What Happened?
Shares of beauty and waxing service franchise European Wax Center (NASDAQ: EWCZ) jumped 14.7% in the morning session after the company reported impressive first quarter 2025 results, which blew past analysts' sales, earnings, and EBITDA estimates.
The beat came from a rebound in customer spending and a small increase in store count, which helped push system-wide sales up even though revenue was mostly flat.
On the cost side, the company cut back on advertising, which helped offset increased expenses tied to leadership changes. For the rest of the year, the company stuck to its sales and profits forecasts, aiming for more profit growth even though it's closing more stores than it planned to open. Overall, we think this was a decent quarter with some key metrics above expectations.
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What The Market Is Telling Us
European Wax Center’s shares are extremely volatile and have had 45 moves greater than 5% over the last year. But moves this big are rare even for European Wax Center and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 5% as investor sentiment improved on renewed optimism that the US-China trade conflict might be nearing a resolution. According to reports, Treasury Secretary Scott Bessent reinforced this positive outlook by describing the trade war as "unsustainable," and emphasized that a potential agreement between the two economic powers "was possible." His comments signaled to markets that both sides might be motivated to seek common ground, raising expectations for reduced tariffs and more stability across markets.
European Wax Center is down 31.9% since the beginning of the year, and at $4.33 per share, it is trading 63.4% below its 52-week high of $11.83 from June 2024. Investors who bought $1,000 worth of European Wax Center’s shares at the IPO in August 2021 would now be looking at an investment worth $202.43.
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