Beauty and waxing service franchise European Wax Center (NASDAQ:EWCZ) beat Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 2.2% year on year to $54.19 million. The company expects the full year’s revenue to be around $207 million, close to analysts’ estimates. Its non-GAAP profit of $0.16 per share was 60% above analysts’ consensus estimates.
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European Wax Center (EWCZ) Q3 CY2025 Highlights:
- Revenue: $54.19 million vs analyst estimates of $52.75 million (2.2% year-on-year decline, 2.7% beat)
- Adjusted EPS: $0.16 vs analyst estimates of $0.10 (60% beat)
- Adjusted EBITDA: $20.17 million vs analyst estimates of $15.76 million (37.2% margin, 28% beat)
- The company reconfirmed its revenue guidance for the full year of $207 million at the midpoint
- EBITDA guidance for the full year is $70 million at the midpoint, below analyst estimates of $71.23 million
- Operating Margin: 25.6%, up from 17.1% in the same quarter last year
- Locations: 1,053 at quarter end, down from 1,064 in the same quarter last year
- Same-Store Sales were flat year on year, in line with the same quarter last year
- Market Capitalization: $180.5 million
StockStory’s Take
European Wax Center delivered third quarter results that exceeded Wall Street expectations, prompting a strong positive market reaction. Management highlighted disciplined cost control, improved operational efficiency, and a stable core guest base as critical contributors to the quarter’s outperformance. CEO Chris Morris emphasized, “Retention is stable quarter over quarter, fewer guests are lapsing, and engagement in our Wax Pass program remains strong, which is an enduring source of strength for us.” Enhanced data-driven marketing and ongoing efforts to optimize franchisee operations underpinned the company’s improved profitability.
Looking ahead, management’s outlook is anchored in driving new guest acquisition and increasing visit frequency among existing clients. Morris noted, “Our focus now is on relevance, creating consistent, personalized communication with guests that more directly speak to our guests about what matters to them.” The leadership team is also prioritizing operational excellence, with new initiatives aimed at supporting franchisees and refining brand positioning to better engage high-value audiences. These strategies are expected to shape the company’s growth trajectory and help return to net positive center growth by the end of next year.
Key Insights from Management’s Remarks
Management credited margin improvement to targeted marketing, franchisee support, and operational adjustments, while acknowledging the need to strengthen new guest acquisition.
- Data-driven marketing refinement: European Wax Center sharpened its marketing approach, eliminating underperforming tactics and focusing on channels that deliver higher guest engagement and efficiency. Management cited new structured guest lifecycle campaigns and enhanced reporting for franchisees, which provide actionable insights into visit frequency and guest retention.
- Guest retention and engagement: Stability in the core guest base, with a slight uptick in Wax Pass sales, was highlighted as a foundation for future growth. The company improved its ability to contact guests—rising from 38% to 60%—which CEO Chris Morris explained enables more effective outreach and frequency campaigns.
- Operational leadership changes: The appointment of Angela Jaskolski as Chief Operating Officer brought greater focus to in-center operational excellence and franchisee support. Jaskolski’s efforts include hands-on coaching and granular operational analysis to improve guest experience and profitability at the unit level.
- Center closures and portfolio health: Management narrowed expected center closures, attributing this to improved franchisee partnerships and proactive analysis of underperforming locations. Most closures are concentrated among persistently low-volume units affected by factors such as real estate quality and local market dynamics.
- Brand investment and influencer strategy: European Wax Center introduced a revamped influencer strategy—showing a 75% increase in efficiency—and engaged a new brand agency partner to refine messaging and connect better with target audiences. These initiatives are already delivering higher website engagement and are expected to play a major role in growth plans for 2026.
Drivers of Future Performance
Management’s outlook centers on growing guest traffic and enhancing franchisee unit economics while mitigating cost pressures.
- New guest acquisition focus: Leadership acknowledged ongoing challenges in attracting new guests and outlined plans to leverage improved analytics, personalized marketing, and a refreshed brand identity. The company is optimistic that these efforts, combined with a new influencer strategy and agency partnerships, will drive higher-quality guest acquisition, especially in underpenetrated markets.
- Operational improvement for franchisees: The company is increasing support for franchisees through expanded training, better data, and targeted operational initiatives. By equipping franchisees with tools to drive local performance and close profitability gaps, management aims to reduce closure risk and return to net positive center growth by year-end 2026.
- Cost management and supply chain flexibility: Management continues to prioritize cost discipline, particularly in advertising and supply chain optimization. Ongoing efforts to diversify sourcing and manage tariffs are expected to help maintain margins, while technology investments are being evaluated for further operational upside.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be monitoring (1) progress in scaling new guest acquisition and effectiveness of influencer and brand marketing initiatives, (2) improvements in franchisee unit economics and reduced closure rates, and (3) consistent execution of operational strategies that drive visit frequency among existing guests. Additionally, we will watch for signs of margin stability despite ongoing cost pressures and indicators that development momentum is building toward positive net center growth.
European Wax Center currently trades at $4.31, up from $3.65 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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