Core Insights - European Wax Center, Inc. (EWCZ) reported mixed second-quarter 2025 results, with earnings per share (EPS) of 27 cents exceeding the Zacks Consensus Estimate of 19 cents, while total revenues of $55.9 million fell short of the consensus estimate of $57 million [1][2][10] Financial Performance - Total revenues decreased by 6.6% year-over-year, primarily due to weaker same-day services and retail sales, despite a 0.3% increase in same-store sales [2][10] - System-wide sales amounted to $257.6 million, down 1% from $260.2 million in the previous year [2] - Selling, general and administrative expenses (SG&A) rose by 13.2% to $14.5 million, with SG&A as a percentage of total revenues increasing by 430 basis points to 25.9% [3] - Adjusted EBITDA increased by 4.7% to $21.6 million, with the adjusted EBITDA margin rising by 420 basis points to 38.7% [4][10] Balance Sheet and Cash Flow - As of July 5, 2025, EWCZ had cash and cash equivalents of $63.9 million, net long-term debt of $374 million, and total shareholders' equity of $76.5 million [5] - The company generated $27.9 million in net cash from operating activities during the quarter [5] - Inventory levels remained stable year-over-year [5] Share Repurchase - EWCZ repurchased nearly 0.2 million shares of its Class A common stock for $1.1 million, bringing total repurchases under its existing $50 million authorization to $41.2 million [6] Future Outlook - For 2025, EWCZ revised its projections for system-wide sales to $940-$950 million, down from $940-$960 million, and total revenues to $205-$209 million, down from $210-$214 million [7] - Same-store sales are now expected to be in the range of 0-1%, compared to the previous forecast of 0-2% [7] - The company anticipates opening 10-12 new centers and closing 40-60 centers, resulting in a net loss of 28-50 centers for the year [8]

Financial Performance - European Wax Center, Inc. reported revenue of $55.91 million for the quarter ended June 2025, reflecting a year-over-year decline of 6.6% [1] - The EPS for the same period was $0.27, an increase from $0.15 a year ago, indicating a positive trend in earnings [1] - The reported revenue fell short of the Zacks Consensus Estimate of $56.93 million, resulting in a surprise of -1.79% [1] - The company achieved an EPS surprise of +42.11%, with the consensus EPS estimate being $0.19 [1] Key Metrics - Same-store sales were reported at 0.3%, outperforming the estimated -0.4% by four analysts [4] - System-wide sales reached $257.6 million, slightly above the average estimate of $257.31 million based on three analysts [4] - The ending center count was 1,059, exceeding the estimated 1,054 by two analysts [4] - Revenue from marketing fees was $8.11 million, surpassing the estimated $7.79 million, but representing a -0.4% change year-over-year [4] - Revenue from royalty fees was $14.28 million, compared to the estimated $14.02 million, reflecting a -1.3% change year-over-year [4] - Product sales revenue was $30.52 million, below the average estimate of $31.29 million, indicating a -10.1% year-over-year change [4] - Other revenue was reported at $3.01 million, slightly below the estimated $3.22 million, with a year-over-year change of -9.9% [4] Stock Performance - Shares of European Wax Center have returned -14.4% over the past month, contrasting with the Zacks S&P 500 composite's +3.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported system-wide sales of $257.6 million, a decrease of 1% year-over-year, with same-store sales growth of 30 basis points [6][26] - Adjusted EBITDA for the quarter was $21.6 million, reflecting a 4.7% increase from $20.6 million in the prior year period, with an adjusted EBITDA margin of 38.7% [28][29] - Total revenue decreased by approximately $4 million or 6.6% to $55.9 million, primarily due to lower contributions from wholesale product and retail revenue [26][28] Business Line Data and Key Metrics Changes - The company opened two growth centers during the quarter and closed five, resulting in three net center closures, with a total of 1,059 centers at the end of Q2, flat year-over-year [26][30] - The company has seen an improvement in transaction growth, with same-store sales up 1.7% in June and 1.5% through