Winmark Corp.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 14 October 2026: press release. The quarter’s numbers.

Key takeaways

Third-quarter net income rose: Net income for the quarter was $11,818,100, or $3.21 per diluted share, against $11,136,500 or $3.02 a year earlier. Basic EPS was $3.29 against $3.13. Source
Royalties grew across both periods: Royalties were $21,707,800 for the quarter against $20,911,300, and $61,087,600 for nine months against $57,348,000. Royalties are the largest revenue line reported. Source
Operating income higher in quarter: Income from operations was $15,785,800 against $14,923,200 for the quarter, and $41,788,500 against $41,580,800 for nine months. Source
Plato’s Closet fund launched this quarter: Management said the North American Advertising Fund for Plato’s Closet launched during the quarter. The prior release described investment made in advance of that launch. Source
Operating cash flow slightly lower: Net cash provided by operating activities was $35,548,400 for nine months against $36,373,800. Investing outflows were $2,549,100, including $2,272,400 of capitalized software. Source
Marketing underinvestment acknowledged by chair: Heffes said Winmark and its franchisees had underinvested over many years in the marketing needed to amplify the company's message across North America. Source

“For many years Winmark and our franchisees have underinvested in the marketing necessary to consistently amplify our message across North America.”
Brett D. Heffes, Chair and Chief Executive Officer

What changed from last quarter

New: North American Advertising Fund for Plato’s Closet launched during the quarter Source
New: Point-of-sale pilot delivered at one franchised location Source
New: North American Advertising Funds announced for Once Upon A Child and Play It Again Sports, with campaigns starting in 2027 Source

Quarterly and nine-month results

Third-quarter net income rose: Net income for the quarter was $11,818,100, or $3.21 per diluted share, against $11,136,500 or $3.02 a year earlier. Basic EPS was $3.29 against $3.13. Source
Nine-month earnings slightly lower: Nine-month net income was $31,467,700, or $8.51 diluted, against $31,694,200 or $8.61 a year earlier. The prior-year period included leasing settlement income. Source
Prior-year leasing settlement income: The 2025 year-to-date period included $2.2 million of leasing income from settling customer litigation. No leasing income appears in the 2026 statements. Source

Revenue lines and growth drivers

Revenue rose with advertising fund: Total revenue was $27,890,500 against $22,632,900. North American advertising fund revenue of $3,825,300 had no prior-year figure and is matched by an equal fund expense line. Source
Royalties grew across both periods: Royalties were $21,707,800 for the quarter against $20,911,300, and $61,087,600 for nine months against $57,348,000. Royalties are the largest revenue line reported. Source
Software and merchandise revenue higher: Software revenue was $497,100 against $93,100, and merchandise sales were $1,031,500 against $693,600. Franchise fees were $330,100 against $417,600. Source

“During the quarter, Winmark launched the North American Advertising Fund for Plato’s Closet and recently delivered a point-of-sale pilot at one of our franchised locations.”
Brett D. Heffes, Chair and Chief Executive Officer

Operating costs and income

Operating income higher in quarter: Income from operations was $15,785,800 against $14,923,200 for the quarter, and $41,788,500 against $41,580,800 for nine months. Source
SG&A rose in quarter and nine months: Selling, general and administrative expenses were $7,332,100 for the quarter against $7,046,400, and $22,708,200 for nine months against $21,070,500. Cost of merchandise sold was $947,300 against $663,300. Source
Interest and tax provision: Interest expense was $610,300 in both quarters. The tax provision was $3,599,500 against $3,486,700 for the quarter. Diluted weighted average shares were 3,685,668 against 3,693,154. Source

Advertising fund and franchise marketing

Plato’s Closet fund launched this quarter: Management said the North American Advertising Fund for Plato’s Closet launched during the quarter. The prior release described investment made in advance of that launch. Source
Point-of-sale pilot delivered recently: The company recently delivered a point-of-sale pilot at one franchised location. No further timing for the pilot was given. Source
Ad funds set for 2027 campaigns: North American Advertising Funds were announced for Once Upon A Child and Play It Again Sports, with campaigns starting in 2027. Source
Prior investment ahead of fund launch: The prior-quarter release said the company kept investing ahead of the Plato’s Closet fund launch and in technology and innovation across its network.

