European Wax Center 2025 Q1 Earnings Mixed Results with Net Income Down 29.7%

European Wax Center (EWCZ) reported its fiscal 2025 Q1 earnings on May 14th, 2025. The company's financial performance was mixed, with a notable decline in net income but improvements in some metrics. While system-wide sales increased by 2.1%, total revenue slightly decreased by 0.9%, reflecting ongoing challenges. Despite these hurdles, the company maintained its full-year guidance, projecting system-wide sales between $940 million and $960 million. European Wax Center is also focusing on strategic initiatives to support franchisee success and drive long-term growth. However, investors are advised to be cautious due to recent stock volatility and mixed financial results.

Revenue

European Wax Center experienced a slight year-over-year decline in total revenue for Q1 2025, dropping 0.9% to $51.43 million. Product sales were the largest contributor with $28.87 million, while royalty fees amounted to $12.43 million. Marketing fees contributed $7.20 million, and other revenue streams added $2.92 million, rounding out the company's diverse revenue mix.

Earnings/Net Income

European Wax Center's earnings per share (EPS) fell by 33.3% to $0.04 from $0.06 in the previous year, with net income decreasing 29.7% to $2.57 million. These results signal a challenging quarter for the company in terms of profitability.

Post-Earnings Price Action Review

Following European Wax Center's earnings release, the stock demonstrated significant volatility. The strategy of acquiring EWCZ shares when revenues fall short and holding for 30 days proved promising, with a 12.12% increase in premarket trading and a substantial 340% earnings surprise. Despite these short-term gains, the stock's price has experienced a considerable decline, falling 46.12% over the past three months and 60.28% over the last year. This reflects ongoing market volatility and investor caution. The company's efforts to modernize marketing, bolster franchisee support, and target net unit growth by 2026 offer a positive long-term outlook, but investors should be wary of short-term risks influenced by market sentiment and external factors.

CEO Commentary

Guidance

Additional News

In recent company developments, European Wax Center is advancing its strategic priorities with a focus on long-term growth. The company has reiterated its commitment to enhancing its marketing initiatives and supporting franchisees, emphasizing the importance of these efforts for future success. Additionally, European Wax Center has been actively managing its capital allocation strategy, including a share repurchase program under a $50 million authorization, with cumulative repurchases reaching $41.2 million. These actions reflect the company's confidence in its business model and growth potential. Furthermore, European Wax Center is navigating a dynamic economic environment with a disciplined approach to managing its supply chain, aiming to ensure franchisee success and maintain its leading market position.