WINMARK CORP
For the period ended Jun 28, 2025. Filed Jul 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 28, 2025 · Filed Jul 15, 2025
WINA$265.23-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-29; filed 2025-04-16.
0000908315-25-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-28; filed 2025-07-15.
0000908315-25-000028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 72 current paragraphs.
25 unchanged; 24 reworded; 20 added; 1 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Royalties increased to $18.7 million for the second quarter of 2025 from $17.8 million for the second quarter of 2024, a 5.0% increase. The increase is primarily from having additional franchise stores and from higher franchise retail sales in the second quarter of 2025 compared to the same period in 2024.
Current report
Leasing income decreased to $46,600 for the second quarter of 2025 compared to $524,400 for the same period in 2024. The decrease is primarily due to a decrease in operating lease income when compared to last year.
Current report
Selling, general and administrative expenses increased 5.6% to $6.6 million in the second quarter of 2025 compared to $6.2 million in the same period of 2024. The increase was primarily due to an increase in technology and compensation related expenses.
Current report
The provision for income taxes was calculated at an effective rate of 16.6% and 17.1% for the second quarter of 2025 and 2024, respectively. The rate for both periods were impacted by tax benefits on the exercise of non-qualified stock options.
Current report
Comparison of Six Months Ended June 28, 2025 to Six Months Ended June 29, 2024
Current report
Revenue
Current report
Revenues for the first six months of 2025 totaled $42.3 million compared to $40.2 million for the comparable period in 2024.
Current report
Royalties and Franchise Fees
Current report
Leasing Income
Current report
Merchandise Sales
Current report
Cost of Merchandise Sold
Current report
Selling, General and Administrative
Current report
Interest Expense
Current report
Interest expense was $1.2 million for the first six months of 2025 compared to $1.5 million for the first six months of 2024. The decrease is primarily due to lower average borrowings when compared to the same period last year.
Current report
Income Taxes
Current report
The other operating segment income for the second quarter of 2025 decreased to $42,400 from $428,300 for the second quarter of 2024. The decrease in segment contribution was due to a decrease in leasing income net of leasing expense.
Current report
Segment Comparison of Six Months Ended June 28, 2025 to Six Months Ended June 29, 2024
Current report
Franchising Segment Income
Current report
The franchising segment operating income for the first six months of 2025 increased to $24.4 million from $24.1 million for the first six months of 2024. The increase in segment contribution was due to increased royalty revenues, partially offset by an increase in selling, general and administrative expenses.
Current report
Other Operating Segment Income
Removed paragraphs (1)
Previous report
The Shelf Agreement allowed us to offer privately negotiated senior notes to Prudential in an aggregate principal amount up to (i) $100.0 million, less (ii) the aggregate principal amount of notes outstanding at such point (including notes outstanding under the Note Agreement, which at March 29, 2025 was $30.0 million). As of March 29, 2025, we had not issued any notes under the Shelf Agreement. The Shelf Agreement expired on April 12, 2025. The $30.0 million of principal outstanding under the Note Agreement matures in 2028.
Reworded paragraphs (24)
Previous wording
Winmark - the Resale Company is focused on sustainability and small business formation. As of March 29, 2025, we had 1,363 franchises operating under the Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands. Our business is not capital intensive and is designed to generate consistent, recurring revenue and strong operating margins.
Current wording
Winmark – the Resale Company is focused on sustainability and small business formation. As of June 28, 2025, we had 1,371 franchises operating under the Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands. Our business is not capital intensive and is designed to generate consistent, recurring revenue and strong operating margins.
Previous wording
Our most significant source of revenue is royalties received from our franchisees. During the first three months of 2025, our royalties increased $0.5 million or 2.9% compared to the first three months of 2024.
Current wording
Our most significant source of franchising revenue is royalties received from our franchisees. During the first six months of 2025, our royalties increased $1.4 million or 4.0% compared to the first six months of 2024.
