Winmark Corporation (WINA) — Agentic Tribune

FORWARD LOOKING STATEMENTS OR INFORMATION

The statements contained in this Form 10-K Item 1 “Business”, Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Item 8 “Financial Statements and Supplemental Data” that are not strictly historical fact, including without limitation, the Company’s statements relating to growth opportunities, its ability to open new franchises, its ability to manage costs in the future, the number of franchises it believes will open, its future cash requirements, its future effective tax rate and its belief that it will have adequate capital and reserves to meet its current and contingent obligations and operating needs, as well as its disclosures regarding market rate risk, and other statements in which we use words or phrases such as “will,” “may,” “should,” “could,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “intends,” and similar words are all forward looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act. Such statements are based on management’s current expectations as of the date of this report but involve risks, uncertainties and other factors which may cause actual results to differ materially from those contemplated by such forward looking statements. Investors are cautioned to consider these forward looking statements in light of important factors which may result in material variations between results contemplated by such forward looking statements and actual results and conditions including, but not limited to, the risk factors discussed in Section 1A of this report. You should not place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.

PART I

ITEM 1: BUSINESS

Background

Winmark – the Resale Company® (Winmark Corporation, Winmark or the 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 27, 2025, there were 1,378 franchises in operation in the United States and Canada and over 2,800 available territories. Our mission is to provide Resale for Everyone®.

Each of our resale brands emphasizes consumer value by offering high-quality used merchandise at substantial savings from the price of new merchandise and by purchasing customers’ used goods that have been outgrown or are no longer used. Our concepts also offer a limited amount of new merchandise to customers. For over 35 years, we have offered a sustainable solution for consumers to recycle their gently used clothing, toys, sporting goods and musical instruments. We estimate that, since 2010, stores in our resale brands have extended the lives of over 2.1 billion items. We continue to enhance our franchise model and provide our franchisees with the technology, tools and training to profitably expand their operations and evolve towards being a multi-channel retailer.

Our significant assets are located within the United States, and we generate the majority of revenues from United States operations. Revenues from Canadian franchisees in 2025, 2024 and 2023 were approximately $7.8 million, $7.3 million and $6.8 million, respectively. For additional financial information, please see Item 8 — Financial Statements and Supplementary Data. We were incorporated in Minnesota in 1988.

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Operations

We currently franchise five brands:

Plato’s Closet

We began franchising the Plato’s Closet brand in 1999. Plato’s Closet franchisees buy and sell gently used clothing and accessories geared toward the teenage and young adult market. Customers have the opportunity to sell their used items to Plato’s Closet stores and to purchase quality used clothing and accessories at prices lower than new merchandise.

Once Upon A Child

We began franchising the Once Upon A Child brand in 1993. Once Upon A Child franchisees buy and sell gently used and, to a lesser extent, new children’s clothing, toys, furniture, equipment and accessories. This brand primarily targets parents of children ages infant to 12 years. These customers have the opportunity to sell their used children’s items to a Once Upon A Child store when outgrown and to purchase quality used children’s clothing, toys, furniture and equipment at prices lower than new merchandise.

Play It Again Sports

We began franchising the Play It Again Sports brand in 1988. Play It Again Sports franchisees buy, sell and trade gently used and new sporting goods, equipment and accessories for a variety of athletic activities including team sports (baseball/softball, hockey, football, lacrosse, soccer), fitness, ski/snowboard and golf among others. The stores offer a flexible mix of merchandise that is adjusted to adapt to seasonal and regional differences.

Style Encore

We began franchising the Style Encore brand in 2013. Style Encore franchisees buy and sell gently used women’s (and to a lesser extent, men’s) apparel, shoes and accessories. Customers have the opportunity to sell their used items to Style Encore stores and to purchase quality used clothing, shoes and accessories at prices lower than new merchandise.

Music Go Round

We began franchising the Music Go Round brand in 1994. Music Go Round franchisees buy, sell and trade gently used and, to a lesser extent, new musical instruments, speakers, amplifiers, music-related electronics and related accessories.

