Industry Overview - The Zacks Cosmetics industry is facing challenges due to softer consumer spending, uneven retail restocking, and persistent cost pressures, which are squeezing margins and reshaping demand trends [1][4]. - Companies in this industry manufacture and market a variety of beauty and personal care products, including skincare, fragrance, makeup, and hair care items [3]. Current Challenges - Rising costs for packaging, ingredients, logistics, and promotional activities are impacting profit margins, while trade tensions and potential supply chain disruptions add uncertainty [1][4]. - Consumers are prioritizing essential purchases over discretionary spending, leading to decreased demand for cosmetics [4]. Long-term Growth Drivers - Despite near-term pressures, long-term fundamentals are supported by innovation and digital transformation, with companies investing in product innovation and enhanced e-commerce capabilities [2][6]. - The demand for organic and clean beauty products is growing, prompting companies to innovate and expand their offerings [6]. Industry Performance - The Zacks Cosmetics industry currently holds a Zacks Industry Rank of 177, placing it in the bottom 27% of over 243 Zacks industries, indicating dull near-term prospects [7][8]. - The industry has underperformed the S&P 500, returning 10% over the past year compared to the S&P 500's growth of 18.3% [11]. Valuation Metrics - The industry is trading at a forward 12-month price-to-earnings (P/E) ratio of 28.99X, higher than the S&P 500's 23.45X and the sector's 16.42X [14]. Notable Companies - **The Estee Lauder Companies**: Focused on restoring profitability and driving long-term growth through innovation and digital channels, with a Zacks Rank of 1 [17]. The consensus estimate for its EPS has increased by 0.5% to $2.15 [18]. - **Coty Inc.**: Currently holds a Zacks Rank of 3, focusing on stabilizing its Consumer Beauty segment and enhancing e-commerce capabilities. The EPS estimate remains unchanged at 42 cents [21][22]. - **Helen of Troy Limited**: Also holds a Zacks Rank of 3, pursuing sustainable growth through its Leadership Brands and strategic investments. The EPS estimate has decreased by 1.2% to $4.05 [29][24]. - **European Wax Center, Inc.**: Positioned for long-term expansion with a Zacks Rank of 3, focusing on customer acquisition and operational productivity. The EPS estimate has decreased by 4.7% to 61 cents [27][28].

Core Insights - European Wax Center, Inc. (EWCZ) reported a revenue of $54.19 million for the quarter ended September 2025, reflecting a decrease of 2.3% year-over-year, while EPS increased to $0.25 from $0.12 in the same quarter last year, indicating a strong performance against expectations [1] - The revenue exceeded the Zacks Consensus Estimate of $52.79 million by 2.65%, and the EPS surpassed the consensus estimate of $0.14 by 78.57% [1] Financial Performance Metrics - System-wide sales reached $238.2 million, slightly below the average estimate of $239.69 million from three analysts [4] - Same-store sales were reported at 0.2%, compared to the estimated 0.4% by analysts [4] - The ending center count was 1,053, surpassing the average estimate of 1,044 [4] - Revenue from marketing fees was $7.57 million, marginally below the estimated $7.58 million, representing a year-over-year decline of 0.4% [4] - Royalty fees revenue was $13.2 million, slightly above the average estimate of $13.15 million, but down 1.6% year-over-year [4] - Product sales revenue was $30.61 million, exceeding the estimated $29.26 million, but reflecting a 3.4% decrease year-over-year [4] - Other revenue remained consistent at $2.81 million, matching the average estimate and showing a year-over-year increase of 2.9% [4] Stock Performance - Over the past month, shares of European Wax Center have returned +3.4%, compared to a +4.6% change in the Zacks S&P 500 composite [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 - System-wide sales for Q3 2025 were $238.2 million, a decrease of 0.8% year-over-year, primarily due to closed centers [20][22] - Same-store sales grew by 20 basis points year-over-year [20] - Adjusted EBITDA increased by 9.6% to $20.2 million from $18.4 million in the prior year, with an adjusted EBITDA margin increase of 400 basis points to 37.2% [23] - Total revenue decreased by approximately $1.2 million, or 2.2%, primarily driven by lower contributions from wholesale product and retail revenue [22] - SG&A expenses decreased by $4.5 million to $13 million, reflecting timing of payroll and benefits, professional fees, and marketing spend [23] Business Line Data and Key Metrics Changes - The company opened three growth centers during the quarter and closed nine, resulting in six net closures, which was better