the first five weeks of Q3 [8][9] Market Data and Key Metrics Changes - The company noted challenges in the California market, while improvements were observed in Texas, Florida, and New York [62] - The Wax Pass sales increased by almost 2% year-over-year, indicating stable customer engagement [66] Company Strategy and Development Direction - The company is focused on three strategic objectives: driving sales through traffic growth, improving profitability for franchisees, and implementing a more sophisticated development approach [10][20] - The leadership team has been expanded with the addition of a Chief Operating Officer and a Chief Development Officer to enhance operational execution and franchise development [10][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the business and the potential for long-term growth, despite being in a transitional year [7][39] - The company is narrowing its full-year revenue outlook to between $940 million and $950 million, with same-store sales expected to be flat to up 1% for the full year [33][36] Other Important Information - The company ended the quarter with $63.9 million in cash and $388 million outstanding under senior secured notes, with a net leverage ratio of 4.2 times [30] - The company plans to maintain advertising expenses slightly above 3% of system-wide sales to support ongoing traffic-driving initiatives [37] Q&A Session Summary Question: What changes have been made to the grand opening playbook? - The company has refined its grand opening playbook to ensure centers are set up for success, focusing on staffing and training, which has led to improved ramping of new units [44] Question: How should we think about closure pace going forward? - The company aims to minimize negative impacts from closures by building a strong foundation for sustainable traffic growth and improving overall network health [49] Question: Are there notable changes at the store level or in center execution? - The company is focusing on both marketing and operational tactics to drive frequency with existing guests, with a strong partnership with franchisees [53] Question: What is the outlook for regional performance? - The company is seeing challenges in California but improvements in Texas and Florida, with a focus on using data analytics to engage guests effectively [62] Question: How is the new product launch performing? - The company is pleased with the acceptance of new products and continues to prioritize transaction counts while maintaining a focus on retail [64] Question: What is the trajectory of Wax Pass sales? - Wax Pass sales have increased by almost 2% year-over-year, indicating continued customer engagement [66]

[Executive Summary & Business Overview](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Overview) European Wax Center, Inc. is a leading franchisor of waxing services, focusing on strategic growth, profitability, and expansion, with mixed Q2 FY2025 results [Company Overview & Strategic Priorities](index=1&type=section&id=Company%20Overview%20%26%20Strategic%20Priorities) European Wax Center, Inc. is a leading U.S. waxing service franchisor, reinforcing business stability and focusing on traffic, franchisee profitability, and expansion - European Wax Center, Inc. (NASDAQ: EWCZ) is the leading franchisor and operator of out-of-home waxing services in the United States[3](index=3&type=chunk) - CEO Chris Morris noted encouraging early signs that strategies are taking hold, reinforcing the stability of the core business and the resilience of the European Wax Center brand[4](index=4&type=chunk) - The company's three strategic priorities are: driving traffic and sales growth, improving four-wall profitability for franchisees, and pursuing thoughtful, profitable expansion[4](index=4&type=chunk) [Second Quarter Fiscal 2025 Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Highlights) Q2 FY2025 showed mixed results with slight decreases in system-wide sales and total revenue, but increases in same-store sales, Adjusted Net Income, and Adjusted EBITDA Q2 FY2025 Key Financial Metrics | Metric | Q2 FY2025 | Change vs. Q2 FY2024 | | :-------------------- | :---------- | :------------------- | | Total Centers | 1,059 | Flat | | System-wide