The following table presents system-wide sales, which we define as estimated revenues generated by all franchise locations through both in-store and e-commerce sales, for each of the past three years.


		System-Wide Sales
		(in millions)
		2023			2024			2025
Plato’s Closet		$	647.6		$	653.0		$	675.5
Once Upon A Child			504.8			517.9			543.4
Play It Again Sports			328.2			331.9			350.0
Style Encore			59.2			59.1			61.7

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Financial statements

data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-04-15 (period ending 2026-03-28).

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reviewed on a consolidated basis. The Company’s internal management reporting is the basis for the information disclosed for its operating segments. The following tables summarize financial information by segment and provide a reconciliation of segment contribution to income from operations:


		Three Months Ended
		March 28, 2026			March 29, 2025
Revenue:
Franchising		$	20,849,700		$	19,611,900
Other			—			2,307,800
Total revenue		$	20,849,700		$	21,919,700

Franchising segment operating expenses:
Merchandise COGS		$	618,500		$	888,300
Selling, general and administrative expenses			7,869,600			7,351,300
Total franchising segment expenses		$	8,488,100		$	8,239,600

Reconciliation to operating income:
Franchising segment income from operations		$	12,361,600		$	11,372,300
Other operating segment income from operations			—			2,224,300
Total income from operations		$	12,361,600		$	13,596,600

Depreciation and amortization:
Franchising		$	183,700		$	185,700
Other			—			—
Total depreciation and amortization		$	183,700		$	185,700

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Winmark - the Resale Company is focused on sustainability and small business formation. As of March 28, 2026, we had 1,383 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.

The financial criteria that management closely tracks to evaluate current business operations and future prospects include royalties and selling, general and administrative expenses.

Our most significant source of revenue is royalties received from our franchisees. During the first three months of 2026, our royalties increased $1.5 million or 8.4% compared to the first three months of 2025.

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 2026, selling, general and administrative expenses increased $0.4 million, or 5.8% compared to the first three months of 2025.

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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 28, 2026:


										AVAILABLE
		TOTAL						TOTAL		FOR		COMPLETED
		12/27/2025		OPENED		CLOSED		3/28/2026		RENEWAL		RENEWALS		% RENEWED
Plato’s Closet		526		3		(1)		528		8		8		100	%
Once Upon A Child		441		6		(3)		444		9		9		100	%
Play It Again Sports		309		1		(1)		309		4		4		100	%
Style Encore		67		—		(1)		66		1		1		100	%
Music Go Round		35		1		—		36		1		1		100	%
Total Franchised Stores		1,378		11		(6)		1,383		23		23		100	%

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 2026, we renewed 23 of the 23 franchise agreements available for renewal.

Our ability to grow our operating income is dependent on our ability to: (i) effectively support our franchise partners so that they produce higher revenues, (ii) open new franchises, and (iii) control our selling, general and administrative expenses.

Results of Operations

The following table sets forth selected information from our Consolidated Condensed Statements of Operations expressed as a percentage of total revenue:


		Three Months Ended
		March 28, 2026		March 29, 2025

Revenue:
Royalties		92.4	%	81.1	%
Leasing income		—		10.5
Merchandise sales		3.1		4.3
Franchise fees		1.7		1.5
Other		2.8		2.6
Total revenue		100.0		100.0

Cost of merchandise sold		(3.0)		(4.1)
Selling, general and administrative expenses		(37.7)		(33.9)
Income from operations		59.3		62.0
Interest expense		(3.0)		(2.8)
Interest and other income		0.6		0.7
Income before income taxes		56.9		59.9
Provision for income taxes		(12.5)		(14.5)
Net income		44.4	%	45.4	%

Comparison of Three Months Ended March 28, 2026 to Three Months Ended March 29, 2025

Revenue

Revenues for the quarter ended March 28, 2026 totaled $20.8 million compared to $21.9 million for the comparable period in 2025.

