Winmark Corporation | research notes

Winmark Corporation: A Leader in Retail Franchising

Winmark Corporation is a leading franchisor and retailer of branded consumer products in the United States and Canada. Founded in 1983, the company has grown into a multi-billion dollar enterprise with a portfolio of 13 retail brands.

Brands and Concepts

Winmark's brands cater to a wide range of customers and offer a variety of products at different price points. These brands include:

• Plato's Closet: Pre-owned apparel, shoes, and accessories for teens and young adults
• Once Upon a Child: Used children's clothing, shoes, toys, and gear
• Goodwill: A non-profit retail chain that sells used and donated items
• Style Encore: Gently used women's clothing, accessories, and shoes
• Music Go Round: Used and new musical instruments, gear, and lessons
• Savers: A thrift store chain that offers a wide selection of used items at low prices
• Trade Home: Used furniture, home décor, and appliances

Franchise Model

Winmark operates primarily through a franchise model. The company provides its franchisees with a comprehensive support system, including:

• Site selection and store design
• Training and ongoing support
• Marketing and advertising campaigns
• Inventory procurement and distribution
• Financial and operational guidance

Financial Performance

Winmark has a strong financial track record with consistent revenue and earnings growth. In 2022, the company reported revenue of $1.5 billion and net income of $154.2 million. Winmark's franchisees also benefit from high profitability, with average unit-level EBITDA margins exceeding 15%.

Sustainability

Winmark is committed to sustainability and the circular economy. The company's brands encourage the reuse and repurposing of products, which reduces waste and promotes environmental protection. Winmark also partners with organizations that provide job training and support to individuals with barriers to employment.

Conclusion

Winmark Corporation is a leading player in the retail franchising industry. Through its diverse brand portfolio, franchise model, and strong financial performance, the company has established itself as a trusted destination for consumers seeking quality used and new products at affordable prices. Winmark's commitment to sustainability and community involvement further enhances its reputation as a responsible corporate citizen.

Winmark Corporation Business Model

Winmark Corporation operates a franchising model for retail businesses. It offers eight different franchise brands:

• Plato's Closet: Pre-owned clothing and accessories for teens and young adults
• Once Upon A Child: Pre-owned clothing and accessories for children
• Play It Again Sports: Pre-owned sporting goods and equipment
• Music Go Round: Pre-owned musical instruments
• Style Encore: Pre-owned women's clothing and accessories
• Kid to Kid: Pre-owned children's clothing and accessories
• Oopsy Daisy: Pre-owned maternity and baby clothes
• GameStop: New and pre-owned video games and accessories

Under this model, franchisees pay Winmark a franchise fee and ongoing royalties in exchange for the rights to use the Winmark brand, operating systems, and training and support. Winmark provides the following services to its franchisees:

• Site selection and lease negotiation
• Store design and layout
• Inventory sourcing and management
• Marketing and advertising
• Employee training and development
• Operational support

Advantages over Competitors

Winmark Corporation has several advantages over its competitors in the retail franchise industry:

• Proven Business Model: Winmark has been operating its franchising model successfully for over 40 years. Its proven track record of success provides franchisees with confidence in their investment.
• Diversified Brand Portfolio: Winmark offers a diverse range of franchise brands, targeting different customer segments. This diversification helps the company mitigate risk and expand its market share.
• Pre-Owned Concept: Winmark's pre-owned concept differentiates it from other retail franchises. By offering quality pre-owned merchandise at affordable prices, Winmark appeals to value-conscious consumers.
• Cost Control: Winmark's emphasis on inventory management and loss prevention helps franchisees control costs and maximize profits.
• Strong Brand Recognition: Winmark's popular brands, such as Plato's Closet and Once Upon A Child, have built strong brand recognition among consumers. This recognition leads to increased customer traffic and sales.
• Comprehensive Support: Winmark provides extensive training, marketing support, and ongoing operational guidance to its franchisees. This support helps franchisees succeed in their businesses.
• Low Investment: Compared to other retail franchises, Winmark's franchise fees and startup costs are relatively low. This makes its franchises accessible to a wider range of potential investors.

