European Wax Center's Q1 2025: Key Contradictions on Store Closures, Franchisee Support, and Growth Strategies

Store closure plans, underperforming stores and franchisee support, underperforming centers and closures, focus on new guest acquisition, tariff management and impact on guidance are the key contradictions discussed in European Wax Center's latest 2025Q1 earnings call.



Financial Performance and Outlook:
- European Wax Center reported system-wide sales of $225.9 million, marking a 70 basis points positive same-store sales growth in Q1 fiscal 2025.
- The company achieved $18.8 million in adjusted EBITDA for the quarter.
- The growth was driven by the value of unparalleled waxing services and strategic priorities to improve execution and profitability.
- The company reiterated its fiscal 2025 outlook, expecting system-wide sales between $940 million and $960 million and same-store sales to be flat to positive 2%.

Marketing Initiatives and Digital Transformation:
- European Wax Center is focusing on improving marketing effectiveness by leveraging data analytics and refining brand identity.
- The company introduced new technology in Q1 to measure advertising effectiveness and enhance digital media targeting, lowering cost per acquisition.
- Early signs of improved new guest trends are observed, with 2025 new guest trends improving each month on a 2-year basis.
- The company aims to refine marketing content and launch a new peak summer campaign, expecting to improve traffic through the second half of 2025.

Franchisee Support and Operational Enhancements:
- The company is working closely with underperforming franchisees to improve profitability and operational excellence.
- To address underperforming centers, European Wax Center expanded its franchisee support team and introduced new tools for tracking and accountability.
- Efforts are underway to identify and hire a strong Chief Operating Officer to evolve the corporate structure and drive operational improvements.

Tariff Impact and Supply Chain Management:
- European Wax Center faces tariff-related cost pressures, with approximately half of its product costs subject to a 10% global tariff.
- The company is actively working with suppliers to mitigate cost increases and identify alternative sources where feasible.
- Despite these challenges, European Wax Center remains confident in managing tariff impacts within its current guidance.