EWCZ EBITDA Expansion Shows Early Wins: Can Margins Stay Strong?

European Wax Center, Inc. EWCZ posted a notable EBITDA improvement in the first quarter of fiscal 2025, raising an important question: Is this expansion sustainable? The company delivered adjusted EBITDA of $18.8 million, representing a 7.2% year-over-year increase, with margins rising to 36.5% from 33.7%.  

The EBITDA margin expansion in the fiscal first quarter was mainly driven by a combination of revenues, advertising, and selling, general and administrative expense timing, which provided a temporary boost to profitability. European Wax Center also reported early progress in marketing efficiency as it continues to implement the new media strategy. Additionally, the company benefited from franchisee order patterns and a successful retail promotion, which contributed to first-quarter revenues by pulling some demand forward. 

Looking ahead, EWCZ plans to spread advertising expenses more evenly throughout 2025, instead of backloading expenses as it has in prior years. This approach is intended to support new guest acquisition and stabilize marketing activity across the full year.

Despite these timing factors, the company on the last earnings call reaffirmed the full-year adjusted EBITDA guidance of $69 million to $71 million, indicating confidence in its cost structure and marketing strategy. European Wax Center plans to maintain focus on disciplined expense management while continuing to support guest acquisition efforts. The company expects these priorities to guide its execution throughout the remainder of 2025.

How COTY and HELE Manage EBITDA & Margin

Coty Inc. COTY reported steady EBITDA growth despite sales headwinds in the third quarter of fiscal 2025. Adjusted EBITDA rose 2% to $204 million, with margins expanding 130 basis points. Cost discipline and short-term savings initiatives fueled this gain, even as Coty shifted marketing resources toward mass fragrances, a higher-margin category. Coty is also managing tariff impacts through pricing actions and expects further margin support from its All-In to Win cost-saving program.

Helen of Troy HELE reported a sharp adjusted EBITDA decline in the first quarter of fiscal 2026, reflecting both macro pressures and strategic investments. With its EBITDA margins shrinking to 6.9% from 12.6%, Helen of Troy saw adjusted EBITDA fall to $25.5 million from $52.4 million. Despite the drop, Helen of Troy is executing cost controls and supply-chain diversification to mitigate these headwinds and stabilize margins.

EWCZ’s Price Performance, Valuation & Estimates

Shares of European Wax Center have risen 61.6% in the past three months compared with the industry’s growth of 62.6%.

From a valuation standpoint, EWCZ trades at a forward price-to-earnings ratio of 8.15X, down from the industry’s average of 28.11X.

The Zacks Consensus Estimate for EWCZ’s fiscal 2025 and 2026 earnings implies year-over-year growth of 35.6% and 8.2%, respectively.

European Wax Center currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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