than the expected closure range of 15-16 [22] - Wax Pass sales saw a slight year-over-year uptick, indicating stability in core guest engagement [39] Market Data and Key Metrics Changes - Com trends were strong through July and mid-August before softening in the latter half of August and September [21] - Regional performance showed improvement in California, while areas like New York, Philadelphia, and D.C. experienced more weakness [39] Company Strategy and Development Direction - The company is focused on three strategic priorities: driving sales through traffic growth, improving four-wall profitability for franchisees through operational excellence, and pursuing disciplined, profitable expansion [7][15] - A new brand agency has been brought on to refine brand identity and connect with high-value audiences, with initiatives expected to scale meaningfully in 2026 [12][56] - The company is narrowing its closure range to between 35 and 40 for the year, reflecting improved franchisee partnerships and strategic initiatives [25][41] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year financial guidance, expecting system-wide sales of $940-$950 million and same-store sales to be flat to up 1% for the full year [26][27] - The company anticipates continued pressure on new guest acquisition but expects improvement in 2026 [26][28] - Management expressed confidence in the strategic groundwork established, which is beginning to take hold and position the company for sustainable long-term growth [28][29] Other Important Information - The company ended Q3 with 1,053 centers, down 1% year-over-year, and had $73.6 million in cash with a net leverage ratio of 3.9 times [22][24] - The company continues to expect adjusted net income between $31 million and $33 million, reflecting an approximately 23% effective tax rate before discrete items [27] Q&A Session Summary Question: Can you quantify the lift from revamped marketing efforts? - Management noted that they have improved contactability from 38% to 60% of guests, which has enhanced engagement and driven frequency improvements [32][33] Question: What trends are observed in Wax Pass sales and regional performance? - Wax Pass sales have seen a slight uptick year-over-year, with stability in the core guest base, while California has shown improvement compared to New York, Philadelphia, and D.C. [39] Question: What are the expectations for center openings and closures moving forward? - Management indicated that they are pleased to narrow the closure range and expect closures in early 2026 but anticipate returning to net positive growth by the end of 2026 [41][42] Question: What factors are contributing to the confidence in alleviating pressures on closures? - The closures are primarily low-volume units due to various factors, and management has a good grip on the overall health of the portfolio, which gives them confidence moving forward [46][48] Question: What is the approach to balancing guest count and ticket growth? - Management emphasized a balanced approach to driving traffic and ticket growth, focusing on both increasing guest count and smart pricing strategies [59][60]

Financial Data and Key Metrics Changes - System-wide sales for Q3 2025 were $238.2 million, a decrease of 0.8% year-over-year, primarily due to closed centers [20][22] - Same-store sales grew by 20 basis points year-over-year [20] - Adjusted EBITDA increased by 9.6% to $20.2 million from $18.4 million in the prior year, with an adjusted EBITDA margin improvement of 400 basis points to 37.2% [23] - Total revenue decreased by approximately $1.2 million, or 2.2%, primarily due to lower contributions from wholesale product and retail revenue [22] - Net interest expense increased to $6.5 million from $6.3 million in the prior year [23] Business Line Data and Key Metrics Changes - The company opened three growth centers during the quarter and closed nine, resulting in six net closures, which was better than the expected closure range of 15-16 [22] - Wax Pass sales saw a slight year-over-year uptick, indicating stability in core guest engagement [39] Market Data and Key Metrics Changes - Com trends were strong through July and mid-August before softening in the latter half of August and September [21] - Regional performance showed improvement in California, while areas like New York, Philadelphia, and DC experienced more weakness [39] Company Strategy and Development Direction - The company is focused on three strategic priorities: driving sales through traffic growth, improving four-wall profitability for franchisees, and pursuing disciplined, profitable expansion [7][12] - A new brand agency has been brought on to refine brand identity and connect with high-value audiences, with initiatives expected to