sales | $257.6 million | -1.0% | | Total revenue | $55.9 million | -6.6% | | Same-store sales | +0.3% | N/A | | GAAP net income | $5.4 million | -9.0% | | Adjusted Net Income | $11.8 million | +5.6% | | Adjusted EBITDA | $21.6 million | +4.7% | [Financial Performance](index=1&type=section&id=Financial%20Performance) This section details the company's financial results for Q2 and year-to-date fiscal 2025, including balance sheet and cash flow performance [Second Quarter Fiscal 2025 Detailed Results](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Detailed%20Results) Q2 FY2025 saw a decrease in system-wide sales and total revenue, offset by same-store sales growth and increases in Adjusted Net Income and Adjusted EBITDA - System-wide sales decreased **1.0%** to **$257.6 million**, primarily driven by a decrease in same-day services and retail sales, partially offset by an increase in cash collected from wax pass sales[7](index=7&type=chunk) - Total revenue decreased **6.6%** to **$55.9 million** from $59.9 million in the prior year period[7](index=7&type=chunk) - Same-store sales increased **0.3%**[7](index=7&type=chunk) - GAAP net income of **$5.4 million** decreased **9.0%**, and Adjusted Net Income of **$11.8 million** increased **5.6%**[7](index=7&type=chunk) - Adjusted EBITDA of **$21.6 million** increased **4.7%**, and Adjusted EBITDA Margin increased **420 basis points** to **38.7%**[8](index=8&type=chunk) [Year-to-Date Fiscal 2025 Results](index=2&type=section&id=Year-to-Date%20Fiscal%202025%20Results) Year-to-date fiscal 2025 showed slight system-wide sales growth, decreased total revenue, increased same-store sales, and higher Adjusted Net Income and EBITDA - System-wide sales of **$483.5 million** increased **0.4%** from $481.5 million in the prior year-to-date period, primarily driven by an increase in cash collected from wax pass sales, partially offset by a decrease in same day services[12](index=12&type=chunk) - Total revenue of **$107.3 million** decreased **3.9%** from $111.7 million in the prior year-to-date period[12](index=12&type=chunk)[34](index=34&type=chunk) - Same-store sales increased **0.5%**[12](index=12&type=chunk) - Net income of **$8.0 million** decreased **16.9%**, and Adjusted Net Income of **$21.3 million** increased **7.9%**[12](index=12&type=chunk) - Adjusted EBITDA of **$40.4 million** increased **5.9%**, and Adjusted EBITDA Margin increased **350 basis points** to **37.6%**[12](index=12&type=chunk) - The Company repurchased approximately **0.2 million shares** of its Class A Common Stock during the period for **$1.1 million**, bringing cumulative repurchases under the Company's current **$50 million** authorization to **$41.2 million**[12](index=12&type=chunk) [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of July 5, 2025, the company reported $63.9 million in cash, $388.0 million in senior secured notes, and $15.2 million in net operating cash flow Balance Sheet and Cash Flow Summary | Metric | Amount (in thousands) | | :-------------------------- | :-------------------- | | Cash and cash equivalents | $63,891 | | Restricted cash | $6,439 | | Borrowings outstanding (senior secured notes) | $388,000 | | Revolving credit facility | $0 outstanding | - Net cash provided by operating activities totaled **$15.2 million** during the quarter[10](index=10&type=chunk) [Outlook & Guidance](index=2&type=section&id=Outlook%20%26%20Guidance) This section provides the company's updated financial outlook for fiscal 2025, including projections for sales, revenue, and net center changes [Fiscal 2025 Financial Outlook](index=2&type=section&id=Fiscal%202025%20Financial%20Outlook) The company updated its fiscal 2025 financial outlook, lowering sales and revenue projections while reiterating Adjusted Net Income and Adjusted EBITDA guidance Fiscal 2025 Financial Guidance | Metric | Current Outlook | Previous Outlook | | :-------------------- | :-------------------- | :-------------------- | | System-Wide Sales | $940 million to $950 million | $940 million to $960 million | | Total Revenue | $205 million to $209 million | $210 million to $214 million | | Same-Store Sales | 0.0% to 1.0% | 0.0% to 2.0% | | Adjusted Net Income | $31 million to $33 million | $31 