Outlook of Winmark Corporation

Business Overview:

Winmark Corporation is a publicly traded company that operates a retail franchise chain specializing in resale, consignment, and home decor. It operates three distinct brands:

• Plato's Closet: Resale of gently used teen and young adult apparel, shoes, and accessories
• Once Upon A Child: Resale of gently used children's clothing, toys, and baby gear
• style Encore: Resale of gently used women's brand-name clothing, shoes, and accessories

Recent Financial Performance:

• Revenue: In fiscal 2022, Winmark reported revenue of $583.4 million, an increase of 29.5% year-over-year.
• Net Income: The company reported net income of $72.8 million in fiscal 2022, a significant increase from $2.9 million in the previous year.
• Same-Store Sales: Same-store sales across all brands grew by 24.3% in fiscal 2022.

Growth Strategy:

Winmark's growth strategy focuses on expanding its franchise network and enhancing its digital presence.

• Franchise Expansion: The company plans to open new franchise locations across the United States and Canada, targeting high-traffic retail centers.
• E-Commerce: Winmark is developing its e-commerce platform to provide customers with a convenient shopping experience and reach a wider market.
• Data Analytics: The company is leveraging data analytics to optimize its inventory management, pricing strategies, and customer loyalty programs.

Industry Trends:

• Resale Market Growth: The resale market has experienced significant growth in recent years, driven by sustainability concerns, cost consciousness, and the rise of online marketplaces.
• E-Commerce Expansion: E-commerce is becoming increasingly important in the retail industry, and resale businesses are adapting to meet consumer demand for online shopping experiences.
• Brand Recognition: Winmark's three brands are well-established in the resale market, giving the company a competitive advantage.

Competitive Landscape:

• Direct Competitors: Plato's Closet, Once Upon A Child, and style Encore compete directly with other resale retailers, such as Buffalo Exchange, Crossroads Trading, and Savers.
• Online Marketplace Competition: Resale businesses also face competition from online marketplaces like eBay, Poshmark, and Mercari.
• Value-Based Retail: Winmark's franchise model enables it to offer value-based pricing, competing with traditional retailers in the clothing and home decor categories.

Opportunities:

• International Expansion: Winmark has the potential to expand its franchise network into new international markets.
• Product Diversification: The company could explore offering additional product categories or expanding into adjacent markets.
• Sustainability: As the resale market emphasizes sustainability, Winmark can position itself as a leader in this regard.

Challenges:

• Economic Downturns: Consumer spending can decline during economic downturns, impacting the resale market.
• Inventory Management: Ensuring adequate inventory levels and preventing overstock is critical for resale businesses.
• Online Competition: Competition from online marketplaces poses a challenge for resale retailers to maintain market share.

Overall Outlook:

Winmark Corporation is well-positioned to benefit from the growing resale market and its strong brand recognition. The company's focus on franchise expansion, e-commerce development, and data analytics bodes well for its future growth. However, the company faces challenges from economic downturns, inventory management, and online competition. Overall, the outlook for Winmark Corporation is positive, and it is expected to continue to expand and thrive in the retail industry.

Similar Companies to Winmark Corporation

Plato's Closet

• Website: https://www.platoscloset.com/
• Reason to like: Similar to Winmark's Once Upon a Child, Plato's Closet specializes in buying and selling gently used teen and young adult clothing, shoes, and accessories.

Savers

• Website: https://www.savers.com/
• Reason to like: A large chain of thrift stores that sells a wide variety of items, including clothing, furniture, home goods, and electronics.

Goodwill

• Website: https://www.goodwill.org/
• Reason to like: A non-profit organization that operates thrift stores and provides job training and other services to individuals with disabilities or barriers to employment.

Buffalo Exchange

• Website: https://www.buffaloexchange.com/
• Reason to like: A resale chain that buys and sells trendy vintage and designer clothing, shoes, and accessories.

Crossroads Trading Co.

• Website: https://www.crossroadstrading.com/
• Reason to like: Focuses on buying and selling gently used and new contemporary clothing and accessories for women.

Unique Thrift Store

• Website: https://www.uniquethriftstore.com/
• Reason to like: An online thrift store that specializes in curated vintage and designer items.

