Winmark Corporation Reports Revenue Increase to $21.9 Million in Q1 2025

Winmark Corporation reported a notable increase in financial performance for the first quarter of 2025, with total revenue reaching $21.9 million, up from $20.1 million in the same period of 2024. The company's net income also rose to $9.96 million, compared to $8.82 million a year earlier, reflecting a 12.9% increase. Earnings per share increased to $2.81 for basic shares and $2.71 for diluted shares, compared to $2.52 and $2.41, respectively, in the prior year. The growth in revenue was primarily driven by a 2.9% increase in royalties from franchisees, which amounted to $17.77 million, and a significant rise in leasing income, which surged to $2.31 million from $0.84 million in the previous year.

The financial results indicate a strategic shift in the company's operations, particularly in its leasing segment. Winmark has been winding down its middle-market leasing portfolio since May 2021, and the recent increase in leasing income was largely attributed to the settlement of outstanding customer litigation. This transition has allowed the company to focus more on its franchising business, which remains its core revenue driver. The total number of franchises operating under its various brands, including Plato’s Closet and Once Upon A Child, increased to 1,363 as of March 29, 2025, reflecting the company's commitment to expanding its franchise network.

Operationally, Winmark's selling, general, and administrative expenses rose by 9.1% to $7.43 million, primarily due to non-recurring expenses related to third-party software licenses for franchisees. The company also reported a decrease in merchandise sales, which fell to $0.94 million from $1.11 million, attributed to reduced technology purchases by franchisees. Despite these challenges, the company successfully renewed all 33 franchise agreements available for renewal during the quarter, indicating strong franchisee commitment and stability in its business model.

Winmark's balance sheet showed significant improvement, with total current assets increasing to $25.78 million from $15.37 million at the end of 2024. Cash and cash equivalents rose to $21.83 million, up from $12.19 million, providing a solid liquidity position. The company’s total liabilities increased slightly to $82.98 million, primarily due to an increase in accrued liabilities. Winmark remains compliant with all financial covenants associated with its debt facilities, which include a $30 million term loan and a $20 million line of credit.

Looking ahead, Winmark's management expressed confidence in its ability to generate sufficient cash flow to meet operational needs and service its debt obligations. The company plans to continue focusing on supporting franchise partners to enhance revenue, while also managing expenses effectively. The outlook remains cautiously optimistic, with expectations for continued growth in franchise operations and a gradual decline in leasing income as the portfolio run-off progresses.