Royalties and Franchise Fees

Royalties increased to $19.3 million for the first three months of 2026 from $17.8 million for the first three months of 2025, an 8.4% increase. The increase is primarily from higher franchise retail sales and, to a lesser extent, having additional franchise stores in the first three months of 2026 compared to the same period in 2025.

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Franchise fees of $0.3 million for the first three months of 2026 were comparable to $0.3 million for the first three months of 2025.

Leasing Income

Leasing income decreased to $0.0 million for the first quarter of 2026 compared to $2.3 million for the same period in 2025. Leasing income in the first quarter of 2025 reflected the settlement of customer litigation. As of December 27, 2025, the previously announced run-off of the leasing portfolio was completed and we no longer have any leasing customers or leased assets.

Merchandise Sales

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 $0.7 million for the first quarter of 2026 compared to $0.9 million in the same period of 2025. The decrease is due to a decrease in technology and buying group purchases by our franchisees.

Cost of Merchandise Sold

Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales. Cost of merchandise sold decreased to $0.6 million for the first quarter of 2026 compared to $0.9 million in the same period of 2025. The decrease was due to the decrease in Direct Franchisee Sales discussed above. Cost of merchandise sold as a percentage of Direct Franchisee Sales for the first quarter of 2026 and 2025 was 94.6% and 94.4%, respectively.

Selling, General and Administrative

Selling, general and administrative expenses increased 5.8% to $7.9 million in the first quarter of 2026 from $7.4 million in the same period of 2025. The increase was primarily due to an increase in compensation related expenses.

Income Taxes

The provision for income taxes was calculated at an effective rate of 22.0% and 24.2% for the first quarter of 2026 and 2025, respectively. The decrease is due to tax benefits on the exercise of non-qualified stock options during the first quarter of 2026.

Segment Comparison of Three Months Ended March 28, 2026 to Three Months Ended March 29, 2025

Franchising Segment Operating Income

The franchising segment’s operating income for the first quarter of 2026 of $12.4 million was up from $11.4 million for the first quarter of 2025. The increase in segment contribution was due to an increase in royalty revenue, partially offset by an increase in selling, general and administrative expenses.

Other Operating Segment Income

The other operating segment income for the first quarter of 2026 was $0.0 million compared to $2.3 million in the first quarter of 2025. The segment contribution in the first quarter of 2025 reflected the settlement of customer litigation.

Liquidity and Capital Resources

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.

We ended the first quarter of 2026 with $19.9 million in cash, cash equivalents and restricted cash compared to $22.0 million in cash, cash equivalents and restricted cash at the end of the first quarter of 2025.

Operating activities provided $11.9 million of cash during the first three months of 2026 compared to $15.1 million provided during the first three months of last year. The decrease in cash provided by operating activities in the first three months of 2026 compared to 2025 was primarily due to an increase in non-cash working capital and a decrease in net income.

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Holder	Type	ETF	MF	Position ($)	% of holder	Δ % of holder	Holder AUM

Next expected filings

~2026-07-14 10-Q expected by 2026-08-05 (in 5 days)
~2026-10-14 10-Q expected by 2026-11-05 (in 97 days)
~2027-02-24 10-K expected by 2027-03-02 (in 230 days)
~2027-04-14 10-Q expected by 2027-05-06 (in 279 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-05-06 8-K Officer/Director Change; Financial Statements and Exhibits
2026-04-15 10-Q Quarterly Report
2026-04-15 8-K Earnings Release; Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2026-03-16 8-K Other Events
2026-02-25 10-K Annual Report
2026-02-18 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
2026-01-28 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2025-10-15 10-Q Quarterly Report
2025-10-15 8-K Earnings Release; Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2025-08-08 8-K Officer/Director Change; Financial Statements and Exhibits
2025-07-15 10-Q Quarterly Report
2025-07-15 8-K Earnings Release; Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2025-04-16 10-Q Quarterly Report
2025-04-16 8-K Earnings Release; Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
2025-02-26 10-K Annual Report

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