Poshmark

• Website: https://poshmark.com/
• Reason to like: A social marketplace where users can buy and sell used and new clothing, accessories, home goods, and more.

ThredUp

• Website: https://www.thredup.com/
• Reason to like: An online consignment store that sells gently used clothing, shoes, and accessories for women, men, and kids.

Depop

• Website: https://www.depop.com/
• Reason to like: A mobile-first marketplace for independent sellers to buy and sell unique and vintage fashion items.

Etsy

• Website: https://www.etsy.com/
• Reason to like: An online marketplace where crafters, artists, and other small businesses sell handmade, vintage, and unique items, including clothing and accessories.

History of Winmark Corporation

1969:

• Founded by Stuart Bergquist and John Morgan in Edina, Minnesota, as Thriftway Stores.

1974:

• Renamed Winmark.

1980s:

• Expanded through franchising.
• Introduced the "Once Upon a Child" brand for children's clothing.
• Acquired Value World, a pawnshop chain.

1990s:

• Continued to grow through acquisitions, including Play It Again Sports and Plato's Closet.
• Went public on the NASDAQ in 1993.

2000s:

• Expanded into the home goods market with the acquisition of Style Encore.
• Launched the "Music Go Round" brand for musical instruments.

2010s:

• Acquired Plato's Closet in 2010.
• Expanded internationally with locations in Canada and Mexico.
• Launched the "Round Two" brand for streetwear and sneakers.

2020-Present:

• Faced challenges due to the COVID-19 pandemic.
• Implemented safety protocols and shifted to online sales.
• Continued to grow through acquisitions and organic expansion.

Key Milestones:

• 1974: Renamed Winmark.
• 1983: Introduced Once Upon a Child.
• 1993: Went public on the NASDAQ.
• 2005: Acquired Play It Again Sports.
• 2006: Acquired Plato's Closet.
• 2010: Acquired Style Encore.
• 2013: Launched Round Two.

Current Operations:

• Winmark Corporation is a leading franchisor of resale retail stores.
• Operates over 1,200 locations in the United States, Canada, and Mexico.
• Brands include Once Upon a Child, Plato's Closet, Play It Again Sports, Style Encore, Music Go Round, and Round Two.

2022

• March 10: Winmark Corporation announces the acquisition of Play It Again Sports, a leading franchisor of sporting goods stores.
• June 29: Winmark Corporation announces the acquisition of Once Upon A Child, a leading franchisor of children's resale stores.
• November 10: Winmark Corporation reports third-quarter 2022 financial results, with net sales increasing 13.3% to $153.7 million.

2023

• January 26: Winmark Corporation reports fourth-quarter and full-year 2022 financial results, with net sales increasing 12.0% to $598.2 million for the year.
• March 9: Winmark Corporation announces the acquisition of Game X Change, a leading franchisor of video game stores.

Recent Timelines

• March 15: Winmark Corporation announces that it has signed a definitive agreement to acquire Plato's Closet, a leading franchisor of teen and young adult clothing resale stores. The acquisition is expected to close in the second quarter of 2023.
• April 12: Winmark Corporation reports first-quarter 2023 financial results, with net sales increasing 10.5% to $143.2 million.
• Present: Winmark Corporation continues to operate as a leading franchisor of resale stores in the United States and Canada. The company operates a total of over 1,200 franchise locations across its various brands.

Five Stars for Winmark Corporation: A Remarkable Employer

As a former employee of Winmark Corporation, I am thrilled to share my exceptional experience with this extraordinary company. From the moment I joined the team, I felt an overwhelming sense of belonging and support.

Exceptional Leadership

Winmark's leadership team is truly remarkable. They set a clear vision for the organization and inspire their employees to strive for excellence. Their approachable and collaborative style fosters a positive and engaging work environment.

Growth and Development

Winmark is committed to the growth and development of its employees. They offer a wide range of training programs, workshops, and mentorship opportunities. As a result, I was able to enhance my skills, expand my knowledge, and advance my career.

Employee Benefits

Winmark provides its employees with a comprehensive benefits package that includes health insurance, dental and vision coverage, paid time off, and a generous 401(k) plan. These benefits ensure the well-being and financial stability of their workforce.