scale meaningfully in 2026 [12][54] - The company expects to return to positive net center growth by year-end 2026, with a focus on new centers and markets with strong demand [17][40] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year financial guidance, expecting system-wide sales of $940-$950 million and same-store sales to be flat to up 1% for the full year [26][27] - The company is optimistic about the strategic groundwork established, which is beginning to take hold and position the company for sustainable long-term growth [28][29] - Management acknowledged that new guest acquisition remains pressured but expects improvement in 2026 [26][27] Other Important Information - The company narrowed its closure range for the year to between 35 and 40, reflecting timing shifts in anticipated closures and progress made on initiatives with franchisees [25][26] - The company ended the quarter with $73.6 million in cash and a net leverage ratio of 3.9 times [24] Q&A Session Summary Question: Can you quantify the lift from revamped marketing efforts? - Management noted that they have improved contactability from 38% to 60% of guests, which has enhanced engagement and driven frequency improvements [32][33] Question: What trends are observed in Wax Pass sales and regional performance? - Wax Pass sales have seen a slight uptick year-over-year, with stability in the core guest base, while California has shown improvement compared to weaker performance in New York, Philadelphia, and DC [39] Question: What are the expectations for center openings and closures moving forward? - Management indicated that closures are primarily low-volume units due to various factors, and they expect to return to net positive growth by the end of 2026 [40][46] Question: What is the outlook for new guest acquisition? - Management highlighted that robust data analytics and a refreshed brand identity are expected to enhance new guest acquisition efforts moving forward [54][55] Question: Can you provide insights on guest count versus ticket growth? - Management emphasized a balanced approach to driving traffic and ticket growth, focusing on both increasing guest count and smart pricing strategies [56][58]

Financial Data and Key Metrics Changes - System-wide sales for Q3 2025 were $238.2 million, a decrease of 0.8% year-over-year, primarily due to closed centers [19] - Same-store sales grew by 20 basis points year-over-year [19] - Adjusted EBITDA increased by 9.6% to $20.2 million from $18.4 million in the prior year [22] - Adjusted EBITDA margin improved by 400 basis points to 37.2% [22] - Total revenue decreased by approximately $1.2 million, or 2.2%, primarily due to lower contributions from wholesale product and retail revenue [20] - Gross margin increased modestly to 73.3% [21] - Adjusted net income rose by 14.2% to $10.7 million from $9.3 million last year [22] Business Line Data and Key Metrics Changes - The company opened three growth centers during the quarter and closed nine, resulting in six net closures [20] - The focus on traffic growth among both new and existing guests has been emphasized, with retention stable quarter-over-quarter [8][10] Market Data and Key Metrics Changes - The company ended Q3 with 1,053 centers, down 1% year-over-year [20] - Com trends were strong through July and mid-August before softening in the latter half of August and September [19] Company Strategy and Development Direction - The company is focused on three strategic priorities: driving sales through traffic growth, improving four-wall profitability for franchisees, and pursuing disciplined, profitable expansion [6][12] - A new brand agency has been brought on to refine the brand and connect with high-value audiences, with foundational work already completed [12][44] - The company expects to return to positive net center growth by year-end 2026 [17] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year financial guidance, expecting system-wide sales of $940-$950 million and same-store sales to be flat to up 1% for the full year [25] - The company is optimistic about the progress made in marketing and operational capabilities, which are expected to strengthen guest engagement and traffic [19][24] - Management noted that new guest acquisition remains pressured but anticipates improvement in 2026 [25][44] Other Important Information - The company narrowed its closure range to between 35 and 40 for the year, reflecting timing shifts in anticipated closures [24] - The company has a $40 million revolver fully undrawn and ended the quarter with $73.6 million in cash [23] Q&A Session Summary Question: Can you quantify the lift seen from revamped marketing efforts? - Management noted that they have improved contactability from 38% to 60% of guests, which