Winmark Profit Slips as Franchisor Absorbs Ad Fund, Tech Costs
Winmark's second-quarter net income fell to $10.4 million, or $2.81 a share, the second straight quarterly decline as the franchisor spent ahead of a new marketing fund launch.
Winmark (WINA) reported second-quarter net income of $10,394,800, or $2.81 a diluted share, down from $10,601,200, or $2.89 a share, a year earlier. The franchisor of resale concepts including Plato's Closet posted its second consecutive quarter of year-over-year earnings declines, a reversal from the growth pattern that ran through all of fiscal 2025.
The prior-year comparisons carry a complication. Winmark's 2025 first half included $2.2 million of one-time leasing income tied to a litigation settlement, a boost that is not repeating in 2026. First-quarter net income this year fell to $9,254,700, or $2.50 a share, from $9,956,400, or $2.71 a share, in a 2025 quarter that also benefited from that settlement income. Six-month net income came in at $19,649,600, or $5.31 a share, versus $20,557,600, or $5.60 a share, in the year-earlier period.
The softening followed a full 2025 fiscal year in which results still trended upward: third-quarter net income was roughly flat at $11,136,500 versus $11,120,700 a year earlier, and full-year 2025 net income rose to $41,654,100, or $11.30 a share, from $39,954,200, or $10.89 a share, in 2024. The turn into YoY declines is confined to the first two quarters of 2026.
Winmark's underlying franchise network kept expanding through the downturn in earnings. Franchise units climbed each quarter, from 1,377 in September 2025 to 1,389 by June 2026, and the awarded-but-not-yet-open pipeline swelled from 77 to 87 over the same span, its largest reading in the five-quarter series. Winmark's chief executive attributed the earnings pressure to costs incurred in advance of the company's planned Plato's Closet North American Ad Fund launch, alongside continued investment in point-of-sale technology, a shift from first-quarter commentary that had framed those same initiatives as upcoming rather than already weighing on results.
The balance sheet showed a new capitalized-software line of $2,210,300 as of June 27, 2026, versus zero at year-end 2025 and no such disclosure in the first quarter, consistent with the technology-investment costs cited by management. Cash and cash equivalents rebuilt to $25,834,500 from $10,295,700 at the end of 2025 and $19,828,300 at the end of the first quarter, recovering after a special dividend drew cash down from $39,734,800 in September 2025.
Winmark raised its regular quarterly dividend to $1.02 a share beginning with the payment made June 1, 2026, up 6.25% from the $0.96 a share paid in December 2025 and March 2026, and reiterated the higher payout for the dividend paid September 1, 2026. The increase followed a one-time special dividend of $10.00 a share, roughly $35.6 million in total, paid December 1, 2025, a disclosure that did not appear in the subsequent first- or second-quarter releases.