“We are taking the appropriate steps to expand awareness of our brands.”
Brett D. Heffes, Chair and Chief Executive Officer

Cash flow and shareholder returns

Operating cash flow slightly lower: Net cash provided by operating activities was $35,548,400 for nine months against $36,373,800. Investing outflows were $2,549,100, including $2,272,400 of capitalized software. Source
Share repurchases higher year to date: Repurchases of common stock were $8,091,600 for nine months against $2,418,700. The company repurchased $9.85 million under its program, and cash payments for repurchases in the quarter totaled $8.10 million. Source
Dividends paid higher; cash lower: Dividends paid were $10,751,400 for nine months against $9,991,400. Cash, cash equivalents and restricted cash ended the period at $28,114,200, against $39,874,800 a year earlier. Source

Balance sheet and debt

Cash higher; shareholders' deficit smaller: Cash and cash equivalents were $27,964,200 at September 26, 2026, against $10,295,700 at December 27, 2025. Total shareholders’ deficit was $37,397,300, against $53,682,400. Source
Debt balances unchanged: The line of credit or term loan was $30,000,000, and notes payable, net, was $29,974,700 against $29,961,000 at December 27, 2025. Source
Repurchases accrued at quarter end: $1.75 million of repurchases was included in accrued liabilities at September 26, 2026. Accrued liabilities totaled $6,612,500 on the balance sheet. Source

Strategy and management view

Marketing underinvestment acknowledged by chair: Heffes said Winmark and its franchisees had underinvested over many years in the marketing needed to amplify the company's message across North America. Source
Steps to expand brand awareness: Management said it is taking appropriate steps to expand awareness of the company's brands. Source
Capitalized software added this year: Capitalized software was $2,272,400 at September 26, 2026, against nil at December 27, 2025. The prior release tied investment to technology and innovation initiatives. Source

Coming up, as management said on 14 October 2026

Ad funds for two brands in 2027: Campaigns for Once Upon A Child and Play It Again Sports are set to start in 2027. Source

Figures management reported

Figure	Reported
Franchises in operation Source	1,398 at September 26, 2026 (1,389 at June 27, 2026)
Franchises awarded, not open Source	79 (87 at June 27, 2026)
Inventories Source	$789,200 at September 26, 2026 ($362,500 at December 27, 2025)

Earlier plans management reported on

Met: Management said the fund launched during the quarter. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

763/520-8500

WINMARK CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

Minneapolis, MN (October 14, 2026) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 26, 2026 of $11,818,100 or $3.21 per share diluted compared to net income of $11,136,500 or $3.02 per share diluted in 2025. For the nine months ended September 26, 2026, net income was $31,467,700 or $8.51 per share diluted compared to net income of $31,694,200 or $8.61 per share diluted for the same period last year. 2025 year-to-date results included $2.2 million of leasing income from the settlement of customer litigation.

“During the quarter, Winmark launched the North American Advertising Fund for Plato’s Closet and recently delivered a point-of-sale pilot at one of our franchised locations. Additionally, we have announced North American Advertising Funds for our Once Upon A Child and Play It Again Sports brands for campaigns starting in 2027,” stated Brett D. Heffes, Chair and Chief Executive Officer. “For many years Winmark and our franchisees have underinvested in the marketing necessary to consistently amplify our message across North America. We are taking the appropriate steps to expand awareness of our brands.”

Winmark - the Resale 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 September 26, 2026, there were 1,398 franchises in operation and over 2,800 available territories. An additional 79 franchises have been awarded but are not open.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual results may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

WINMARK CORPORATION

CONDENSED BALANCE SHEETS

	September 26, 2026	December 27, 2025
ASSETS
Current Assets:
Cash and cash equivalents	$27,964,200	$10,295,700
Restricted cash	150,000	165,000
Receivables, net	2,253,300	1,483,500
Income tax receivable	-	463,600
Inventories	789,200	362,500
Prepaid expenses	1,447,200	1,325,700
Total current assets	32,603,900	14,096,000
Property and equipment, net	1,214,400	1,219,000
Operating lease right of use asset	1,482,300	1,761,500
Intangible assets, net	2,020,800	2,286,300
Capitalized software	2,272,400	-
Goodwill	607,500	607,500
Other assets	528,500	506,400
Deferred income taxes	4,304,900	4,407,400
	$45,034,700	$24,884,100
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$1,824,800	$1,673,900
Income tax payable	100,200	-
Accrued liabilities	6,612,500	2,324,800
Deferred revenue	1,666,900	1,667,300
Total current liabilities	10,204,400	5,666,000
Long-Term Liabilities:
Line of credit/Term loan	30,000,000	30,000,000
Notes payable, net	29,974,700	29,961,000
Deferred revenue	8,447,400	8,350,100
Operating lease liabilities	1,869,500	2,414,200
Other liabilities	1,936,000	2,175,200
Total long-term liabilities	72,227,600	72,900,500
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized, 3,559,195 and 3,571,861 shares issued and outstanding	15,181,700	19,612,800
Retained earnings (accumulated deficit)	(52,579,000)	(73,295,200)
Total shareholders’ equity (deficit)	(37,397,300)	(53,682,400)
	$45,034,700	$24,884,100