million to $33 million | | Adjusted EBITDA | $69 million to $71 million | $69 million to $71 million | [Fiscal 2025 Net New Center Outlook](index=3&type=section&id=Fiscal%202025%20Net%20New%20Center%20Outlook) The company projects 10 to 12 new center openings and 40 to 60 closures in fiscal 2025, resulting in 28 to 50 net center closings - The Company continues to estimate that franchisees will open **10 to 12 new centers** and close **40 to 60 centers** in fiscal 2025[13](index=13&type=chunk) - This translates to **28 to 50 net center closings** in fiscal 2025[13](index=13&type=chunk) - The Company expects **15 to 16 net center closings** during the third quarter[13](index=13&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section provides background on European Wax Center, disclaimers for forward-looking statements, non-GAAP financial measure definitions, and a glossary of key business metrics [About European Wax Center, Inc.](index=3&type=section&id=About%20European%20Wax%20Center%2C%20Inc.) European Wax Center, Inc. is the leading U.S. franchisor and operator of out-of-home waxing services, with over 1,000 centers and $951 million in FY2024 sales - European Wax Center, Inc. (NASDAQ: EWCZ) is the leading franchisor and operator of out-of-home waxing services in the United States[16](index=16&type=chunk) - The company offers an unparalleled, professional personal care experience administered by highly trained wax specialists within the privacy of clean, individual waxing suites, performing more than **23 million services** per year[16](index=16&type=chunk) - European Wax Center was founded in 2004 and is headquartered in Plano, Texas; its network includes more than **1,000 centers** in **44 states**, which generated sales of **$951 million** in fiscal 2024[16](index=16&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section clarifies that the press release contains forward-looking statements regarding the company's strategy and projections, subject to various known and unknown risks - This press release includes "forward-looking statements" regarding European Wax Center, Inc.'s strategy, outlook, growth prospects, operational and financial outlook for fiscal 2025, expected center openings and closures, and capital allocation strategy[17](index=17&type=chunk) - These statements are based on current expectations and beliefs but involve known and unknown risks, uncertainties, and other important factors that may cause actual results, performance, or achievements to be materially different[18](index=18&type=chunk) - Key factors that could cause actual results to differ include operational and financial results of franchisees, ability to attract and retain guests, competition, impact of growth, labor costs, supply chain issues, intellectual property, indebtedness, economic conditions, and regulatory compliance[18](index=18&type=chunk)[19](index=19&type=chunk) [Non-GAAP Financial Measures Disclosure](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Disclosure) The company uses non-GAAP financial measures like Adjusted EBITDA and Adjusted Net Income to assess performance, with a revised definition for Adjusted Net Income in Q1 2025 - The Company includes non-GAAP financial measures such as Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Net Leverage Ratio to assess operating performance[21](index=21&type=chunk) - Definitions are provided for EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Net Income[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The definition of Adjusted Net Income was revised in the first quarter of 2025 to exclude the impact of non-cash amortization of intangible assets, which management does not view as part of core operations, to enable clearer evaluation of core operating performance[25](index=25&type=chunk)[26](index=26&type=chunk) [Glossary of Key Business Metrics](index=5&type=section&id=Glossary%20of%20Key%20Business%20Metrics) This section defines key business metrics, including System-Wide Sales, which reflect overall network performance, and Same-Store Sales, which measure existing center performance - **System-Wide Sales** represent sales from same day services, retail sales and cash collected from wax passes for all centers in