European Wax Center reaffirms $940M-$950M 2025 sales outlook with narrowed closure guidance as strategic initiatives advance

Earnings Call Insights: European Wax Center, Inc. (EWCZ) Q3 2025

MANAGEMENT VIEW

* CEO Christopher Morris opened by stating, "In Q3, we delivered system-wide sales of $238.2 million, 20 basis points of same-store sales growth and $20.2 million in adjusted EBITDA." He emphasized the company's transformation, noting, "2025 is a pivotal year of transformation dedicated to strengthening and accelerating the fundamentals that power our business model." Morris highlighted a refined acquisition strategy, increased franchisee engagement, and the implementation of data-driven marketing and guest lifecycle campaigns. He noted, "Retention is stable quarter-over-quarter, fewer guests are lapsing and engagement in our Wax Pass program remains strong."
* Morris announced a new influencer strategy, a partnership with a new brand agency, and the onboarding of Angela Jaskolski as Chief Operating Officer and Kurt Smith as Chief Development Officer. He reported, "Our execution of a national eyebrow day Activation included our new influencer strategy... The campaign delivered more than 75 million impressions and drove a 53% lift in unique website visitors."
* The CEO stated, "We are reaffirming our full year financial guidance, reinforcing the strength and resiliency of our model."
* CFO Thomas Kim stated, "Same-store sales grew 20 basis points year-over-year. System-wide sales decreased 0.8% to $238.2 million, driven primarily by the impact of closed centers." He added, "Adjusted EBITDA of $20.2 million increased 9.6% from $18.4 million in the prior year period. Adjusted EBITDA margin increased 400 basis points to 37.2%."

OUTLOOK

* Kim reaffirmed, "We continue to expect system-wide sales of $940 million to $950 million and same-store sales to be flat to up 1% for the full year." He also stated, "Our adjusted EBITDA outlook remains unchanged at $69 million to $71 million."
* Full year revenue guidance remains at $205 million to $209 million, with advertising expenses planned slightly above 3% of system-wide sales.
* Adjusted net income is expected to be between $31 million and $33 million.
* The company now anticipates 35 to 40 total closures for 2025, narrowed from the previous 40 to 60 range, and maintains the expectation of 12 gross openings.

FINANCIAL RESULTS

* Total revenue for Q3 was $54.2 million, a decrease of $1.2 million or 2.2%, attributed to lower wholesale product and retail revenue.
* Gross margin increased to 73.3%, benefiting from a higher mix of royalty, marketing fees, and margin improvements.
* SG&A expenses fell by $4.5 million to $13 million, mainly due to the timing of payroll, professional fees, and marketing spend, while advertising expenses decreased by $0.8 million.
* The company ended Q3 with 1,053 centers, three openings and nine closures, resulting in net closures of six.
* Operating activities generated $45.2 million in net cash year-to-date and the company holds $73.6 million in cash at quarter end.

Q&A

* Joshua Young, Truist Securities, Inc.: Asked about marketing efforts and engagement lift. Morris responded, "We have more insight than ever before into how to intercept those guests to drive behavior going forward... we have been able to very -- through a focused effort to take a nonroutine guest and start to drive them into routines. And we are seeing an improvement in our frequency."
* Dana Telsey, Telsey Advisory Group LLC: Inquired about consumer trends and Wax Pass sales. Morris replied, "Wax Pass sales, we're seeing a slight uptick on a year-over-year basis... Our big opportunity is everything that I just walked through with Josh... engaging with our existing guests to drive more frequency."
* Telsey followed up on center openings/closings. Morris noted, "We're very pleased that we're now narrowing the range on closures. We started the year saying 40 to 60, now we're saying 35 to 40... we continue to target that by the end of 2026, we will return to net positive growth."
* Alexander Conway, Robert W. Baird & Co.: Asked about unit closures and confidence in future growth. Morris said, "The units that are closing are low-volume units... we have a good grip on where the risk is."
* Conway asked about Q4 EBITDA. Kim responded, "There are some timing situations going on that will play out through the year, but we are very confident as you look through the modeling and you level out through the year to those targets and the bottom line implication, that's the dynamics that will play out in Q4."
* Simeon Gutman, Morgan Stanley: Queried about new guest acquisition. Morris explained, "A combination of the right intelligence along with a freshened lively brand aimed at high-valued acquisitions, we think that combination is really going to pay off."
* Gutman asked about guest count versus ticket. Morris stated, "Ultimately, we want to drive traffic into the centers... we're going to take a balanced approach."

SENTIMENT ANALYSIS

* Analysts pressed for quantification on marketing results, regional trends, and future unit growth, reflecting a neutral to slightly cautious tone, with focus on the pace of new guest acquisition and closure risks.
* Management maintained a confident tone during both prepared remarks and Q&A, frequently emphasizing stability, improved data insights, and control over closure risks. Phrases like "I've never been more confident in where we're headed" and "we are very confident" were used.
* Compared to the previous quarter, management's tone remains confident, though with a shift from foundational progress to showcasing measurable improvements and narrowed guidance. Analyst tone is consistently cautious but not adversarial.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for system-wide sales, same-store sales, EBITDA, and revenue remains unchanged from Q2, but the guidance on closures has been narrowed from 40–60 to 35–40 for 2025.
* The prior quarter emphasized early traction and foundational work; this quarter highlights visible progress in guest engagement, marketing efficiency, and operational initiatives.
* Management's confidence has grown, with more focus on execution and data-driven results. Analysts continue to focus on guest acquisition and unit economics, but with more questions about the timing and sustainability of improvements.
* The addition of new senior leaders and progress on strategic initiatives marks a transition from setup to execution phase.

RISKS AND CONCERNS

* Challenges remain on new guest acquisition, which "remains pressured," with expectations for improvement in 2026.
* Closure risk is primarily concentrated in low-volume centers due to factors like location, lease expiration, and franchisee circumstances.
* Regional weaknesses persist in New York, Philadelphia, and D.C., though California has shown some improvement.
* Management is actively addressing supply chain risks and cost pressures, reporting, "we've continued to stay ahead of potential impacts by partnering closely with our suppliers and further diversifying our sourcing."

FINAL TAKEAWAY

European Wax Center management reiterates confidence in its strategic direction as it reaffirms full-year financial guidance and narrows closure expectations for 2025. The company highlights progress in data-driven marketing, franchisee engagement, and operational excellence, while acknowledging ongoing challenges in new guest acquisition and certain regional markets. Leadership signals that foundational changes are beginning to deliver measurable results and positions the business for a return to net positive unit growth by the end of 2026, with continued focus on profitability, cost management, and sustainable expansion.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ewcz/earnings/transcripts]

MORE ON EUROPEAN WAX CENTER

* European Wax Center, Inc. (EWCZ) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4842611-european-wax-center-inc-ewcz-q3-2025-earnings-call-transcript]
* European Wax Center: Patience Advised On This Tempting Turnaround [https://seekingalpha.com/article/4829562-european-wax-center-patience-advised-on-this-tempting-turnaround]
* European Wax Center GAAP EPS of $0.09 beats by $0.05, revenue of $54.2M beats by $1.75M [https://seekingalpha.com/news/4520369-european-wax-center-gaap-eps-of-0_09-beats-by-0_05-revenue-of-54_2m-beats-by-1_75m]
* Seeking Alpha’s Quant Rating on European Wax Center [https://seekingalpha.com/symbol/EWCZ/ratings/quant-ratings]
* Historical earnings data for European Wax Center [https://seekingalpha.com/symbol/EWCZ/earnings]