European Wax Center (EWCZ 13.95%), a leading national provider of waxing services, reported its results for the second quarter of fiscal 2025 on August 13, 2025. The most notable news in the release was a year-over-year revenue decline, as GAAP total revenue decreased 6.6% to $55.9 million from $59.9 million in Q2 FY2024, with the $55.9 million GAAP revenue result missing analyst estimates by $0.99 million. Non-GAAP earnings per share matched the $0.16 consensus. The company saw improved profitability metrics such as Adjusted EBITDA (non-GAAP), but with little growth in core sales measures (system-wide sales decreased 1.0% and same-store sales increased 0.3%) and a shrinking overall network (franchisees opened 2 and closed 5 centers, ending the quarter with 1,059 centers, flat year over year; 7 openings and 15 closures in the first half of FY2025), management trimmed its full-year total revenue guidance for FY2025 to $205 million to $209 million, down from its previous guidance of $210 million to $214 million and now expects 28 to 50 net center closures. The quarter reflected stabilization in underlying operations, but subdued performance on sales growth and network health.
| Metric | Q2 FY25 | Q2 Estimate | Q2 FY24 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.16 | $0.16 | $0.15 | 6.7% |
| Revenue (GAAP) | $55.9 million | N/A | $59.9 million | (6.6%) |
| Adjusted EBITDA | $21.6 million | $20.6 million | 4.9% | |
| Same-Store Sales Growth | 0.3% | N/A | 0.3 pp | |
| Net Income (GAAP) | $5.4 million | $5.9 million | (9.0%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Success Factors
European Wax Center operates a network of over 1,000 franchised locations across the United States, almost all run by franchise partners rather than the company itself. Its main business is providing waxing services in a clean, consistent, and high-quality setting. The brand is built around proprietary wax formulas -- notably its Comfort Wax -- as well as trained estheticians, consistent hygiene practices, and a pre-paid customer loyalty program called the Wax Pass.
Recent years have seen the company focus on strengthening its franchise model. This includes supporting underperforming locations, developing technology for marketing and operations, and using data-driven tactics to grow guest frequency. Providing a stand-out guest experience and keeping franchisee economics healthy are central to its strategy and long-term performance. Maintaining a stable and profitable network is crucial, especially given the competitive and fragmented market for out-of-home waxing services.
Quarterly Review: Performance, Initiatives, and Trends
During Q2 FY2025, GAAP revenue fell 6.6% compared to the prior year, and system-wide sales—total sales across all franchise locations—slipped 1.0% to $257.6 million. The decrease was reflected in a nearly flat network size: only two new centers opened while five closed, leaving the total at 1,059 centers, unchanged from a year prior. Same-store sales increased 0.3%, comparing sales at existing locations year-over-year, indicating stabilization rather than accelerating growth, but it does not signal a strong rebound.
Profitability metrics offered a brighter spot, with Adjusted EBITDA (non-GAAP) rising 4.7% from the prior year period and the Adjusted EBITDA margin expanding to 38.7% from 34.5% in Q2 FY2024. Adjusted Net Income also rose to $11.8 million, up 5.6% year-over-year. However, reported GAAP net income fell to $5.4 million, down 9.0% from a year earlier, and the net income margin (GAAP) narrowed.
Franchisee health and individual unit economics played a big role in this period. The company acknowledged continued closure of underperforming stores, mainly due to weak average unit volumes, which measure the sales generated at each location. Store closures are expected to continue throughout FY2025, with management projecting an additional 28 to 50 net closings for the full fiscal year. Center openings are concentrated only in “low-hanging fruit” markets with strong customer bases and enough local demand, a clear shift from earlier periods of rapid expansion.
Product sales—which include proprietary wax and aftercare items—dropped from $33.9 million to $30.5 million. There was no notable change in promotional strategy. Marketing spend was deployed more evenly across the year, and technological investments supported more efficient customer acquisition.
Looking Ahead: Guidance and Investor Watchpoints
For the rest of FY2025, management lowered its total revenue forecast to $205 million to $209 million, down from the earlier $210 million to $214 million range and trimmed its full-year same-store sales growth projection for FY2025 to 0.0% to 1.0%. The high end of the new system-wide sales forecast for FY2025 is now $950 million, $10 million less than prior guidance. Adjusted Net Income and Adjusted EBITDA guidance for FY2025 remain unchanged at $31 million to $33 million and $69 million to $71 million, respectively. The company reinforced that it expects 10 to 12 new center openings but 40 to 60 closures, signaling ongoing contraction in network size.
No dividend is paid by EWCZ at this time. Looking ahead to future quarters, investors will likely focus on how effectively the company continues to stabilize same-store sales, manages franchisee health, and leverages technology for guest growth. The company has not indicated it will return to net network growth until the end of FY2026. Material one-time events or unexpected market shifts, including further changes in input costs from inflation or tariffs, could impact both franchisee profitability and company guidance going forward.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