has allowed for better engagement and improved frequency [30] Question: What trends are observed in Wax Pass sales and regional performance? - Wax Pass sales have seen a slight year-over-year uptick, with stability in the core guest base, while California has shown improvement compared to New York, Philadelphia, and DC [32][33] Question: What are the expectations for center openings and closures moving forward? - Management indicated that closures are primarily low-volume units due to various factors, and they expect to return to net positive growth by the end of 2026 [36][37] Question: What is the outlook for new guest acquisition? - Management highlighted that robust data analytics and a fresh brand identity are expected to enhance new guest acquisition efforts [41][44] Question: What factors might affect Q4 performance? - Management acknowledged timing situations that may impact year-over-year growth but remains confident in meeting full-year guidance [40]

Core Insights - European Wax Center, Inc. (EWCZ) reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.14 per share, and showing an increase from $0.12 per share a year ago, resulting in an earnings surprise of +78.57% [1] - The company achieved revenues of $54.19 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.65%, although this represents a decline from $55.43 million in the same quarter last year [2] - The stock has underperformed, losing approximately 45.3% year-to-date compared to the S&P 500's gain of 16.4% [3] Earnings Performance - Over the last four quarters, European Wax Center has consistently surpassed consensus EPS estimates, achieving this four times [2] - The company is currently rated Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.10 on revenues of $46.9 million, and for the current fiscal year, it is $0.69 on revenues of $207.03 million [7] - The earnings outlook will be influenced by management's commentary during the earnings call, which is crucial for assessing future stock movements [4][5] Industry Context - The Cosmetics industry, to which European Wax Center belongs, is currently ranked in the bottom 12% of over 250 Zacks industries, which may impact stock performance [8]

Revenue Performance - Total revenue for Q3 FY2025 was $54.2 million, a decrease of 2.2% compared to $55.4 million in Q3 FY2024[5] - Total revenue for the thirteen weeks ended October 4, 2025, was $54,185,000, a decrease of 2.2% compared to $55,430,000 for the same period in 2024[33] - Total revenue for the thirty-nine weeks ended October 4, 2025, was $161,523,000, compared to $167,175,000 for the same period in 2024, indicating a decline of 3.9%[41] Sales Metrics - System-wide sales decreased by 0.8% to $238.2 million from $240.2 million in the prior year period[6] - Same-store sales increased by 0.2% in Q3 FY2025[5] - Same-store sales growth is driven by increases in the number of transactions and average transaction size, reflecting the performance of existing centers[29] Income and Profitability - GAAP net income increased by 164.4% to $5.4 million from $2.0 million in the prior year[6] - Net income for the thirteen weeks ended October 4, 2025, was $5,367,000, compared to $2,030,000 for the same period in 2024, representing a 164% increase[36] - Adjusted net income for FY2025 is expected to be between $31 million and $33 million[10] - Adjusted Net Income for the thirty-nine weeks ended October 4, 2025, was $31,967,000, up from $29,086,000 in the prior year, reflecting a 9.7% growth[36] - Net income margin for the thirteen weeks ended October 4, 2025, was 9.9%, compared to 3.7% in the prior year, showing an improvement of 6.2 percentage points[41] EBITDA Metrics - Adjusted EBITDA for Q3 FY2025 was $20.2 million, reflecting a 9.6% increase from $18.4 million in Q3 FY2024[6] - Adjusted EBITDA for the trailing twelve months ended October 4, 2025, was $79,536,000, an increase from $56,550,000 in the previous year, marking a 40.6% rise[41] - Adjusted EBITDA margin for the thirty-nine weeks ended October 4, 2025, was 37.5%, up from 33.8% in the previous year, reflecting a 3.7 percentage point increase[41] Shareholder Actions - The company repurchased approximately 1.2 million shares for $4.6 million during the quarter, with cumulative repurchases reaching $45.9 million[7] Center Operations - The company ended Q3 FY2025 with 1,053 centers, a 1.0% decrease from 1,064 centers in the prior year[5] - The company estimates 12 new centers will open and 35 to 40 centers will close in FY2025, resulting in a net decrease of 23 to 28 centers[12] Cash and Assets - Cash and cash equivalents increased to $73,600,000 as of October 4, 2025, compared to $49,725,000 as of January 4, 2025[31] - Total assets as of October 4, 2025, were $720,697,000, up from $707,067,000 as