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European Wax Center (EWCZ)
NASDAQ:EWCZ
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European Wax Center
(NASDAQ:EWCZ)
58Neutral
Positive Factors
Management and Leadership
Appointed CEO brings 25+ years experience in consumer.
Strategic Initiatives
Efforts to reset the store fleet, combined with new management stabilizing the business, should help shares recover.
Negative Factors
Growth Challenges
Management lowered net unit growth expectations for 2024 and indicated potential for a net unit decline in 2025.
Outlook and Projections
The expected share price return is negative at -3.7%.
Stock Performance
Shares are down (~15%) as the number of store closures in '25 will likely be more than previously expected.
European Wax Center (EWCZ) vs. S&P 500 (SPY)
Market Cap
$177.00M
Dividend YieldN/A
Average Volume (3M)815.50K
Price to Earnings (P/E)14.5
Beta (1Y)1.18
Revenue Growth-1.86%
EPS Growth25.97%
CountryUS
Employees124
SectorConsumer Cyclical
Sector Strength64
IndustryHousehold & Personal Products
Share Statistics
EPS (TTM)0.22
Shares Outstanding43,305,824
10 Day Avg. Volume730,316
30 Day Avg. Volume815,505
Financial Highlights & Ratios
PEG Ratio0.56
Price to Book (P/B)N/A
Price to Sales (P/S)1.32
Price to Cash Flow (P/CF)3.30
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$6.42Price Target Upside95.73% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
European Wax Center Business Overview & Revenue Model
Company DescriptionEuropean Wax Center (EWCZ) is a leading personal care franchise in the beauty and wellness industry, specializing in professional waxing services. With a presence across the United States, the company offers a range of waxing services for both men and women, focusing on delivering a high-quality, comfortable, and efficient hair removal experience. European Wax Center is known for its proprietary Comfort Wax, designed to enhance the customer experience, and it also provides a selection of skincare products to complement its services.
How the Company Makes MoneyEuropean Wax Center generates revenue primarily through its franchise model, where it licenses its brand and business model to franchisees who operate the individual locations. The company earns money from franchise fees, which include initial setup fees and ongoing royalties based on the franchisees' sales. Additionally, the company sells proprietary skincare products, such as exfoliants and lotions, both in-store and online, which contribute to its revenue stream. Partnerships with vendors for skincare products and collaborations in marketing and promotions also play a role in enhancing its brand presence and revenue potential.
European Wax Center Financial Statement Overview
Summary
European Wax Center displays solid revenue growth and effective cash flow management, though profitability margins are inconsistent. The balance sheet reveals high leverage which poses a risk, yet improvements in equity position are promising. The company is well-positioned in terms of cash flow, which supports future growth initiatives.Income Statement
The income statement shows steady revenue growth with a slight dip in the latest year. Gross profit margin remains healthy, indicating efficient cost management. However, net profit margin and EBIT margins show some fluctuations, suggesting challenges in maintaining profitability. Despite this, the company has shown improvement in EBITDA margin over time.68
Positive
Balance Sheet
The balance sheet highlights a high debt-to-equity ratio, indicating significant leverage. However, the company has improved its equity position over time. Return on equity is moderate, suggesting decent profitability relative to shareholders' equity. The equity ratio is low, reflecting a reliance on debt financing.55
Neutral
Cash Flow
Cash flow analysis indicates strong free cash flow growth, showcasing effective cash generation capabilities. The operating cash flow to net income ratio is robust, indicating good cash conversion efficiency. Additionally, free cash flow to net income ratio demonstrates strong cash profitability.74
Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 216.92M | 221.02M | 207.35M | 178.68M | 103.41M | Gross Profit |
| 159.60M | 158.39M | 148.12M | 131.84M | 67.90M | EBIT |
| 47.76M | 44.86M | -15.95M | 24.37M | -2.17M | EBITDA |
| 62.64M | 65.44M | 4.28M | 45.03M | 16.36M | Net Income Common Stockholders |
| 10.46M | 8.93M | 13.61M | 3.97M | -39.77M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 49.73M | 52.73M | 44.22M | 43.30M | 36.72M | Total Assets |
| 707.07M | 735.73M | 716.03M | 613.44M | 606.90M | Total Debt |
| 7.57M | 380.39M | 380.47M | 178.23M | 265.40M | Net Debt |
| -42.15M | 327.65M | 336.25M | 134.93M | 228.68M | Total Liabilities |
| 615.48M | 619.11M | 585.73M | 272.20M | 288.88M | Stockholders Equity |
| 64.05M | 83.34M | 79.00M | -3.53M | -62.00M |
| Cash Flow | Free Cash Flow | |||
| 55.98M | 54.82M | 44.11M | 33.14M | -35.45M | Operating Cash Flow |
| 56.51M | 55.60M | 44.35M | 41.35M | 1.40M | Investing Cash Flow |
| -386.00K | -785.00K | -245.00K | -8.20M | -36.84M | Financing Cash Flow |
| -59.15M | -46.38M | -36.62M | -26.56M | 61.90M |
European Wax Center Technical Analysis
Negative
3.28
Price Trends
4.75
Negative
5.53
Negative
6.42
Negative
Market Momentum
-0.40
Negative
34.65
Neutral
19.42
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EWCZ, the sentiment is Negative. The current price of 3.28 is below the 20-day moving average (MA) of 3.54, below the 50-day MA of 4.75, and below the 200-day MA of 6.42, indicating a bearish trend. The MACD of -0.40 indicates Negative momentum. The RSI at 34.65 is Neutral, neither overbought nor oversold. The STOCH value of 19.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EWCZ.
