European Wax Center 2025 Q2 Earnings Mixed Performance as Net Income Declines 9%

European Wax Center reported its fiscal 2025 Q2 earnings on Aug 13th, 2025. The results showed a challenging quarter with a revenue decline and stable EPS, despite some early signs of strategic progress. The company's guidance remained unchanged, with expectations for modest same-store sales growth and stable adjusted EBITDA. However, investors should note the underperformance of post-earnings strategies and recent stock price volatility.

European Wax Center reported mixed second-quarter performance, falling short of revenue expectations while maintaining stable earnings per share. The company’s guidance for the remainder of 2025 reflects cautious optimism, though challenges remain in translating these early gains into long-term growth.

Revenue
Revenue for European Wax Center in the second quarter of 2025 decreased by 6.4% year-over-year to $52.90 million, with product sales accounting for the largest portion at $30.52 million. Royalty fees contributed $14.28 million, while marketing fees added $8.11 million. Other revenue sources brought in an additional $3.01 million, rounding out the total to $55.91 million.

Earnings/Net Income
Despite the revenue decline, European Wax Center’s EPS remained flat at $0.09 compared to the prior year. However, net income dropped by 9.0% to $5.39 million from $5.92 million in the same period of 2024, indicating underlying margin pressures.

Price Action
Shares of European Wax Center rose 2.87% on the latest trading day and surged 17.29% over the past full trading week. However, the stock declined by 3.83% month-to-date, reflecting mixed investor sentiment.

Post-Earnings Price Action Review
A strategy of buying European Wax Center shares after a revenue raise quarter-over-quarter on the financial report release date and holding for 30 days has historically underperformed. Over the past three years, the approach delivered a negative return of -78.10%, far below the benchmark return of 46.32%. The strategy’s poor Sharpe ratio of -0.54 and a maximum drawdown of 0.00% highlight its unattractive risk-return profile.

CEO Commentary
Christopher D. Morris, CEO & Chairman, noted early signs of strategic progress, including 30 bps same-store sales growth and $21.6 million in adjusted EBITDA. He emphasized foundational improvements in marketing, guest engagement, and operational execution, with a 40% improvement in cost per acquisition and a 170 bps EBITDA margin improvement in engaged centers. Morris expressed confidence in the new leadership team’s ability to drive traffic growth, improve 4-wall profitability, and support unit expansion.

Guidance
European Wax Center expects full-year system-wide sales of $940 million to $950 million, with same-store sales flat to up 1%. Adjusted EBITDA guidance remains unchanged at $69 million to $71 million. The company anticipates 10 to 12 gross unit openings and 28 to 50 net closures for 2025, with closures delayed to Q3 and Q4. Revenue guidance for 2025 is $205 million to $209 million, with advertising expenses slightly above 3% of system-wide sales. Adjusted net income is expected between $31 million and $33 million.

Additional News
Recent news highlights include advancements in China's satellite internet industry, with the successful launch of the low-orbit 08 group satellite. Meanwhile, in the financial sector, large state-owned enterprises are expanding their financial licenses, with another self-insurance company establishing a presence in Hong Kong. Additionally, the Shanghai Composite Index has surpassed the 3700-point level, marking its first such milestone since late 2021.