of January 4, 2025[31] - Total liabilities as of October 4, 2025, were $615,888,000, slightly up from $615,475,000 as of January 4, 2025[31] Debt and Expenses - Long-term debt, net, was $374,412,000 as of October 4, 2025, compared to $373,246,000 as of January 4, 2025[31] - Interest expense for the thirty-nine weeks ended October 4, 2025, was $19,747,000, compared to $19,043,000 in the prior year, representing a 3.7% increase[41] - Legal settlements for the thirteen weeks ended October 4, 2025, amounted to $261,000, while the previous year reported no legal settlements, indicating a new expense category[41] Royalty Revenue - The company’s royalty revenue is calculated based on a percentage of franchised center sales, which is 6.0% of sales, net of retail product sales[28]

Core Insights - European Wax Center, Inc. reported solid third-quarter performance, focusing on traffic growth, franchisee profitability, and disciplined expansion [3][6][9] - The company ended the quarter with 1,053 centers, a 1.0% decrease from the previous year [6][7] - System-wide sales were $238.2 million, down 0.8% from $240.2 million in the prior year [6][7] - Total revenue decreased by 2.2% to $54.2 million compared to $55.4 million in the prior year [6][7] - Same-store sales increased by 0.2% [6][7] - GAAP net income rose 164.4% to $5.4 million, while adjusted net income increased by 14.2% to $10.7 million [6][7] - Adjusted EBITDA grew by 9.6% to $20.2 million, with an adjusted EBITDA margin of 37.2% [6][7] Financial Performance - Year-to-date system-wide sales were flat at $721.7 million compared to the prior year-to-date period [7] - Total revenue for the first three quarters decreased by 3.4% to $161.5 million [7] - Selling, general and administrative expenses decreased by 25.4% to $13.0 million [7] - Interest expense increased slightly to $6.5 million from $6.3 million in the prior year [7] - The effective tax rate decreased to 27.4% from 28.7% in the prior year [7] Balance Sheet and Cash Flow - The company ended the quarter with $73.6 million in cash and cash equivalents and $6.4 million in restricted cash [8] - Net cash provided by operating activities totaled $17.3 million during the quarter [8] - The company repurchased approximately 1.2 million shares for $4.6 million, with cumulative repurchases reaching $45.9 million under a $50 million authorization [7][8] Fiscal 2025 Outlook - The company reiterated its fiscal 2025 outlook for system-wide sales between $940 million and $950 million [9] - Franchisees are expected to open 12 new centers while closing 35 to 40 centers, resulting in a net decrease of 23 to 28 centers for the fiscal year [10]

Core Insights - European Wax Center, Inc. (EWCZ) is expected to report quarterly earnings of $0.14 per share, reflecting a year-over-year increase of 16.7% [1] - Revenue projections for the upcoming quarter are estimated at $52.79 million, which represents a decline of 4.8% compared to the same quarter last year [1] - There have been no revisions in the consensus EPS estimate over the last 30 days, indicating stability in analysts' forecasts [1] Revenue Estimates - The consensus estimate for 'Revenue- Marketing fees' is projected at $7.58 million, indicating a slight decrease of 0.3% year over year [3] - Analysts estimate 'Revenue- Royalty fees' to be $13.15 million, reflecting a decrease of 2% from the previous year [4] - 'Revenue- Product sales' is projected to reach $29.26 million, which is a decline of 7.7% from the year-ago quarter [4] Operational Metrics - The consensus among analysts is that the 'Ending center count' will be 1,044, down from 1,064 reported in the same quarter last year [4] - Shares of European Wax Center have increased by 8.2% over the past month, contrasting with a slight decline of 0.2% in the Zacks S&P 500 composite [5] - EWCZ holds a Zacks Rank of 3 (Hold), suggesting it is expected to perform in line with the overall market in the near future [5]

Core Points - European Wax Center, Inc. plans to report its third quarter fiscal 2025 financial results on November 12, 2025, before market opens [1] - The company will host a conference call at 8:00 a.m. ET to discuss the results [1] Company Overview - European Wax Center, Inc. is the leading franchisor and operator of out-of-home waxing services in the United States [3] - The company performs over 23 million services annually, providing a professional personal care experience in clean, individual waxing suites [3] - It generated sales of $951 million in fiscal 2024 and operates more than 1,000 centers across 44 states [3] - The company is known for its innovative Comfort Wax® and proprietary products that enhance waxing results [3] - European Wax Center was founded in 2004 and is headquartered in Plano, Texas [3]