European Wax Center Risk Analysis
European Wax Center disclosed 68 risk factors in its most recent earnings report. European Wax Center reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
European Wax Center Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $156.00M | 17.21 | 9.68% | 1.42% | 2.56% | -47.22% | |
60 Neutral | $6.85B | 11.57 | 3.09% | 4.18% | 2.37% | -21.38% | |
58 Neutral | $177.00M | 14.47 | 14.07% | ― | -1.86% | 25.97% | |
57 Neutral | $285.09M | ― | -19.90% | 4.20% | -12.04% | -1796.38% | |
56 Neutral | $2.58M | 1.87 | 3.96% | ― | 6.27% | -34.07% | |
43 Neutral | $44.57M | ― | -159.69% | ― | -21.54% | 40.62% | |
41 Neutral | $122.79M | ― | -52.34% | ― | -16.00% | 69.61% |
* Consumer Cyclical Sector Average
Performance Comparison
EWCZ
European Wax Center
3.28
-8.38
-71.87%
ACU
Acme United
41.55
1.10
2.72%
NUS
Nu Skin
5.77
-6.21
-51.84%
TANH
Tantech Holdings
2.29
-20.11
-89.78%
SKIN
Beauty Health
0.99
-2.25
-69.44%
GROV
Grove Collaborative Holdings
1.10
-0.47
-29.94%
European Wax Center Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: -35.81% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a transitional period for European Wax Center, with strong performance in mature centers and a stable core customer base. However, challenges related to franchisee profitability, planned center closures, and macroeconomic pressures are significant. The company's focus on strengthening its executive team and improving operational infrastructure indicates a commitment to overcoming these challenges and returning to growth.Highlights
Stability in Core Guests
The core guest segment, which includes loyal Wax Pass holders, remains stable and committed to their waxing routines, providing a strong foundation for recurring revenue.
Strong Unit Economics in Mature Centers
Mature units exhibit strong unit economics with AUVs north of $1 million and approximately 40% cash-on-cash returns, indicating a solid performance in established locations.
Executive Team Strengthening
Appointment of Tom Kim as CFO, Katie Mullen as Chief Commercial Officer, and Chris Andrews as Chief Information and Digital Officer to drive growth and improve operational efficiencies.
Improved Gross Margin
Fourth quarter gross margin improved by 190 basis points to 74.3%, primarily due to continued cost savings and a higher mix of royalty and marketing fees.
Lowlights
Decline in Franchisee Transactions and Profitability
Franchisees are experiencing pressure from declining transactions and profitability, prompting many to pause new center growth plans.
Expected Center Closures
40 to 60 centers are estimated to close in fiscal 2025 due to profitability pressures, individual franchisee challenges, or market consolidation efforts.
Impact of Challenging Macro Environment
The macro environment has led to pressured consumer spending, especially among new guests, affecting average unit economics.
Softer Retail Product Sales
Total revenue decreased by 4.6% to $49.7 million in Q4 due to softer retail product sales as guests prioritize services over products in a tougher macro environment.
Franchisee Operational Challenges in California
Franchisees in California are facing significant inflationary pressures, impacting four-wall economics and profitability.
Company Guidance
During the European Wax Center's fourth quarter fiscal 2024 earnings call, the company provided guidance for fiscal 2025, outlining a transitional year focused on solidifying the foundation for future growth. They anticipate system-wide sales between $940 million and $960 million, with same-store sales expected to be flat to positive 2%. Revenue is projected to be between $210 million and $214 million. They also anticipate opening 10 to 12 new centers while closing 40 to 60 underperforming ones. Adjusted EBITDA is expected to fall between $69 million and $71 million, with an emphasis on investing in marketing and technology to enhance their capabilities. The company aims to return to positive unit growth by the end of 2026, driven by initiatives to improve guest engagement and operational infrastructure.European Wax Center Corporate Events
Business Operations and Strategy
European Wax Center Approves 2025 Inducement Plan
Positive
Mar 21, 2025
On March 21, 2025, European Wax Center’s board approved the 2025 Inducement Plan, allowing the company to grant up to 4,000,000 shares of Class A Common Stock as stock-based awards to new or returning employees. This strategic move, not requiring stockholder approval, aims to enhance the company’s ability to attract and retain talent, potentially strengthening its market position and operational capabilities.
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
European Wax Center Appoints New CFO Amid Strategic Shifts
Neutral
Mar 11, 2025
European Wax Center announced the appointment of Thomas Kim as Chief Financial Officer, effective April 7, 2025, succeeding Stacie Shirley who will remain as a strategic advisor until April 30, 2025. The company reported its fiscal 2024 results, highlighting a 21.9% increase in GAAP net income and a 15.2% rise in adjusted net income, despite a slight decrease in system-wide sales and total revenue. Looking forward, the company anticipates a transitional year in 2025, with plans to open 10-12 new centers and close 40-60 centers, while focusing on improving its marketing and support infrastructure to drive long-term growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.