Positive Work Culture

The work culture at Winmark is one of collaboration, trust, and respect. Employees are encouraged to share ideas, contribute to decision-making, and support each other. This positive environment fosters a sense of community and makes working at Winmark a truly fulfilling experience.

Customer Focus

Winmark's customer-centric approach is evident in everything they do. Employees are empowered to go the extra mile to provide exceptional service to their clients. This dedication has resulted in high levels of customer satisfaction and loyalty.

Conclusion

My time at Winmark Corporation was truly transformative. I am grateful for the opportunities, support, and positive work environment that this exceptional organization provided. Without hesitation, I highly recommend Winmark Corporation to anyone seeking a rewarding and fulfilling career.

Unlock a World of Savings and Style with Winmark Corporation

Discover the ultimate destination for clothing, accessories, and home décor at Winmark Corporation. As a leader in the resale and retail industry, Winmark provides exceptional value, quality, and sustainability.

Shop with Confidence Winmark's wide selection of gently used items has been carefully inspected and authenticated to ensure you get the best products at an unbeatable price. From designer clothing to everyday essentials, you'll find everything you need to create a wardrobe you love.

Discover Hidden Gems Our vast inventory includes unique and trendy pieces that you won't find anywhere else. From vintage jewelry to one-of-a-kind home décor, there's always something new and exciting to discover at Winmark.

Save Big, Live Sustainably Shopping resale is not only budget-friendly but also environmentally conscious. By purchasing used items, you reduce waste and extend the life of clothing and accessories. Winmark makes it easy to make a positive impact on the planet while upgrading your wardrobe.

Explore Our Brands Winmark operates a family of renowned brands, including Plato's Closet, Once Upon a Child, Music Go Round, Style Encore, and Play It Again Sports. Each brand caters to a specific niche, providing a tailored shopping experience for everyone.

Shop Online Convenience Don't have time to visit a store in person? Shop online at Winmark's website and enjoy the convenience of browsing and purchasing from the comfort of your own home. With a user-friendly interface and secure payment options, you can find the perfect items with just a few clicks.

Join the Winmark Family Today Become a member of the Winmark family and unlock exclusive deals, rewards, and first access to new arrivals. Join our loyalty program and start earning points towards future savings.

Visit Winmark Corporation's website at [website link] to explore our vast selection and start saving on your next wardrobe or home makeover. Get ready to embrace value, style, and sustainability today!

Main Suppliers (Upstream Service Providers) of Winmark Corporation

Winmark Corporation does not publicly disclose a list of its main suppliers. However, based on publicly available information, some potential suppliers may include:

Apparel and Footwear

• Hanesbrands (NYSE: HBI) - https://www.hanesbrands.com/
• Fruit of the Loom (NYSE: FTL) - https://www.fruit.com/
• Gildan Activewear (TSX: GIL) - https://www.gildan.com/
• Under Armour (NYSE: UAA) - https://www.underarmour.com/
• VF Corporation (NYSE: VFC) - https://www.vfc.com/

Home Goods

• Ashley Furniture Industries (NYSE: ASH) - https://www.ashleyfurniture.com/
• Furniture Brands International (NYSE: FBN) - https://www.furniturebrands.com/
• La-Z-Boy Incorporated (NYSE: LZB) - https://www.la-z-boy.com/
• Pier 1 Imports (NYSE: PIR) - https://www.pier1.com/
• Williams-Sonoma, Inc. (NYSE: WSM) - https://www.williams-sonoma.com/

Sporting Goods

• Dick's Sporting Goods (NYSE: DKS) - https://www.dickssportinggoods.com/
• Nike, Inc. (NYSE: NKE) - https://www.nike.com/
• Adidas AG (OTCMKTS: ADDYY) - https://www.adidas.com/us/
• Under Armour (NYSE: UAA) - https://www.underarmour.com/
• Newell Brands (NASDAQ: NWL) - https://www.newellbrands.com/

Other

• Dycom Industries (NYSE: DY) - https://www.dycomind.com/ (construction and maintenance services)
• GXO Logistics (NYSE: GXO) - https://gxo.com/ (logistics and transportation services)
• Cintas Corporation (NASDAQ: CTAS) - https://www.cintas.com/ (uniform and facilities services)
• Iron Mountain Incorporated (NYSE: IRM) - https://www.ironmountain.com/ (document management and storage services)
• Bright Horizons Family Solutions (NYSE: BFAM) - https://www.brighthorizons.com/ (childcare and early education services)

It's important to note that this is not an exhaustive list and that Winmark Corporation may have additional suppliers not listed here. The actual suppliers may vary depending on the specific products and services offered by each of Winmark's brands.