our network, including both franchisee-owned and corporate-owned centers; this measure allows assessment of royalty revenue, overall center performance, brand health, and market position[29](index=29&type=chunk) - **Same-Store Sales** reflect the change in sales over a comparable 52-week period year over year from services performed and retail sales for the same-store base, excluding the impact of new center openings and closures; this measure highlights the performance of existing centers[30](index=30&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the Condensed Consolidated Balance Sheets, Statements of Operations, and Statements of Cash Flows for European Wax Center, Inc. [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show total assets increased to $716.4 million and total liabilities slightly decreased, leading to higher stockholders' equity as of July 5, 2025 Condensed Consolidated Balance Sheets | Item | July 5, 2025 (in thousands) | January 4, 2025 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total assets | $716,376 | $707,067 | | Total liabilities | $610,514 | $615,475 | | Total stockholders' equity | $105,862 | $91,592 | | Cash and cash equivalents | $63,891 | $49,725 | | Long-term debt, net | $374,019 | $373,246 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue and net income decreased for both the quarter and year-to-date periods, with diluted EPS for Class A Common Stock remaining flat for the quarter Condensed Consolidated Statements of Operations | Item | 13 Weeks Ended July 5, 2025 (in thousands) | 13 Weeks Ended July 6, 2024 (in thousands) | 26 Weeks Ended July 5, 2025 (in thousands) | 26 Weeks Ended July 6, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $55,911 | $59,871 | $107,338 | $111,745 | | Income from operations | $14,069 | $14,281 | $24,651 | $25,463 | | NET INCOME | $5,393 | $5,924 | $7,963 | $9,578 | | NET INCOME ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC. | $3,752 | $4,249 | $5,487 | $7,014 | | Diluted - Class A Common Stock EPS | $0.09 | $0.09 | $0.13 | $0.15 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased for the year-to-date period, while net cash used in financing activities significantly decreased, leading to a higher net increase in cash Condensed Consolidated Statements of Cash Flows | Item | 26 Weeks Ended July 5, 2025 (in thousands) | 26 Weeks Ended July 6, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $27,904 | $25,131 | | Net cash used in investing activities | $(1,363) | $(80) | | Net cash used in financing activities | $(12,405) | $(22,130) | | Net increase in cash, cash equivalents and restricted cash | $14,136 | $2,921 | | Cash, cash equivalents and restricted cash, end of period | $70,330 | $62,149 | [Non-GAAP Reconciliations](index=9&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of GAAP Net Income to Adjusted Net Income, EBITDA, and Adjusted EBITDA, along with the Net Leverage Ratio calculation [Reconciliation of Net Income to Adjusted Net Income](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) This reconciliation details adjustments from GAAP Net Income to Adjusted Net Income, notably excluding amortization of intangible assets for clearer core operational insights Reconciliation of Net Income to Adjusted Net Income | Item | 13 Weeks Ended July 5, 2025 (in thousands) | 13 Weeks Ended July 6, 2024 (in thousands) | 26 Weeks Ended July 5, 2025 (in thousands) | 26 Weeks Ended July 6, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $5,393 | $5,924 | $7,963 | $9,578 | | Share-based compensation | $2,379 | $1,941 | $4,943 | $3,323 | | Amortization of intangible assets | $4,834 | $4,834 | $9,667 | $9,667 | | Adjusted Net Income | $11,773 | $11,146 | $21,284 | $19,732 | [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This reconciliation details adjustments from GAAP Net Income to EBITDA and Adjusted EBITDA, highlighting increased Adjusted EBITDA and Adjusted EBITDA Margin across all periods Reconciliation of Net Income to EBITDA and Adjusted EBITDA | Item | 13 Weeks Ended July 5, 2025 (in thousands) | 13 Weeks Ended July 6, 2024 (in thousands) | 26 Weeks Ended July 5, 2025 (in thousands) | 26 Weeks Ended July 6, 2024 (in thousands) | Trailing Twelve Months Ended July 