Beauty and waxing service franchise European Wax Center (NASDAQ: EWCZ) announced better-than-expected revenue in Q1 CY2025, but sales were flat year on year at $51.43 million. The company expects the full year’s revenue to be around $212 million, close to analysts’ estimates. Its GAAP profit of $0.04 per share was $0.02 above analysts’ consensus estimates.
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European Wax Center (EWCZ) Q1 CY2025 Highlights:
- Revenue: $51.43 million vs analyst estimates of $49.61 million (flat year on year, 3.7% beat)
- EPS (GAAP): $0.04 vs analyst estimates of $0.02 ($0.02 beat)
- Adjusted EBITDA: $18.75 million vs analyst estimates of $15.76 million (36.5% margin, 19% beat)
- The company reconfirmed its revenue guidance for the full year of $212 million at the midpoint
- EBITDA guidance for the full year is $70 million at the midpoint, in line with analyst expectations
- Operating Margin: 20.6%, down from 21.7% in the same quarter last year
- Free Cash Flow Margin: 23.4%, up from 20.6% in the same quarter last year
- Same-Store Sales were flat year on year (-1.2% in the same quarter last year)
- Market Capitalization: $171.5 million
Chris Morris, Chairman and CEO of European Wax Center, Inc. stated, “During the first quarter, we made meaningful progress against our strategic priorities and delivered solid financial performance, enabling us to reiterate our full-year outlook. We continue to advance our enhanced, data-rich marketing engine, and guest research is generating valuable insights that will shape our traffic-driving strategies. We're also strengthening our corporate infrastructure to better support franchisees through enhanced tools, resources and action plans, all while maintaining our focus on long-term network health and our goal of achieving net unit growth by the end of 2026.”
Company Overview
Founded by two siblings, European Wax Center (NASDAQ: EWCZ) is a beauty and waxing salon chain specializing in professional wax services and skincare products.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, European Wax Center’s sales grew at a sluggish 7.6% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector and is a poor baseline for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. European Wax Center’s recent performance shows its demand has slowed as its annualized revenue growth of 1.1% over the last two years was below its five-year trend. Note that COVID hurt European Wax Center’s business in 2020 and part of 2021, and it bounced back in a big way thereafter. 
We can better understand the company’s revenue dynamics by analyzing its same-store sales, which show how much revenue its established locations generate. Over the last two years, European Wax Center’s same-store sales averaged 1.1% year-on-year growth. This number doesn’t surprise us as it’s in line with its revenue growth. 
This quarter, European Wax Center’s $51.43 million of revenue was flat year on year but beat Wall Street’s estimates by 3.7%.
Looking ahead, sell-side analysts expect revenue to decline by 1.6% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
European Wax Center’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 22.3% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.
In Q1, European Wax Center generated an operating profit margin of 20.6%, down 1.2 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
European Wax Center’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q1, European Wax Center reported EPS at $0.04, down from $0.06 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects European Wax Center to perform poorly. Analysts forecast its full-year EPS of $0.25 will hit $0.19.
Key Takeaways from European Wax Center’s Q1 Results
We were impressed by how significantly European Wax Center blew past analysts’ EPS expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 2.3% to $4.03 immediately following the results.
European Wax Center had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