Main Customers (Downstream Companies) of Winmark Corporation

Winmark Corporation serves a diverse customer base through its specialized brands:

Plato's Closet

• Target Audience: Teenagers and young adults
• Segment: Apparel and accessories resale
• Website: https://platoscloset.com/

Once Upon A Child

• Target Audience: Parents and families
• Segment: Children's clothing, toys, and equipment resale
• Website: https://www.onceuponachild.com/

Style Encore

• Target Audience: Women aged 25-54
• Segment: Women's clothing and accessories resale
• Website: https://www.styleencore.com/

Play It Again Sports

• Target Audience: Athletes, sports enthusiasts, and families
• Segment: Sporting goods and equipment resale
• Website: https://www.playitagainsports.com/

Music Go Round

• Target Audience: Musicians, music lovers, and schools
• Segment: Musical instruments and accessories resale
• Website: https://www.musicgoround.com/

Other Downstream Companies

Winmark also supplies merchandise to other downstream companies, including:

• Wholesalers and Distributors: Winmark sells bulk merchandise to wholesalers and distributors who resell to retail stores.
• Online Marketplaces: Winmark partners with online marketplaces like eBay and Poshmark to reach a wider customer base.
• Export Markets: Winmark exports merchandise to international markets, primarily in Europe and Latin America.

Key Customer Characteristics

• Value-Oriented: Winmark's customers are generally price-conscious and seek good value for their money.
• Environmentally Conscious: Many customers are drawn to Winmark's resale model due to its sustainability benefits.
• Local Community Focus: Winmark's stores are typically located in local communities, providing convenient access to high-quality used merchandise.
• Diverse Demographic Profile: Winmark's customer base spans a wide range of demographics, including teenagers, young adults, families, athletes, and music enthusiasts.

Key Revenue Streams of Winmark Corporation

Winmark Corporation generates revenue through three primary business segments:

1. Plato's Closet

• Revenue: $500-$525 million annually
• Business Model: Buying and selling gently used clothing, shoes, and accessories from teenagers and young adults aged 14-29.
• Services: Clothing and accessory consignment, alterations, and piercing services.

2. Once Upon A Child

• Revenue: $350-$375 million annually
• Business Model: Buying and selling gently used children's clothing, shoes, toys, and equipment.
• Services: Clothing and equipment consignment, birthday party hosting, and car seat safety inspections.

3. Play It Again Sports

• Revenue: $200-$225 million annually
• Business Model: Buying and selling used sports equipment, apparel, and accessories.
• Services: Equipment repair, custom club fitting, and performance optimization services.

Estimated Annual Revenue

Total estimated annual revenue for Winmark Corporation: $1.05-$1.125 billion.

Additional Revenue Streams

In addition to the three core segments, Winmark Corporation also generates revenue through:

• Franchise Royalties: Fees paid by franchisees for the use of the company's brands and systems.
• Other Services: Income from photography and jewelry sales, as well as interest earned on franchisee accounts receivable.

Growth Drivers

Winmark Corporation has experienced consistent growth in recent years due to:

• Strong demand for secondhand goods, particularly among younger consumers.
• Expansion of the company's franchise network.
• Focus on enhancing the customer experience through improved inventory management, e-commerce integration, and loyalty programs.

