Winmark's Resilience: Navigating Market Fluctuations with a Multi-Brand Strategy

Winmark Corporation (WINA), a nationally recognized franchisor focused on sustainability and small business formation, recently 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.

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.

Winmark'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 the circular economy.



In conclusion, Winmark's strategic decision to exit the leasing business and focus on its core competency in resale franchising has had both near-term and long-term impacts on its financial performance and growth prospects. The company's multi-brand strategy across different resale categories contributes to its diversification and resilience in the face of market fluctuations. With a strong underlying demand for its franchise business model and over 2,800 available territories for future growth, Winmark is well-positioned to capitalize on the growing consumer preference for sustainable retail and secondhand goods.