European Wax Center, Inc. (EWCZ) reported worse-than-expected second-quarter sales results on Wednesday, missing analyst estimates and prompting a downward revision of its full-year revenue guidance. The company’s quarterly sales reached $59.87 million, falling short of the anticipated $61.33 million by 2.38%. Although this represents a 1.32% increase from the same period last year, the results highlight the challenges the company is facing in the current market.
The company attributed the shortfall to the ongoing macroeconomic environment, which is putting pressure on consumer spending and hindering its ability to attract and retain new customers. To address these challenges, European Wax Center has adjusted its development plans, extending the timeline for new center openings. This strategic move aims to allocate more resources towards enhancing overall performance and mitigating the impact of the challenging economic landscape.
In addition to the disappointing financial results, European Wax Center also announced the appointment of David Berg as CEO, effective August 12th. Berg, previously serving as Executive Chairman, expressed his commitment to navigating this critical juncture for the business.
The announcement of these financial challenges and the revised guidance led to a significant decline in European Wax Center’s share price. The stock plummeted 27% to close at $5.06 on Wednesday. This negative sentiment was reflected in the reactions of analysts, who adjusted their price targets for the company’s stock.
Telsey Advisory Group analyst Dana Telsey maintained an Outperform rating but lowered the price target from $16 to $8. Baird analyst Jonathan Komp maintained a Neutral rating and reduced the price target from $13 to $7. Citigroup analyst Kelly Crago downgraded European Wax Center from Buy to Neutral, lowering the price target from $16 to $5.5. Morgan Stanley analyst Simeon Gutman maintained an Equal-Weight rating while reducing the price target from $14 to $5.
The company’s recent performance and revised guidance underscore the impact of the macroeconomic environment on consumer spending and business operations. European Wax Center is now focused on navigating these challenges through strategic adjustments and strengthening its core customer base. Investors will be closely monitoring the company’s progress in the coming quarters to assess its ability to overcome the headwinds and achieve its long-term growth goals.
