Winmark Corporation Announces Year End Results

Rhea-AI Summary

Winmark (WINA) reported its financial results for the year ended December 28, 2024. The company's net income reached $39.95 million ($10.89 per share diluted), slightly down from $40.18 million ($11.04 per share diluted) in 2023. Fourth quarter 2024 net income was $9.58 million ($2.60 per share diluted), compared to $9.72 million in the same period last year.

Annual revenues decreased to $81.29 million from $83.24 million in 2023, partly affected by the company's 2021 decision to run-off its leasing portfolio. As of December 28, 2024, Winmark operated 1,350 franchises under its resale brands: Plato's Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round, with 79 additional franchises awarded but not yet operational.

Positive

• Strong franchise network with 1,350 operational locations
• Substantial earnings per share of $10.89 for 2024
• 79 new franchises awarded and pending opening

Negative

• Year-over-year revenue decline from $83.24M to $81.29M
• Net income decreased from $40.18M to $39.95M
• Q4 earnings per share dropped from $2.64 to $2.60

Insights

Financial Analyst

Winmark 's 2024 financial results reveal a nuanced performance picture. While net income saw a marginal decline of 0.56% to $39.95 million, the company's franchise-based resale business model continues to demonstrate resilience. The revenue decrease of 2.3% to $81.29 million should be contextualized against the deliberate wind-down of the leasing portfolio initiated in 2021, rather than indicating core business weakness.

The expansion to 1,350 operating franchises, coupled with 79 awarded but unopened locations, signals strong underlying demand for Winmark's business model. Particularly noteworthy is the company's disclosure of over 2,800 available territories, suggesting substantial runway for future growth. This expansion potential is especially relevant given the growing consumer preference for sustainable retail and secondhand goods.

The company's multi-brand strategy across different resale categories (clothing, sports equipment, music instruments) provides diversification benefits and captures various segments of the circular economy. The slight compression in earnings per share from $11.04 to $10.89 reflects modest margin pressure, but the franchise-based model continues to generate strong cash flows with minimal capital requirements.

The strategic decision to exit the leasing business represents a focus on their core competency in resale franchising. While this transition creates some near-term revenue headwinds, it should lead to a more streamlined and focused operation aligned with current market trends toward sustainability and circular economy principles.

MINNEAPOLIS--(BUSINESS WIRE)-- Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 28, 2024 of $39,954,200 or $10.89 per share diluted compared to net income of $40,178,100 or $11.04 per share diluted in 2023. The fourth quarter 2024 net income was $9,583,100 or $2.60 per share diluted compared to net income of $9,716,800 or $2.64 per share diluted for the same period last year. Revenues for the year ended December 28, 2024 were $81,289,100, down from $83,243,500 in 2023. 2024 results were impacted by the Company’s decision in May 2021 to run-off its leasing portfolio.

Winmark − the Resale Company®, is a nationally recognized franchisor focused on sustainability and small business formation. − We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At December 28, 2024, there were 1,350 franchises in operation and over 2,800 available territories. An additional 79 franchises have been awarded but are not open.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

WINMARK CORPORATION CONDENSED BALANCE SHEETS (Unaudited)
	December 28, 2024				December 30, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	12,189,800			$	13,361,500
Restricted cash		140,000				25,000
Receivables, net		1,336,400				1,475,300
Net investment in leases - current		—				75,100
Income tax receivable		96,400				31,400
Inventories		397,600				386,100
Prepaid expenses		1,205,400				1,392,100
Total current assets		15,365,600				16,746,500
Property and equipment, net		1,419,400				1,669,800
Operating lease right of use asset		2,108,700				2,425,900
Intangible assets, net		2,640,300				2,994,300
Goodwill		607,500				607,500
Other assets		491,200				471,300
Deferred income taxes		4,211,800				4,052,400
	$	26,844,500			$	28,967,700
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	—			$	4,217,900
Accounts payable		1,562,000				1,719,400
Accrued liabilities		1,866,200				2,858,200
Deferred revenue		1,659,700				1,666,100
Total current liabilities		5,087,900				10,461,600
Long-Term Liabilities:
Line of credit/Term loan		30,000,000				30,000,000
Notes payable, net		29,942,800				34,848,800
Deferred revenue		8,027,600				7,657,500
Operating lease liabilities		3,092,800				3,715,800
Other liabilities		1,739,500				1,440,100
Total long-term liabilities		72,802,700				77,662,200
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,539,744 and 3,496,977 shares issued and outstanding		14,790,500				7,768,800
Retained earnings (accumulated deficit)		(65,836,600	)			(66,924,900	)
Total shareholders’ equity (deficit)		(51,046,100	)			(59,156,100	)
	$	26,844,500			$	28,967,700