Previous wording
Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include compensation and benefits, marketing and advertising, professional services, and occupancy. During the first three months of 2025, selling, general and administrative expenses increased $0.6 million, or 9.1% compared to the first three months of 2024.
Current wording
Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include compensation and benefits, marketing and advertising, professional services, and occupancy. During the first six months of 2025, selling, general and administrative expenses increased $1.0 million, or 7.4% compared to the first six months of 2024.
Previous wording
Management also monitors several nonfinancial factors in evaluating the current business operations and future prospects including franchise openings and closings and franchise renewals. The following is a summary of our net store growth and renewal activity for the first three months ended March 29, 2025:
Current wording
Management also monitors several nonfinancial factors in evaluating the current business operations and future prospects including franchise openings and closings and franchise renewals. The following is a summary of our net store growth and renewal activity for the first six months ended June 28, 2025:
Previous wording
Renewal activity is a key focus area for management. Our franchisees sign 10-year agreements with us. The renewal of existing franchise agreements as they approach their expiration is an indicator that management monitors to determine the health of our business and the preservation of future royalties. During the first three months of 2025, we renewed 33 of the 33 franchise agreements available for renewal.
Current wording
Renewal activity is a key focus area for management. Our franchisees sign 10-year agreements with us. The renewal of existing franchise agreements as they approach their expiration is an indicator that management monitors to determine the health of our business and the preservation of future royalties. During the first six months of 2025, we renewed 60 of the 61 franchise agreements available for renewal.
Previous wording
In May 2021, we made the decision to no longer solicit new leasing customers and pursue an orderly run-off of our middle-market leasing portfolio. Leasing income net of leasing expense for the first three months of 2025 was $2.3 million compared to $0.8 million in the first three months of 2024. $2.2 million of the $2.3 million of leasing income for the first three months of 2025 was related to the settlement of outstanding customer litigation. The run-off of our leasing portfolio is now substantially complete and we anticipate that leasing income net of leasing expense will be lower during the remaining quarters of 2025 compared to the last three quarters of 2024.
Current wording
In May 2021, we made the decision to no longer solicit new leasing customers and pursue an orderly run-off of our middle-market leasing portfolio. Leasing income net of leasing expense for the first six months of 2025 was $2.4 million compared to $1.3 million in the first six months of 2024. $2.2 million of the $2.4 million of leasing income for the first six months of 2025 was related to the settlement of outstanding customer litigation. The run-off of our leasing portfolio is now substantially complete and we anticipate that leasing income net of leasing expense will be lower during the remaining quarters of 2025 compared to the last two quarters of 2024.
Previous wording
Revenues for the quarter ended March 29, 2025 totaled $21.9 million compared to $20.1 million for the comparable period in 2024.
Current wording
Revenues for the quarter ended June 28, 2025 totaled $20.4 million compared to $20.1 million for the comparable period in 2024.
Previous wording
Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales. Cost of merchandise sold decreased to $0.9 million for the first quarter of 2025 compared to $1.0 million in the same period of 2024. The decrease was primarily due to a decrease in Direct Franchisee Sales discussed above. Cost of merchandise sold as a percentage of Direct Franchisee Sales for the first quarter of 2025 and 2024 was 94.4% and 93.6%, respectively.
Current wording
Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales. Cost of merchandise sold decreased to $0.8 million for the second quarter of 2025 compared to $0.9 million in the same period of 2024. The decrease is due to a decrease in Direct Franchise Sales discussed above. Cost of merchandise sold as a percentage of Direct Franchisee Sales for the second quarter of 2025 and 2024 was 95.4% and 93.0%, respectively.
Previous wording
Interest expense decreased to $0.6 million for the first quarter of 2025 compared to $0.7 million for the first quarter of 2024. The decrease is primarily due to lower average corporate borrowings when compared to the same period last year.
Current wording
Interest expense decreased to $0.6 million for the second quarter of 2025 compared to $0.7 million for the second quarter of 2024. The decrease is primarily due to lower average borrowing when compared to the same period last year.
