Is EWCZ Fixing Its Overbuilt Network With Smarter Expansion?

European Wax Center, Inc. EWCZ is taking decisive steps to address the effects of an overextended franchise footprint. After years of aggressive expansion, the company is shifting to a more measured strategy aimed at stabilizing its network and restoring unit-level performance.

In the first quarter of fiscal 2025, franchisees opened five centers and closed 10, ending the period with 1,062 locations, a modest 1% increase from the prior year. The company anticipates seven to eight net closures in the fiscal second quarter. For the full year, it expects 10 to 12 gross openings and 40 to 60 closures, indicating a deliberate pruning of underperforming units.

Previous expansion at times outpaced market demand, leaving certain centers exposed to declining transactions and margin pressure. To course correct, EWCZ has implemented a more rigorous site approval process and upgraded its market planning tool to a purpose-built solution with enhanced analytics and forecasting capabilities. The focus now centers on high-potential, underpenetrated trade areas with stronger demand profiles.

The focus is not limited to downsizing the network. European Wax Center is undertaking a broader reset aimed at strengthening operations and aiding franchisees by expanding support capacity, improving operational tools and increasing engagement through its learning platform, all intended to enhance visibility, accountability and execution across the system.

EWCZ plans to return to net unit growth by late 2026, backed by a more strategically positioned network. Future expansion will prioritize data-driven site selection, stronger analytics and sustainable unit economics over the rapid growth approach taken in prior years.

How Are EWCZ Rivals HELE & COTY Approaching?

Helen of Troy HELE is undergoing a strategic operational reset after identifying internal complexity as a barrier to execution. Helen of Troy has acknowledged that a matrixed structure slowed its ability to respond to market needs. Helen of Troy is now simplifying operations, realigning spending and streamlining decision-making to enable faster, product-led growth. This back-to-basics approach mirrors a broader trend toward restoring focus and agility following a period of internal overreach.

Coty Inc. COTY is also realigning its growth strategy with a sharper focus on profitability and efficiency. Coty has taken steps to streamline its brand and SKU portfolio, optimize cost structure and accelerate high-return channels like e-commerce. Coty’s All In to Win transformation program reflects a disciplined shift toward sustainable margin expansion and operational simplicity, paralleling industry peers that are moving away from volume-driven growth toward smarter, more scalable models.

EWCZ’s Price Performance, Valuation & Estimates

Shares of European Wax Center have risen 50% in the past three months compared with the industry’s growth of 48.8%.

From a valuation standpoint, EWCZ trades at a forward price-to-earnings ratio of 7.23X, down from the industry’s average of 28.57X.

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 carries a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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