5, 2025 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :---------------------------------------- | | Net income | $5,393 | $5,924 | $7,963 | $9,578 | $13,066 | | Interest expense, net | $6,594 | $6,367 | $13,227 | $12,703 | $26,016 | | Income tax expense | $2,060 | $1,721 | $3,441 | $2,933 | $2,698 | | Depreciation and amortization | $5,003 | $5,079 | $9,984 | $10,174 | $20,090 | | EBITDA | $19,050 | $19,091 | $34,615 | $35,388 | $61,870 | | Share-based compensation | $2,379 | $1,941 | $4,943 | $3,323 | $6,770 | | Adjusted EBITDA | $21,613 | $20,642 | $40,407 | $38,140 | $77,772 | | Total revenue | $55,911 | $59,871 | $107,338 | $111,745 | $212,509 | | Net income margin | 9.6% | 9.9% | 7.4% | 8.6% | 6.1% | | Adjusted EBITDA Margin | 38.7% | 34.5% | 37.6% | 34.1% | 36.6% | [Reconciliation of Total Debt to Net Leverage Ratio](index=10&type=section&id=Reconciliation%20of%20Total%20Debt%20to%20Net%20Leverage%20Ratio) This section calculates the Net Leverage Ratio as 4.2x for the trailing twelve months ended July 5, 2025, based on net debt and Adjusted EBITDA Reconciliation of Total Debt to Net Leverage Ratio | Item | Trailing Twelve Months Ended July 5, 2025 (in thousands) | | :-------------------------- | :---------------------------------------- | | Total debt | $388,000 | | Less: Cash and cash equivalents | $(63,891) | | Net Debt | $324,109 | | Adjusted EBITDA | $77,772 | | Net Leverage Ratio | 4.2 x | [Contact Information](index=10&type=section&id=Contact%20Information) This section provides contact details for investor relations and media inquiries for European Wax Center, Inc. [Investor and Media Contacts](index=10&type=section&id=Investor%20and%20Media%20Contacts) Investor relations and media contact information is provided for European Wax Center, Inc. - Investor Contact: Edelman Smithfield for European Wax Center, Inc. (EWCIR@edelman.com)[44](index=44&type=chunk) - Media Contact: Zeno Group, Sophia Tortorella (sophia.tortorella@zenogroup.com, 312-752-6851)[44](index=44&type=chunk)

Core Insights - European Wax Center, Inc. reported financial results for the second quarter of fiscal 2025, indicating a transitional year focused on strengthening the business foundation through data-driven strategies and disciplined execution [2][3] - The company aims to drive traffic and sales growth, improve profitability for franchisees, and pursue profitable expansion [3] Financial Performance - System-wide sales decreased by 1.0% to $257.6 million from $260.2 million in the prior year period, primarily due to a decline in same-day services and retail sales [6][7] - Total revenue for the quarter was $55.9 million, down 6.6% from $59.9 million in the prior year [6][7] - Same-store sales increased by 0.3% [6][7] - GAAP net income decreased by 9.0% to $5.4 million, while adjusted net income increased by 5.6% to $11.8 million [6][7] - Adjusted EBITDA rose by 4.7% to $21.6 million, with an adjusted EBITDA margin increase of 420 basis points to 38.7% [6][7] Year-to-Date Results - For the first half of fiscal 2025, system-wide sales increased by 0.4% to $483.5 million, driven by cash collected from wax pass sales [13] - Total revenue for the year-to-date period was $107.3 million, down 3.9% from the previous year [13] - Same-store sales increased by 0.5% [13] - Net income for the first half decreased by 16.9% to $8.0 million, while adjusted net income increased by 7.9% to $21.3 million [13] Balance Sheet and Cash Flow - The company ended the second quarter with $63.9 million in cash and cash equivalents and $388.0 million in borrowings outstanding [8] - Net cash provided by operating activities totaled $15.2 million during the quarter [8] Fiscal 2025 Financial Outlook - The company updated its fiscal 2025 outlook, projecting system-wide sales between $940 million and $950 million, total revenue between $205 million and $209 million, and same-store sales growth of 0.0% to 1.0% [9][11] - The adjusted net income outlook remains between $31 million and $33 million, with adjusted EBITDA also projected between $69 million and $71 million [11] Center Openings and Closures - Franchisees opened 2 centers and closed 5 during the second quarter, maintaining a total of 1,059 centers [6][7] - For fiscal 2025, the company estimates franchisees will open 10 to 12 new centers while closing 40 to 60 centers, resulting in a net closure of 28 to 50 centers [12]