Previous wording
Royalties increased to $17.8 million for the first three months of 2025 from $17.3 million for the first three months of 2024, a 2.9% increase. The increase is primarily due to having additional franchise stores in the first three months of 2025 compared to the same period in 2024.
Current wording
Royalties increased to $36.4 million for the first six months of 2025 from $35.0 million for the first six months of 2024, a 4.0% increase. The increase is primarily from having additional franchise stores and from higher franchise retail sales in the first six months of 2025 compared to the same period in 2024.
Previous wording
Franchise fees of $0.3 million for the first three months of 2025 were comparable to $0.4 million for the first three months of 2024.
Current wording
Franchise fees of $0.7 million for the first six months of 2025 were comparable to $0.7 million for the first six months of 2024.
Previous wording
Leasing income increased to $2.3 million for the first quarter of 2025 compared to $0.8 million for the same period in 2024. The increase is primarily due to the settlement of outstanding customer litigation in the first quarter of 2025.
Current wording
Leasing income increased to $2.4 million for the first six months of 2025 compared to $1.4 million for the same period in 2024. The increase is primarily due to the settlement of outstanding customer litigation when compared to the same period last year.
Previous wording
Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”). Direct Franchisee Sales decreased to $0.9 million for the first quarter of 2025 compared to $1.1 million in the same period of 2024. The decrease is primarily due to a decrease in technology purchases by our franchisees.
Current wording
Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”). Direct Franchisee Sales decreased to $1.7 million for the first six months of 2025 compared to $2.0 million in the same period of 2024. The decrease is primarily due to a decrease in technology purchases by our franchisees.
Previous wording
Selling, general and administrative expenses increased 9.1% to $7.4 million in the first quarter of 2025 from $6.8 million in the same period of 2024. The increase was primarily due to a non-recurring expense related to third party software licenses for franchisees.
Current wording
Selling, general and administrative expenses increased 7.4% to $14.0 million in the first six months of 2025 compared to $13.1 million in the same period of 2024. The increase was primarily due to a non-recurring expense related to third party software licenses for franchisees and an increase in technology and compensation related expenses.
Previous wording
The provision for income taxes was calculated at an effective rate of 24.2% and 24.4% for the first quarter of 2025 and 2024, respectively.
Current wording
The provision for income taxes was calculated at an effective rate of 20.4% and 20.6% for the first six months of 2025 and 2024, respectively.
Previous wording
The franchising segment’s operating income for the first quarter of 2025 of $11.4 million was down from $11.5 million for the first quarter of 2024. The decrease in segment contribution was primarily due to an increase in selling, general and administrative expenses, partially offset by an increase in royalty revenue.
Current wording
The franchising segment’s operating income for the second quarter of 2025 increased to $13.0 million from $12.6 million for the second quarter of 2024. The increase in segment contribution was due to increased royalty revenues, partially offset by an increase in selling, general, and administrative expenses.
Previous wording
Other operating segment income for the first quarter of 2025 increased to $2.3 million from $0.7 million for the first quarter of 2024. The increase in segment contribution was due to the settlement of outstanding customer litigation in the Company’s equipment leasing business.
Current wording
The other operating segment income for the first six months of 2025 increased to $2.3 million from $1.2 million for the first six months of 2024. The increase in segment contribution was due to the settlement of outstanding customer litigation in the Company’s equipment leasing business.
Previous wording
Our primary sources of liquidity have historically been cash flow from operations and borrowings. The components of the consolidated condensed statements of operations that reduce our net income but do not affect our liquidity include non-cash items for depreciation and amortization and compensation expense related to stock options.
Current wording
Our primary sources of liquidity have historically been cash flows from operations and borrowings. The components of the consolidated condensed statements of operations that reduce our net income but do not affect our liquidity include non-cash items for depreciation and amortization and compensation expense related to stock options.
