European Wax Center, Inc. Class A ((EWCZ)) has held its Q3 earnings call. Read on for the main highlights of the call.
TipRanks Black Friday Sale
- Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
European Wax Center, Inc. Class A recently held its earnings call, presenting a balanced sentiment with notable achievements and challenges. The call underscored strong EBITDA growth and operational improvements, particularly in guest engagement and marketing effectiveness. However, the company also faced challenges with a decline in system-wide sales and difficulties in acquiring new guests.
Adjusted EBITDA Growth
The company reported a robust increase in adjusted EBITDA for Q3, rising by 9.6% to $20.2 million from $18.4 million in the previous year. This growth was accompanied by a significant margin increase of 400 basis points, reaching 37.2%. This reflects the company’s effective cost management and operational efficiency.
Operational Improvements and Data-Driven Insights
European Wax Center has made strides in enhancing guest engagement through improved communication, increasing their ability to contact guests from 38% to 60%. This improvement has driven guest frequency, showcasing the company’s commitment to leveraging data-driven insights for operational success.
Narrowing Closure Estimates
The company has successfully reduced its expected total closures for the year from 40-60 centers to 35-40. This narrowing of closure estimates indicates progress in strategic initiatives with franchisees, reflecting a more stable operational environment.
Successful Marketing Initiatives
The National Eyebrow Day campaign was a significant success, delivering over 75 million impressions and a 53% increase in unique website visitors. This highlights the effectiveness of the company’s marketing strategies in enhancing brand visibility and engagement.
Decrease in System-Wide Sales
Despite operational successes, system-wide sales saw a slight decline of 0.8%, totaling $238.2 million. This decrease was primarily attributed to closed centers, indicating areas for potential improvement in maintaining sales momentum.
Challenges in New Guest Acquisition
The company continues to face challenges in acquiring new guests, which remains below expectations. This issue is critical as it affects sustainable traffic growth, highlighting the need for enhanced strategies to attract new customers.
Regional Weakness
Weakness persists in key markets such as New York, Philadelphia, and DC, despite some improvements in California. Addressing these regional disparities remains a priority for the company to ensure balanced growth across its markets.
Forward-Looking Guidance
Looking ahead, European Wax Center reaffirmed its full-year financial guidance, projecting system-wide sales between $940 to $950 million, with same-store sales flat to up 1%. Adjusted EBITDA is expected to range from $69 to $71 million. The company also plans to narrow its expected closures to 35-40 centers for the year, with 12 gross openings anticipated. Strategic efforts will focus on driving sales through traffic growth, improving profitability for franchisees, and disciplined expansion plans, setting the stage for sustainable long-term growth into 2026.
In summary, European Wax Center’s earnings call reflected a balanced sentiment, with strong EBITDA growth and operational improvements countered by challenges in sales and guest acquisition. The company remains focused on strategic initiatives to drive future growth, with a clear roadmap outlined in its forward-looking guidance.