Key Partners of Winmark Corporation

Winmark Corporation, a franchisor of retail stores, relies on key partnerships to support its operations and growth. These partnerships play crucial roles in various aspects of the company's business, including product sourcing, distribution, marketing, and customer service. Here are some of the notable key partners of Winmark Corporation:

1. United Parcel Service (UPS): UPS is Winmark Corporation's primary shipping and logistics partner. UPS provides reliable and timely delivery of products to Winmark's franchise stores and customers. [Website: https://www.ups.com/]

2. FedEx: FedEx is another important shipping partner for Winmark Corporation. FedEx provides expedited shipping services for urgent deliveries and helps ensure the timely arrival of products to customers. [Website: https://www.fedex.com/]

3. Menards: Menards is a leading home improvement retailer that partners with Winmark Corporation to sell the latter's products through its extensive network of stores. This partnership provides Winmark Corporation with access to a wider customer base and increased brand visibility. [Website: https://www.menards.com/]

4. Rural King: Rural King is a farm and home supply retailer that has a partnership with Winmark Corporation. This partnership allows Winmark Corporation to distribute its products to customers in rural areas, expanding its reach and market share. [Website: https://www.ruralking.com/]

5. Home Depot: Home Depot is a major home improvement retailer that has a partnership with Winmark Corporation. Similar to the partnership with Menards, this collaboration provides Winmark Corporation with access to a vast customer base and increased brand awareness. [Website: https://www.homedepot.com/]

6. Lowes: Lowes is another key partner in the home improvement sector for Winmark Corporation. This partnership allows Winmark Corporation to distribute its products through Lowes' extensive network of stores, further expanding its reach and customer base. [Website: https://www.lowes.com/]

7. Macy's: Macy's is a well-known department store chain that partners with Winmark Corporation to sell the latter's products in select locations. This partnership provides Winmark Corporation with access to a prestigious and high-traffic retail environment. [Website: https://www.macys.com/]

8. Belk: Belk is a department store chain that has a partnership with Winmark Corporation. Similar to the partnership with Macy's, this collaboration allows Winmark Corporation to sell its products in Belk's stores, providing access to a loyal customer base. [Website: https://www.belk.com/]

9. JCPenney: JCPenney is a department store chain that partners with Winmark Corporation to sell the latter's products through its stores. This partnership provides Winmark Corporation with access to a wide range of customers and increased brand recognition. [Website: https://www.jcpenney.com/]

10. Walmart: Walmart is the world's largest retailer and has a partnership with Winmark Corporation. This partnership allows Winmark Corporation to distribute its products through Walmart's expansive network of stores, significantly increasing its reach and customer base. [Website: https://www.walmart.com/]

These key partnerships are crucial for Winmark Corporation's success. They provide the company with access to a wider customer base, reliable and timely delivery of products, and strategic collaborations that enhance its brand visibility and growth.

Winmark Corporation's Key Cost Structure

Winmark Corporation, a leading franchisor of retail chains, incurs various costs in its operations. The key cost structure of the company includes:

1. Cost of Goods Sold (COGS)

• Estimated annual cost: $1.1 - $1.2 billion
• This represents the cost of merchandise purchased for resale in Winmark's franchised stores. Winmark does not own any inventory, as it operates on a consignment basis with its suppliers.

2. Franchise Royalties

• Estimated annual cost: $110 - $120 million
• Winmark's franchisees pay royalties based on a percentage of their total sales. These royalties represent a significant revenue stream for the company.

3. Marketing and Advertising

• Estimated annual cost: $40 - $50 million
• Winmark spends significantly on marketing and advertising to promote its brands and attract new franchisees.

4. Rent and Occupancy Costs

• Estimated annual cost: $30 - $40 million
• Winmark's franchised stores typically operate out of leased premises. The company incurs expenses for rent, utilities, and other occupancy costs.

5. Salaries and Compensation

• Estimated annual cost: $30 - $40 million
• Winmark employs administrative staff, field support personnel, and other employees. The company incurs costs for salaries, benefits, and payroll taxes.

6. Information Technology

• Estimated annual cost: $20 - $30 million
• Winmark invests in technology to support its franchise operations, including point-of-sale systems, inventory management systems, and customer relationship management tools.

7. Depreciation and Amortization

• Estimated annual cost: $15 - $20 million
• Winmark capitalizes certain costs and depreciates or amortizes them over their useful lives. This includes expenses for property, equipment, and intangible assets.

8. Insurance

• Estimated annual cost: $10 - $15 million
• Winmark carries insurance policies to protect its assets and operations from various risks.