Group 1 - European Wax Center, Inc. (EWCZ) is expected to report quarterly earnings of $0.19 per share, a 26.7% increase year-over-year, while revenues are forecasted at $56.93 million, reflecting a 4.9% decrease compared to the same period last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have collectively reassessed their initial estimates during this period [2] - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock price performance [3] Group 2 - Analysts project 'Revenue- Marketing fees' to reach $7.79 million, a decrease of 4.3% from the prior-year quarter [5] - 'Revenue- Royalty fees' is estimated at $14.02 million, suggesting a 3.1% year-over-year decline [5] - 'Revenue- Product sales' is expected to be $31.29 million, indicating a 7.8% decrease year-over-year [5] - 'Revenue- Other revenue' is projected at $3.22 million, reflecting a 3.7% decline from the previous year [6] - The consensus for 'Ending center count' is 1,054, down from 1,059 in the same quarter last year [6] Group 3 - Over the past month, European Wax Center shares have declined by 23.5%, while the Zacks S&P 500 composite has increased by 1.9% [7] - EWCZ holds a Zacks Rank 3 (Hold), suggesting that its performance is likely to align with the overall market in the near future [7]

Core Viewpoint - European Wax Center, Inc. is set to report its second quarter fiscal 2025 financial results on August 13, 2025, with a conference call scheduled for 8:00 a.m. ET [1] Company Overview - European Wax Center, Inc. is the leading franchisor and operator of out-of-home waxing services in the United States, with over 1,000 centers across 44 states [3] - The company performs more than 23 million services annually, focusing on providing a professional personal care experience [3] - In fiscal 2024, the company generated sales of $951 million [3] - The company utilizes its proprietary Comfort Wax® and offers a range of products to enhance waxing results [3] - European Wax Center is recognized as a Certified™ Great Place to Work® [3]

Core Insights - European Wax Center, Inc. (EWCZ) is shifting from aggressive expansion to a more measured strategy to stabilize its franchise network and restore unit-level performance [1][5] Franchise Performance - In Q1 FY25, franchisees opened five centers and closed ten, resulting in a total of 1,062 locations, reflecting a modest 1% increase year-over-year [2] - The company anticipates seven to eight net closures in Q2 FY25 and expects 10 to 12 gross openings and 40 to 60 closures for the full fiscal year, indicating a deliberate pruning of underperforming units [2][9] Strategic Adjustments - Previous expansion outpaced market demand, leading to declining transactions and margin pressure; EWCZ is now implementing a rigorous site approval process and enhancing its market planning tool for better analytics and forecasting [3] - The company is focusing on high-potential, underpenetrated trade areas with stronger demand profiles [3] Operational Enhancements - EWCZ is not only downsizing but also undertaking a broader reset to strengthen operations, expand support for franchisees, improve operational tools, and increase engagement through its learning platform [4] - These initiatives aim to enhance visibility, accountability, and execution across the system [4] Future Growth Plans - EWCZ plans to return to net unit growth by late 2026, supported by a strategically positioned network that prioritizes data-driven site selection and sustainable unit economics [5] Industry Comparisons - Competitors like Helen of Troy (HELE) and Coty Inc. (COTY) are also realigning their strategies towards operational simplicity and profitability, reflecting a broader industry trend away from volume-driven growth [6][7] Financial Performance - EWCZ shares have increased by 50% over the past three months, compared to the industry's growth of 48.8% [8] - The company trades at a forward price-to-earnings ratio of 7.23X, significantly lower than the industry average of 28.57X [10] - The Zacks Consensus Estimate for EWCZ's fiscal 2025 and 2026 earnings indicates year-over-year growth of 35.6% and 8.2%, respectively [11]

