Winmark Corporation (WINA): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Winmark Corporation (WINA)'s business segments, and the BCG Matrix is defintely the right tool to map their asset-light, high-margin model against the booming resale market. Honestly, the picture is sharp: you've got powerhouse brands driving growth, supported by a Cash Cow engine generating a 55% net profit margin and 91.4% royalty revenue, while the legacy leasing business is nearly done, bringing in just $46,600 in Q3 2025. Still, we need to watch the smaller brands needing investment to capture more of that high-growth circular economy. Let's break down exactly where Winmark Corporation (WINA) is placing its chips across its portfolio right now.

Background of Winmark Corporation (WINA)

You're looking at Winmark Corporation (WINA), which operates as a franchisor for small businesses across the United States and Canada. Founded way back in 1988, the company is headquartered in Minneapolis, Minnesota, and its core business is franchising retail store concepts that buy, sell, and trade in merchandise. Winmark Corporation champions an asset-light, high-margin franchise model, focusing on sustainability and the formation of small businesses. This approach means the corporation primarily collects royalties rather than managing day-to-day store operations itself.

Winmark Corporation's portfolio is built around several distinct, established resale brands, each targeting a specific customer segment. These include Plato's Closet, which focuses on trendy apparel for teens and young adults, and Once Upon a Child, which serves families needing children's clothing and maternity wear. Also in the mix are Play It Again Sports for used sporting equipment, Style Encore for women's resale fashion, and Music Go Round for musical instruments and related electronics. As of the end of the first six months of 2025, the company had grown its network to 1,371 franchises operating under these brands.

The financial performance in 2025 clearly shows the strength of this royalty-based structure. For the first three quarters of 2025, Winmark Corporation reported total revenue of $57.35 million, which was an increase of 5.1% over the same period in 2024. Net income for those three quarters hit $31.69 million, resulting in a very strong profit margin of 55%. To give you a sense of the scale as of late 2025, the company's gross margin was reported at 96.29%, with an operating margin of 64.30%. The company's market capitalization, as of December 1, 2025, stood at approximately $1.54 billion, with 3.56 million shares outstanding.

Looking at the most recent twelve-month figures available, Winmark Corporation generated revenue of $84.52 million and earned profits of $41.28 million, translating to earnings per share of $11.21. The company has also shown a commitment to returning capital, announcing a special dividend of $10 per share in October 2025. This focus on franchising, coupled with the consumer trend toward value and sustainable retail, defines the current operational landscape for Winmark Corporation.

Winmark Corporation (WINA) - BCG Matrix: Stars

The Stars quadrant represents Winmark Corporation's business units operating in high-growth markets where they maintain a strong market share. These units require significant investment to maintain their leadership position and fuel further expansion.

The Plato's Closet and Once Upon A Child brands are positioned here, capitalizing on the robust consumer demand for value-oriented, sustainable retail. Royalty revenues, which are the primary indicator of the underlying business health for these brands, demonstrated significant momentum, showing a year-over-year increase of approximately 7.2% in the third quarter of 2025, reaching $20,911,300 for the quarter ended September 27, 2025.

This performance is set against the backdrop of a high-growth secondhand apparel market. While the specific market expansion multiple is not confirmed for 2025, the resale sector's dynamism supports the need for continued investment in these market leaders. The company's commitment to growth is evident in its franchise development pipeline.

New franchise openings remain a focus for sustaining market share. As of the third quarter end on September 27, 2025, Winmark Corporation had an additional 77 franchises awarded but not yet open, representing future royalty streams waiting to come online. This pipeline supports the high-growth market share strategy.

The financial results from the core franchising segment confirm its strength, even as the company manages higher operating expenses. For the second quarter of 2025, the core franchising segment's operating income increased to $13.0 million, up from $12.6 million in the second quarter of 2024. This segment's contribution to the overall financial picture is critical for funding the growth required of a Star.

Here is a look at the key financial metrics supporting the Star positioning as of the latest reported periods:

The investment required to keep these brands dominant is reflected in the increase in Selling, General and Administrative expenses, which rose to $7,046,400 in Q3 2025 from $5,919,800 in Q3 2024. This spending is the necessary fuel for maintaining leadership.

Key operational indicators for the Star brands include:

• Franchises in operation reached 1,377 as of September 27, 2025.
• Net income for the first nine months of 2025 was $31,694,200.
• Franchise renewal success was high, with 60 out of 61 agreements renewed in the first half of 2025.
• The company added a net of 21 stores in the first six months of 2025.

Maintaining this high market share requires continued investment in promotion and placement to ensure these brands mature into Cash Cows when their respective markets eventually slow their growth rate.

Winmark Corporation (WINA) - BCG Matrix: Cash Cows

The Cash Cow quadrant for Winmark Corporation is defined by its highly profitable, mature business model centered on recurring franchise royalties.

Recurring royalty revenue stream is the core driver of this stability, accounting for 91.4% of Q2 2025 revenue.

The asset-light business model supports exceptional profitability, yielding an exceptional net profit margin of 55% for the first nine months of 2025. For the nine months ended September 27, 2025, net income was $31,694,200, or $8.61 per diluted share.