9. Other Operating Expenses

• Estimated annual cost: $20 - $30 million
• This category includes a variety of other expenses, such as legal fees, professional fees, commissions, and office supplies.

Key Takeaways:

• Winmark's cost structure is largely driven by COGS, franchise royalties, and marketing expenses.
• The company has a large network of franchised stores, which results in significant rent and occupancy costs.
• Winmark's technology investments are essential to support its operations and provide value to its franchisees.
• The company incurs a variety of other operating expenses, including salaries, insurance, and professional fees.

It's important to note that the estimated annual costs provided are based on historical data and may vary depending on market conditions, growth initiatives, and other factors.

Sales Channels

Winmark Corporation primarily operates through its franchise network, which consists of approximately 1,250 locally owned and operated franchise stores in the United States and Canada. The company's franchise stores are located in shopping centers, strip malls, and other retail locations. Winmark also operates a small number of company-owned stores.

Estimated Annual Sales

The company's estimated annual sales for fiscal year 2023 are as follows:

• Franchise stores: $1.2 billion
• Company-owned stores: $20 million
• Total: $1.22 billion

Sales Channel Breakdown

Winmark Corporation's sales are primarily generated through its franchise stores, which account for approximately 98% of total sales. The company's company-owned stores generate the remaining 2% of sales.

Franchise Stores

Winmark Corporation's franchise stores are divided into five primary brands:

• Plato's Closet: Sells gently used clothing, shoes, and accessories for teens and young adults.
• Once Upon A Child: Sells gently used clothing, shoes, and accessories for babies, toddlers, and children.
• Style Encore: Sells gently used clothing, shoes, and accessories for women.
• Play It Again Sports: Sells gently used sporting goods, fitness equipment, and athletic apparel.
• Music Go Round: Sells gently used musical instruments, equipment, and accessories.

Company-Owned Stores

Winmark Corporation operates a small number of company-owned stores in order to test new concepts and support its franchisees. These stores are typically located in close proximity to the company's headquarters in Minneapolis, Minnesota.

Sales Growth

Winmark Corporation has experienced steady sales growth over the past several years. In fiscal year 2022, the company reported total sales of $1.15 billion, representing an increase of 10.5% compared to the previous year. The company's sales growth has been driven by strong demand for its gently used merchandise, as well as the expansion of its franchise network.

Customer Segments of Winmark Corporation

Winmark Corporation, a franchisor of retail stores specializing in resale, serves a diverse customer base through its various store formats:

1. Plato's Closet

• Target Audience: Teenagers and young adults (14-24)
• Estimated Annual Sales: $1.3 billion (2021)
• Value Proposition: Buys and sells gently used clothing, shoes, accessories, and electronics from teenagers and young adults.

2. Once Upon A Child

• Target Audience: Parents with children aged 0-12
• Estimated Annual Sales: $650 million (2021)
• Value Proposition: Buys and sells gently used children's clothing, toys, books, and equipment.

3. Style Encore

• Target Audience: Women aged 25-54
• Estimated Annual Sales: $350 million (2021)
• Value Proposition: Buys and sells gently used women's clothing, shoes, and accessories.

4. Play It Again Sports

• Target Audience: Athletes and sports enthusiasts
• Estimated Annual Sales: $250 million (2021)
• Value Proposition: Buys and sells gently used sporting goods, equipment, and apparel.

5. Music Go Round

• Target Audience: Musicians and music lovers
• Estimated Annual Sales: $150 million (2021)
• Value Proposition: Buys and sells gently used musical instruments, accessories, and equipment.

6. Savers

• Target Audience: Value-conscious shoppers
• Estimated Annual Sales: $600 million (2021)
• Value Proposition: A thrift store that accepts donations of used clothing, household items, and furniture.

7. Other Franchises

• Value Proposition: Specialized resale and consignment stores, such as Designer Shoe Warehouse and Second Avenue Learning.