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended		Nine Months Ended
	September 26, 2026	September 27, 2025	September 26, 2026	September 27, 2025
Revenue:
Royalties	$21,707,800	$20,911,300	$61,087,600	$57,348,000
North American advertising fund	3,825,300	-	3,825,300	-
Software	497,100	93,100	678,900	278,900
Franchise fees	330,100	417,600	1,092,500	1,088,100
Merchandise sales	1,031,500	693,600	2,544,700	2,438,500
Leasing income	-	46,600	-	2,401,100
Other	498,700	470,700	1,477,200	1,414,800
Total revenue	27,890,500	22,632,900	70,706,200	64,969,400
North American advertising fund expense	3,825,300	-	3,825,300	-
Cost of merchandise sold	947,300	663,300	2,384,200	2,318,100
Selling, general and administrative expenses	7,332,100	7,046,400	22,708,200	21,070,500
Income from operations	15,785,800	14,923,200	41,788,500	41,580,800
Interest expense	(610,300)	(610,300)	(1,834,000)	(1,833,900)
Interest and other income	242,100	310,300	516,500	714,800
Income before income taxes	15,417,600	14,623,200	40,471,000	40,461,700
Provision for income taxes	(3,599,500)	(3,486,700)	(9,003,300)	(8,767,500)
Net income	$11,818,100	$11,136,500	$31,467,700	$31,694,200
Earnings per share - basic	$3.29	$3.13	$8.79	$8.94
Earnings per share - diluted	$3.21	$3.02	$8.51	$8.61
Weighted average shares outstanding - basic	3,588,328	3,553,211	3,581,906	3,543,766
Weighted average shares outstanding - diluted	3,685,668	3,693,154	3,697,251	3,679,745

Winmark Corporation

CONDENSED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 26, 2026	September 27, 2025
OPERATING ACTIVITIES:
Net income	$31,467,700	$31,694,200
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	281,300	295,500
Amortization of intangible assets	265,500	265,500
Compensation expense related to stock options	1,917,200	1,666,900
Deferred income taxes	102,600	160,100
Operating lease right of use asset amortization	279,200	252,700
Tax benefits on exercised stock options	898,800	1,091,900
Change in operating assets and liabilities:
Receivables	(769,800)	(316,500)
Income tax receivable/payable	(335,000)	(998,500)
Inventories	(426,700)	113,900
Prepaid expenses	(121,600)	(44,500)
Other assets	(22,100)	(5,000)
Accounts payable	150,900	(188,800)
Accrued and other liabilities	1,763,500	2,054,900
Deferred revenue	96,900	331,500
Net cash provided by operating activities	35,548,400	36,373,800
INVESTING ACTIVITIES:
Capitalized software	(2,272,400)	-
Purchase of property and equipment	(276,700)	(172,700)
Net cash used for investing activities	(2,549,100)	(172,700)
FINANCING ACTIVITIES:
Repurchases of common stock	(8,091,600)	(2,418,700)
Proceeds from exercises of stock options	3,497,200	3,754,000
Dividends paid	(10,751,400)	(9,991,400)
Net cash used for financing activities	(15,345,800)	(8,656,100)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	17,653,500	27,545,000
Cash, cash equivalents and restricted cash, beginning of period	10,460,700	12,329,800
Cash, cash equivalents and restricted cash, end of period	$28,114,200	$39,874,800
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$1,802,900	$1,815,500
Cash paid for income taxes	$8,210,800	$8,514,100
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES
During the nine months ended September 26, 2026, the Company repurchased $9.85 million of its common stock under its share repurchase program. At September 26, 2026, $1.75 million of such repurchases was included in Accrued liabilities within the Condensed Balance Sheets. Cash payments for repurchased shares during the quarter totaled $8.10 million.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above:
	Nine Months Ended
	September 26, 2026	September 27, 2025
Cash and cash equivalents	$27,964,200	$39,734,800
Restricted cash	150,000	140,000
Total cash, cash equivalents and restricted cash	$28,114,200	$39,874,800

Contacts
Anthony D. Ishaug