WINMARK CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
		Quarter Ended							Fiscal Year Ended
		December 28, 2024				December 30, 2023			December 28, 2024			December 30, 2023
Revenue:
Royalties		$	17,642,800			$	17,167,200		$	72,198,500		$	70,230,700
Leasing income			134,500				817,600			1,811,800			4,766,200
Merchandise sales			862,900				1,159,200			3,601,300			4,761,100
Franchise fees			362,800				378,600			1,545,600			1,512,000
Other			545,100				517,300			2,131,900			1,973,500
Total revenue			19,548,100				20,039,900			81,289,100			83,243,500
Cost of merchandise sold			816,700				1,091,100			3,379,200			4,461,500
Leasing expense			—				16,600			36,600			398,300
Provision for credit losses			—				(1,000	)		(1,500	)		(5,600	)
Selling, general and administrative expenses			5,965,200				6,414,400			24,944,200			25,108,700
Income from operations			12,766,200				12,518,800			52,930,600			53,280,600
Interest expense			(693,600	)			(751,100	)		(2,856,900	)		(3,091,000	)
Interest and other income			295,100				368,300			1,150,300			1,171,700
Income before income taxes			12,367,700				12,136,000			51,224,000			51,361,300
Provision for income taxes			(2,784,600	)			(2,419,200	)		(11,269,800	)		(11,183,200	)
Net income		$	9,583,100			$	9,716,800		$	39,954,200		$	40,178,100
Earnings per share - basic		$	2.71			$	2.78		$	11.36		$	11.55
Earnings per share - diluted		$	2.60			$	2.64		$	10.89		$	11.04
Weighted average shares outstanding - basic			3,533,107				3,494,544			3,516,122			3,479,936
Weighted average shares outstanding - diluted			3,679,992				3,679,444			3,667,479			3,640,524

WINMARK CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
		Year Ended
		December 28, 2024				December 30, 2023
OPERATING ACTIVITIES:
Net income		$	39,954,200			$	40,178,100
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			445,300				418,700
Amortization of intangible assets			354,000				354,000
Provision for credit losses			(1,500	)			(5,600	)
Compensation expense related to stock options			1,988,000				1,952,400
Deferred income taxes			(159,400	)			(512,000	)
Operating lease right of use asset amortization			317,100				290,100
Tax benefits on exercised stock options			1,307,700				1,138,500
Change in operating assets and liabilities:
Receivables			138,900				(36,700	)
Principal collections on lease receivables			104,700				556,000
Income tax receivable/payable			(1,372,800	)			(611,200	)
Inventories			(11,500	)			384,500
Prepaid expenses			186,700				(81,700	)
Other assets			(19,900	)			(41,600	)
Accounts payable			(157,400	)			(402,600	)
Accrued and other liabilities			(1,251,900	)			(16,900	)
Rents received in advance and security deposits			(28,000	)			(275,200	)
Deferred revenue			363,700				705,500
Net cash provided by operating activities			42,157,900				43,994,300
INVESTING ACTIVITIES:
Purchase of property and equipment			(194,900	)			(383,900	)
Net cash used for investing activities			(194,900	)			(383,900	)
FINANCING ACTIVITIES:
Payments on notes payable			(9,187,500	)			(4,250,000	)
Proceeds from exercises of stock options			5,033,700				4,009,700
Dividends paid			(38,865,900	)			(43,664,200	)
Net cash used for financing activities			(43,019,700	)			(43,904,500	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			(1,056,700	)			(294,100	)
Cash, cash equivalents and restricted cash, beginning of period			13,386,500				13,680,600
Cash, cash equivalents and restricted cash, end of period		$	12,329,800			$	13,386,500
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	2,851,000			$	3,049,400
Cash paid for income taxes		$	11,168,700			$	10,874,300
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above:
		Year Ended
		December 28, 2024				December 30, 2023
Cash and cash equivalents		$	12,189,800			$	13,361,500
Restricted cash			140,000				25,000
Total cash, cash equivalents and restricted cash		$	12,329,800			$	13,386,500

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250218640607/en/

Anthony D. Ishaug

763/520-8500

Source: Winmark Corporation

FAQ

What was Winmark 's (WINA) net income for 2024?

Winmark reported a net income of $39,954,200 or $10.89 per share diluted for the year ended December 28, 2024.

How did WINA's Q4 2024 performance compare to Q4 2023?

WINA's Q4 2024 net income was $9,583,100 ($2.60 per share), down from $9,716,800 ($2.64 per share) in Q4 2023.

How many Winmark franchises were operational as of December 2024?

As of December 28, 2024, Winmark had 1,350 franchises in operation, with an additional 79 franchises awarded but not yet open.

What caused the decline in Winmark's 2024 revenues?

The revenue decline was impacted by the Company's decision in May 2021 to run-off its leasing portfolio, resulting in revenues dropping from $83.24M in 2023 to $81.29M in 2024.