Winmark Royalty Growth
Winmark Reports $10.4 Million Q2 Profit, Royalties Drive 7.6% Revenue Growth Amid Expansion
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Key Points
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Q2 2026 quarterly royalty revenue rose to $20.12 million, underscoring royalties as the primary driver of revenue growth for the quarter.
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First-half net income was $19.65 million, down from $20.56 million a year earlier, with the 2025 period benefiting from a $2.2 million one-time leasing income.
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There were 87 awarded locations awaiting opening, and more than 2,800 territories available for expansion.
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Royalties rose 8.1% year-to-date and 7.8% in Q2, while leasing income runoff was completed, resulting in no leasing revenue in 2026.
Winmark Corporation posted $10.4 million in net income for the second quarter of 2026, with revenue climbing 7.6% to $21.97 million, according to Grafa. Diluted earnings per share came in at $2.81, and the company declared a quarterly dividend of $1.02 per share.
Shares edged up roughly 1% after the earnings release. The gains were driven almost entirely by royalties, as Winmark's leasing business fully wound down in 2026, leaving royalties and franchise services as the sole revenue engines, TradingView reported.
Royalties Power Revenue Growth as Leasing Era Ends
Quarterly royalty revenue reached $20.12 million, up from $18.66 million a year earlier — a rise of nearly 7.8%, according to GuruFocus. Year-to-date royalties grew 8.1%. That growth now carries the entire business, since leasing income — which had been shrinking for years — hit zero in 2026.
The shift matters because leasing once added a meaningful chunk of revenue. In 2025, a one-time leasing payment of $2.2 million gave that year a boost. That bump is now gone, which is part of why first-half net income fell to $19.65 million from $20.56 million a year earlier, TradingView noted.
Higher Costs Weigh on Profit Despite Strong Sales
Even as revenue grew, profit dipped compared to last year. Winmark faced higher selling, general, and administrative costs. The company spent more on technology, marketing, and upgrades to its franchise network, Grafa reported. A higher tax provision also cut into the bottom line, Nasdaq noted.
Total net income of $10.39 million compared to $20.42 million in the prior-year quarter on a reported basis, though the prior year included unusual items that inflated the figure, according to TradingView. Stripping out the one-time leasing income, the year-over-year comparison looks far more modest.
Franchise Network Grows With 1,389 Stores and Room to Expand
Winmark's five resale brands — led by Plato's Closet and Once Upon A Child — now operate 1,389 franchised stores combined. The company said 87 locations have been awarded but are still waiting to open. More than 2,800 territories remain available for new franchisees to claim, according to Grafa.
Management pointed to the size of the available territory pipeline as a sign of long-term growth potential. The resale retail model — where stores buy and resell used goods — has proven durable, giving franchisees a low-cost business to run and customers a cheaper place to shop.
Technology and Advertising Investments Set the Stage Ahead
Winmark said it is putting money into advertising, technology, and innovation across its franchise network, Grafa reported. These investments drove some of the higher costs this quarter. But management framed them as essential for keeping the brand competitive and supporting franchisee growth long-term.
With leasing income now fully gone, the company's future is straightforward: grow royalties by growing the store count and lifting sales at existing locations. The 87 awarded-but-unopened stores offer a near-term boost, while the 2,800-plus open territories point to a much longer runway, according to GuruFocus.
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