Previous wording
We ended the first quarter of 2025 with $22.0 million in cash, cash equivalents and restricted cash compared to $22.9 million in cash, cash equivalents and restricted cash at the end of the first quarter of 2024.
Current wording
We ended the second quarter of 2025 with $28.9 million in cash, cash equivalents and restricted cash compared to $29.4 million in cash, cash equivalents and restricted cash at the end of the second quarter of 2024.
Previous wording
Operating activities provided $15.1 million of cash during the first three months of 2025 compared to $13.4 million provided during the first three months of last year. The increase in cash provided by operating activities in the first three months of 2025 compared to 2024 was primarily due to an increase in net income and a decrease in non-cash working capital.
Current wording
Operating activities provided $24.1 million of cash during the first six months of 2025, compared to $21.6 million provided during the same period last year. The increase in cash provided by operating activities during the first six months of 2025 compared to 2024 was primarily due to an increase in net income and a decrease in non-cash working capital.
Previous wording
Investing activities used $0.1 million of cash during the first three months of 2025. The 2025 activities consisted of the purchase of property and equipment.
Current wording
Investing activities used $0.1 million of cash during the first six months of 2025, compared to $0.2 million used during the same period last year. The 2025 activities consisted of the purchase of property and equipment.
Previous wording
Financing activities used $5.4 million of cash during the first three months of 2025. Our most significant financing activities during the first three months of 2025 consisted of $3.2 million for the payment of dividends and $2.2 million to repurchase 7,383 shares of our common stock; partially offset by a de minimis amount of proceeds from exercise of stock options. (See Note 8 — “Shareholders’ Equity (Deficit)).
Current wording
Financing activities used $7.4 million of cash during the first six months of 2025. Our most significant financing activities during the first six months of 2025 consisted of $6.6 million for the payment of dividends and $2.4 million to repurchase 7,944 shares of our common stock; partially offset by $1.6 million of proceeds from exercise of stock options. (See Note 8 — “Shareholders’ Equity (Deficit).”
Previous wording
As of March 29, 2025, our debt facilities include a Line of Credit with CIBC Bank USA, a Note Agreement, and Shelf Agreement with Prudential. These facilities have been and will continue to be used for general corporate purposes, are secured by a lien against substantially all of our assets, contain customary financial conditions and covenants, and require maintenance of minimum levels of debt service coverage and maximum levels of leverage (all as defined within the agreements governing the facilities). As of March 29, 2025, we were in compliance with all of the financial covenants under the Line of Credit, the Note Agreement and the Shelf Agreement.
Current wording
Our debt facilities include a Line of Credit with CIBC Bank USA and a Note Agreement with Prudential. These facilities have been and will continue to be used for general corporate purposes, are secured by a lien against substantially all of our assets, contain customary financial conditions and covenants, and require maintenance of minimum levels of debt service coverage and maximum levels of leverage (all as defined within the agreements governing the facilities). As of June 28, 2025, we were in compliance with all of the financial covenants under the Line of Credit and the Note Agreement.
Previous wording
See Part I, Item 1, Note 9 – “Debt” for more information regarding the Line of Credit, Note Agreement and Shelf Agreement.
Current wording
See Part I, Item 1, Note 9 – “Debt” for more information regarding the Line of Credit and Note Agreement.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Franchise fees of $0.3 million for the second quarter of 2025 were comparable to $0.4 million for the second quarter of 2024.
Current report — wording carried from elsewhere
Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”). Direct Franchisee Sales decreased to $0.8 million for the second quarter of 2025 compared to $0.9 million in the same period of 2024. The decrease is due to a decrease in buying group and technology purchases by our franchisees.
Current report — wording carried from elsewhere
Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales. Cost of merchandise sold decreased to $1.7 million for the first six months of 2025 compared to $1.9 million in the same period of 2024. The decrease is due to a decrease in Direct Franchise Sales discussed above. Cost of merchandise sold as a percentage of Direct Franchisee Sales for the first six months of 2025 and 2024 was 94.8% and 93.3%, respectively.