 28, 2024, compared to $(59,156,100) in 2023, indicating a positive change of approximately 13.5%[5]

Core Insights - Winmark Corporation has launched a new campaign titled "Part of Their Journey," celebrating individuals whose lives have been positively influenced by the company and its resale brands [1][2] - The campaign features stories of various individuals, including professional athletes and community leaders, showcasing Winmark's commitment to providing quality used equipment and clothing [2][3] - Winmark emphasizes its role in supporting sustainable choices and making success more accessible for individuals across different fields [4] Company Overview - Winmark Corporation is a franchisor focused on sustainability and small business formation, operating five resale brands: Play It Again Sports, Once Upon A Child, Plato's Closet, Music Go Round, and Style Encore [5] - As of September 28, 2024, Winmark had 1,343 franchises in operation and over 2,800 available territories, with an additional 82 franchises awarded but not yet opened [5]

Core Insights - Winmark Corporation has launched a new campaign titled "Part of Their Journey," celebrating individuals whose lives have been positively influenced by the company and its resale brands [1][2] - The campaign features stories of various individuals, including professional athletes and community leaders, highlighting Winmark's commitment to providing quality used equipment and clothing [2][3] - Winmark aims to inspire and support individuals in their personal and professional journeys by making quality resources more accessible [4] Company Overview - Winmark Corporation is a franchisor focused on sustainability and small business formation, operating five resale brands: Play It Again Sports®, Once Upon A Child®, Plato's Closet®, Music Go Round®, and Style Encore® [5] - As of September 28, 2024, Winmark had 1,343 franchises in operation and over 2,800 available territories, with an additional 82 franchises awarded but not yet opened [5]

Company Overview - Winmark Corporation is a leader in the circular economy with over 35 years of experience and operates five resale brands: Play It Again Sports, Once Upon A Child, Plato’s Closet, Music Go Round, and Style Encore [1][4] - As of September 28, 2024, Winmark has 1,343 franchises in operation and over 2,800 available territories, with an additional 82 franchises awarded but not yet opened [4] Partnership with Tom Hoge - Winmark announced a four-year partnership extension with PGA Tour member Tom Hoge, who will continue as the brand ambassador and wear Winmark and Play It Again Sports logos during PGA TOUR events [1] - Tom Hoge has been part of the Winmark team since 2022 and is recognized for his professionalism and commitment to sustainability and community engagement, aligning with Winmark's core values [2][3] Strategic Alignment - The partnership emphasizes Winmark's commitment to leveraging sports to promote sustainability and community values, as stated by CEO Brett Heffes [3] - Tom Hoge expressed his honor in extending the relationship, highlighting Winmark's dedication to sustainability and community opportunities [3]