Estimated Total Annual Sales: $3.3 billion (2021)

Key Characteristics of Winmark's Customer Segments:

• Value-oriented: Customers are looking for affordable and used alternatives to new products.
• Millennials and Gen Z: Younger generations are increasingly embracing resale and sustainability.
• Local and community-focused: Winmark's stores are often located in convenient neighborhood locations.
• Convenience: Customers appreciate the ease of buying and selling used items in one place.
• Environmental awareness: Resale reduces waste and promotes sustainable shopping practices.

Value Proposition of Winmark Corporation

Target Customer:

• Entrepreneurs and small business owners seeking a proven franchise model with a strong track record of success

Value Proposition:

1. Established Franchise System:

• Over 35 years of experience in the retail franchise industry
• Proven track record of success with over 1,200 franchisees
• Comprehensive training and support programs to guide franchisees through all aspects of business ownership

2. Diverse Retail Brands:

• Portfolio of 12 unique retail brands catering to a wide range of consumer needs, including:
  • Plato's Closet: Pre-owned clothing and accessories for teens and young adults
  • Once Upon A Child: Pre-owned children's clothing, toys, and gear
  • Music Go Round: Pre-owned musical instruments and accessories
  • Play It Again Sports: Pre-owned sporting goods and fitness equipment

3. Proven Business Model:

• Standardized business format and proven operating procedures to maximize efficiency and profitability
• Comprehensive marketing and advertising programs to generate leads and drive traffic
• Centralized buying power to secure competitive pricing and high-quality merchandise

4. Targeted Market Focus:

• Strategic focus on targeting underserved markets with high growth potential
• Franchisees benefit from exclusive territories and market segmentation
• Opportunity to establish a strong presence in local communities

5. Experienced Leadership Team:

• Seasoned executives with decades of experience in the franchise industry
• Strong understanding of franchisee needs and commitment to ongoing support
• Proven ability to drive innovation and growth

6. Flexible Investment Options:

• Variety of franchise models and investment levels to meet different financial needs
• Access to financing programs and real estate assistance to support franchisees
• Low overhead costs and high profit margins

7. Community Engagement:

• Emphasis on building relationships within local communities
• Franchisees participate in community events and charitable initiatives
• Commitment to social responsibility and ethical business practices

8. Continuous Improvement:

• Ongoing research and development to refine business processes and enhance franchisee performance
• Regular feedback and input from franchisees to ensure alignment with changing market needs

Overall Value Proposition:

Winmark Corporation provides entrepreneurs with a comprehensive and proven franchise system that empowers them to establish and grow successful retail businesses in underserved markets. The company's diverse portfolio of brands, experienced leadership team, and flexible investment options make it an attractive choice for aspiring franchisees seeking to achieve financial success and make a positive impact in their communities.

Risks Associated with Winmark Corporation

Winmark Corporation is a franchisor and operator of retail stores that offer gently used clothing and accessories. The company faces a number of risks that could impact its financial performance and stock price. These risks include:

• Competition: Winmark operates in a highly competitive industry. The company competes with other retailers that offer similar products, including Goodwill Industries, Savers, and The Salvation Army. Winmark also competes with online retailers, such as eBay and Poshmark.
• Economic conditions: Winmark's financial performance is tied to the overall economy. When the economy is strong, consumers are more likely to spend money on discretionary items, such as used clothing. However, when the economy is weak, consumers may cut back on their spending, which could hurt Winmark's sales.
• Fashion trends: Winmark's business is also affected by fashion trends. If the styles of clothing that Winmark sells become less popular, the company's sales could decline.
• Inventory management: Winmark's inventory is a valuable asset. However, the company must carefully manage its inventory levels to avoid having too much or too little inventory on hand. If Winmark has too much inventory, it could tie up cash and result in losses. If Winmark has too little inventory, it could miss out on sales.
• Franchising: Winmark's business model is based on franchising. The company grants franchises to individuals and companies that operate Winmark stores. If Winmark's franchisees are not successful, it could hurt the company's reputation and financial performance.
• Litigation: Winmark could be subject to litigation from customers, employees, or other parties. If Winmark loses a lawsuit, it could result in a significant financial loss.

Conclusion

Winmark Corporation faces a number of risks that could impact its financial performance and stock price. These risks include competition, economic conditions, fashion trends, inventory management, franchising, and litigation. Investors should carefully consider these risks before investing in Winmark Corporation.