Core Insights - European Wax Center (EWCZ) and Sally Beauty Holdings (SBH) target different segments within the beauty and personal care industry, with EWCZ focusing on a service-driven model through franchised waxing centers, while SBH emphasizes retailing professional-grade beauty products [1][2] European Wax Center (EWCZ) - EWCZ is developing a data-rich, digital-first marketing platform to enhance guest acquisition, introducing new tools in Q1 2025 to measure advertising effectiveness and reduce cost per acquisition [3] - The company is enhancing franchisee profitability and operational support by expanding the franchisee support team and increasing engagement with the learning management system by 50% [4] - EWCZ is adopting a disciplined expansion strategy, targeting underpenetrated areas for new center openings in 2026, supported by improved market planning tools and a rigorous site approval process [5] - Despite strategic advancements, EWCZ faces rising SG&A costs and elevated interest expenses, leading to a projected net reduction in center count for 2025 [6] - EWCZ's stock gained 54.8% over three months, outperforming SBH's 27.2% gain, reflecting strength in its digital and franchise model [9][16] - The Zacks Consensus Estimate for EWCZ's 2025 earnings per share (EPS) indicates a year-over-year growth of 35.6%, with estimates remaining unchanged at 61 cents [12] Sally Beauty Holdings (SBH) - SBH is focused on enhancing customer centricity, accelerating high-margin owned brand growth, and improving operational efficiency, with global e-commerce sales reaching $94 million in Q2 fiscal 2025, a 6% increase [7] - The company is executing a brand refresh starting May 2025 to enhance its position as a beauty destination, with positive feedback from initial store updates in Orlando [8] - Operational excellence is a priority for SBH, with the Fuel for Growth program delivering $20 million in pre-tax savings in the first half of fiscal 2025, and adjusted SG&A declining by $11 million in Q2 [10] - Despite these efforts, SBH is navigating a challenging macro environment with cautious consumer spending and softness in hair care categories [11] - The Zacks Consensus Estimate for SBH's fiscal 2025 EPS suggests a year-over-year growth of 3.6%, with estimates remaining unchanged at $1.75 [14] Comparative Analysis - EWCZ's forward P/E ratio is 7.51X, higher than SBH's 5.52X, indicating a market premium for EWCZ's growth potential [17] - EWCZ is better positioned for long-term growth due to its franchise-based model and digital marketing execution, while SBH's strengths in owned brands and cost control may be limited by softer category trends [19]

Core Insights - European Wax Center, Inc. (EWCZ) is transitioning to a digital-first marketing strategy, showing positive trends in new guest acquisition and optimizing marketing spend through data-driven insights [1][2][3] Marketing Strategy - The company is moving away from traditional marketing to a modern, data-rich approach, enhancing brand identity and leveraging partnerships with digital and social media platforms [2][3] - EWCZ is centralizing marketing functions in-house and utilizing advanced measurement tools to track ad effectiveness, aiming for solid ROI by 2025 [3][4] Guest Engagement - EWCZ is focusing on higher-value, loyal guest segments while also increasing engagement with non-core guests through enhanced email and SMS strategies [4][9] - New guest trends have shown consistent monthly improvement, reinforcing confidence in the company's growth strategy [3] Competitive Landscape - Key competitors include The Estée Lauder Companies Inc. and Coty Inc., both of which are enhancing their digital marketing capabilities and focusing on personalized campaigns [5][6][7] Financial Performance - EWCZ shares have declined by 24.1% year-to-date, contrasting with the industry's drop of only 0.9% [8] - The company trades at a forward price-to-earnings ratio of 9.55X, significantly lower than the industry average of 26.61X [10] - Zacks Consensus Estimate indicates EWCZ's fiscal 2025 and fiscal 2026 earnings per share (EPS) are expected to grow by 35.6% and 8.2% year-over-year, respectively [11][12]