Strong franchisee loyalty underpins this cash flow, evidenced by the company renewing 60 out of 61 franchise agreements available for renewal in the first six months of 2025. Historically, Winmark Corporation has renewed over 99% of franchise agreements up for renewal over the past three years.

This robust cash generation supported a significant capital return in late 2025, with the Board approving a $10.00 per share special dividend, totaling approximately $35.6 million, payable on December 1, 2025. The quarterly dividend approved was $0.96 per share.

You can see the key metrics supporting this Cash Cow positioning below:

• Recurring royalty revenue as a percentage of Q2 2025 Total Revenue: 91.4%.
• Net Income for the nine months ended September 27, 2025: $31,694,200.
• Franchise agreements renewed in the first six months of 2025: 60 out of 61.
• Special Dividend per share approved in late 2025: $10.00.

The operational scale as of the third quarter end provides context for this cash generation:

The Q3 2025 performance highlights the stability of the core business, with net income for the quarter at $11,136,500, or $3.02 per diluted share.

To maintain this position, investments focus on efficiency, not aggressive market expansion, which is reflected in the low capital intensity of the model. The company's asset base reflects this, with Property and equipment, net, at $1,296,600 as of September 27, 2025.

Finance: review the cash flow impact of the $35.6 million special dividend against Q4 2025 projected royalty receipts by next Tuesday.

Winmark Corporation (WINA) - BCG Matrix: Dogs

You're looking at the legacy equipment leasing/finance segment of Winmark Corporation (WINA), which definitely fits the profile of a BCG Dog. This unit has been in a planned run-off phase since the decision made in May 2021 to stop soliciting new leasing customers and maximize shareholder value by winding down the portfolio. The focus now is entirely on the core franchising business.

The minimal financial contribution confirms this unit is nearing its end. For the third quarter of 2025, the leasing income registered at only \$46,600. This extremely low figure strongly suggests the segment is essentially complete, as management noted the run-off was already "substantially complete" by the first quarter of 2025.

Here's a quick look at the recent, highly diminished leasing income activity:

This segment operates in what is now a low-growth or actively declining market for Winmark Corporation (WINA), given the strategy to exit it. It has a low market share relative to the dominant franchising operations. Honestly, any remaining activity consumes management focus without generating significant, sustainable return, which is the classic trap for a Dog. The company's Chief Operating Decision Maker (CODM) primarily reviews revenue and income from operations for the franchising segment when allocating resources.

The income stream from this unit is highly volatile because the remaining activity is non-routine. For instance, the first quarter of 2025 results included a one-time boost of \$2.2 million from the settlement of outstanding customer litigation. Without that non-recurring event, the Q1 2025 leasing income net of expense would have been just \$0.1 million (or $\text{\$2.3 million} - \text{\$2.2 million}$). Management anticipates leasing income net of expense will be lower in the remaining quarters of 2025 compared to the last two quarters of 2024.

The characteristics of this unit align perfectly with the Dog quadrant:

• Low market share in its current state.
• Operating in a declining phase due to the planned run-off.
• Frequently breaks even or consumes minimal cash, but ties up residual resources.
• Prime candidate for divestiture or, in this case, orderly termination.

Finance: review the final cash impact of the leasing portfolio run-off in the Q4 2025 filing by February 15, 2026.

Winmark Corporation (WINA) - BCG Matrix: Question Marks

These business units are operating in markets with high potential, but Winmark Corporation has not yet secured a dominant position. Style Encore and Music Go Round fit this profile, representing smaller franchise brands with a comparatively smaller footprint within the broader, high-growth resale market.

The market context is supportive of growth; the U.S. secondhand market is estimated to be worth $56 billion as of 2025, marking a 14.3% increase from 2024. Globally, the secondhand product market size is projected to reach $475.19 billion in 2025, growing at a 12.0% CAGR. Furthermore, secondhand clothing sales are projected to surge 11% in 2025, and secondhand apparel is expected to account for 10% of the global apparel market by 2025. This environment provides the high-growth backdrop necessary for Question Marks to potentially mature into Stars.

As of September 27, 2025, Winmark Corporation had 1,377 franchises in operation. The smaller brands, Style Encore and Music Go Round, require significant capital deployment to increase their relative market share against the core three brands. This necessary support is reflected in the company's operating expenses. For instance, Selling, General, and Administrative (SG&A) expenses rose by 9.1% to $7.43 million in the first quarter ended March 29, 2025. The scenario suggests that the company's SG&A expenses were up 19% in Q3 2025, which would be funding this required investment in technology and marketing for these growth areas.

These Question Marks consume cash to fuel expansion and market penetration. The strategy here is clear: invest heavily to capture market share quickly, or risk them becoming Dogs. The investment is targeted at technology and marketing to help these smaller brands compete effectively.

The relative scale of the brands, based on 2024 revenue contribution, illustrates the dominance of the core brands versus the smaller units needing investment:

The required support for these growth areas involves bolstering franchisee capabilities. The focus areas for investment to gain relative market share include:

• Continued investment in technology platforms.
• Increased spending on targeted marketing campaigns.
• Supporting new store openings, as 77 additional franchises were awarded but not yet open as of September 27, 2025.

These units are currently low market share entities in high-growth segments, demanding cash now for a potential future Star position.