European Wax Center’s first quarter saw a strong market reaction as the company surpassed Wall Street’s revenue and adjusted profit expectations, despite flat year-over-year sales. Management credited the outperformance to early progress in modernizing its marketing strategy, improvements in franchisee support, and cost discipline. CEO Chris Morris highlighted that new guest trends were improving each month, supported by data-driven digital marketing and enhanced engagement with non-core guests. Management also emphasized operational changes aimed at narrowing the performance gap between underperforming and healthy centers, with new tools and increased direct support for franchise partners.
Is now the time to buy EWCZ? Find out in our full research report (it’s free).
European Wax Center (EWCZ) Q1 CY2025 Highlights:
- Revenue: $51.43 million vs analyst estimates of $49.61 million (flat year on year, 3.7% beat)
- Adjusted EBITDA: $18.75 million vs analyst estimates of $15.76 million (36.5% margin, 19% beat)
- The company reconfirmed its revenue guidance for the full year of $212 million at the midpoint
- EBITDA guidance for the full year is $70 million at the midpoint, in line with analyst expectations
- Operating Margin: 20.6%, in line with the same quarter last year
- Locations: 1,062 at quarter end, up from 1,051 in the same quarter last year
- Same-Store Sales were flat year on year (-1.2% in the same quarter last year)
- Market Capitalization: $250.1 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions European Wax Center’s Q1 Earnings Call
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Dana Telsey (Telsey Advisory Group) asked about changes in promotional activity and Wax Pass customer trends. CEO Chris Morris said there was no material change in promotions and highlighted gradual improvement in new guest and Wax Pass sales, describing the overall business as stabilizing.
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Jonathan Komp (Baird) questioned the increase in costs to build new centers and whether inflation or operational factors were the main driver. Morris attributed the rise to inflationary pressures and emphasized focusing expansion on markets with sufficient demand and strong franchisee returns.
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John Heinbockel (Guggenheim) asked how many centers would remain underperforming after current closures and what drives low performance. Morris responded that most issues were related to low average unit volumes and that new marketing and segmentation efforts target these weaknesses.
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Korinne Wolfmeyer (Piper Sandler) inquired about advertising spend timing and macro trends. CFO Tom Kim explained that marketing expenses will be more evenly spread throughout the year, and Morris emphasized the resilience of core guests despite a challenging consumer environment.
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Scot Ciccarelli (Truist) pressed for specific marketing changes to drive new customer acquisition. Morris pointed to new measurement technology, creative message testing, and a more targeted approach to paid media as early but promising initiatives.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will closely monitor (1) the effectiveness of new digital marketing campaigns in driving guest growth, (2) the operational turnaround and profitability improvements at underperforming centers, and (3) the pace and quality of new center openings versus closures. Additional attention will be paid to how well management navigates tariff-related cost pressures and adapts its supply chain and sourcing strategies.
European Wax Center currently trades at $5.89, up from $3.94 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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