8-K: European Wax Center Reports Q4, FY25 Results Amidst Go-Private Deal

European Wax Center, Inc. reported a decline in Q4 and fiscal year 2025 net income and revenue, alongside a pending take-private transaction by General Atlantic.

Summary

• For fiscal year 2025, total centers decreased by 1.9% to 1,047, with franchisees opening 11 and closing 31 centers.
• System-wide sales for fiscal year 2025 decreased 0.4% to $947.3 million, while total revenue decreased 4.7% to $206.6 million.
• Same-store sales for fiscal year 2025 increased by 0.2%.
• GAAP net income for fiscal year 2025 was $11.9 million, a 19.2% decrease, and Adjusted Net Income was $36.2 million, an 11.6% decrease.
• Adjusted EBITDA for fiscal year 2025 decreased 3.0% to $73.3 million.
• For the fourth quarter of fiscal 2025, system-wide sales decreased 1.6% to $225.6 million, and total revenue decreased 9.3% to $45.1 million.
• Same-store sales for the fourth quarter of fiscal 2025 decreased by 0.1%.
• The company reported a net loss of $1.5 million for Q4 2025, a 147.5% decrease from net income of $3.1 million in the prior year period.
• Adjusted Net Income for Q4 2025 decreased 64.4% to $4.2 million, and Adjusted EBITDA decreased 33.1% to $12.7 million.
• Selling, general and administrative expenses (SG&A) as a percent of total revenue increased 450 basis points to 34.3% in Q4 2025, driven by strategic investments in headcount and lower revenue from one-time franchisee support.
• The company repurchased approximately 1.4 million shares of its Class A Common Stock for $5.7 million during the period, bringing cumulative repurchases under the current $50 million authorization to $45.9 million.
• European Wax Center, Inc. announced on February 10, 2026, that it entered into a definitive agreement to be taken private by General Atlantic in an all-cash transaction, which will result in the company's Class A common stock no longer being publicly listed.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to widespread declines in key financial metrics, including revenue, net income, and Adjusted EBITDA, coupled with a net loss in the fourth quarter and a reduction in the total number of centers. The pending take-private transaction overshadows the operational results, but the underlying performance was weak.

Positives

• Same-store sales increased 0.2% for the full fiscal year 2025, indicating some underlying strength in existing centers.
• Adjusted EBITDA Margin for fiscal year 2025 increased 70 basis points to 35.5%.
• The company ended fiscal year 2025 with a strong cash position of $76.1 million in cash and cash equivalents.
• Net cash provided by operating activities totaled $53.0 million for fiscal year 2025.
• No outstanding borrowings were reported under the company's revolving credit facility.
• The company repurchased approximately 1.4 million shares for $5.7 million, demonstrating commitment to shareholder returns prior to the take-private announcement.

Negatives

• Total centers decreased by 1.9% to 1,047, with 31 centers closed and only 11 opened by franchisees in fiscal year 2025.
• System-wide sales decreased for both the fourth quarter (1.6%) and the full fiscal year (0.4%).
• Total revenue decreased significantly by 9.3% in Q4 2025 and 4.7% for the full fiscal year 2025.
• The company reported a net loss of $1.5 million in Q4 2025, a substantial decline from net income in the prior year.
• GAAP net income for fiscal year 2025 decreased 19.2% to $11.9 million.
• Adjusted Net Income saw significant declines, decreasing 64.4% in Q4 2025 and 11.6% for the full fiscal year.
• Adjusted EBITDA also declined, falling 33.1% in Q4 2025 and 3.0% for the full fiscal year.
• Same-store sales decreased 0.1% in the fourth quarter of fiscal 2025.
• SG&A as a percent of total revenue increased 450 basis points in Q4 2025, primarily due to strategic investments in headcount and lower revenue from one-time franchisee support.

Risks

• The operational and financial results of franchisees directly impact the company's performance.
• The ability of franchisees to enter new markets, select appropriate sites for new centers, or open new centers is crucial for growth.
• The effectiveness of the company's marketing and advertising programs and the active participation of franchisees in enhancing brand value are vital.
• Failure of franchisees to participate in and comply with agreements, business model, and policies poses a risk.
• The company's and its franchisees' ability to attract and retain guests is essential for revenue generation.
• The effect of social media on the company's reputation could be detrimental.
• The company's ability to compete with other industry participants and respond to market trends and changes in consumer preferences is a continuous challenge.
• The effect of planned growth on management, employees, information systems, and internal controls could strain resources.
• The company's ability to retain and effectively respond to a loss of key executives is important for leadership stability.
• Recruitment efforts for staff and franchisees are ongoing risks.
• A significant failure, interruptions, or security breach of the company's computer systems or information technology could disrupt operations.
• The company and its franchisees' ability to attract, train, and retain talented wax specialists and managers is critical for service quality.
• Changes in the availability or cost of labor could impact profitability.
• The company's ability to retain its franchisees and to maintain the quality of existing franchisees is important for network stability.
• Failure of the company's franchisees to implement business development plans could hinder growth.
• The ability of the company's limited key suppliers, including international suppliers, and distribution centers to deliver their products is a supply chain risk.
• Changes in supply costs and decreases in the company's product sourcing revenue, including due to the imposition of tariffs, could affect margins.
• The company's ability to adequately protect its intellectual property is crucial for brand integrity.
• The company has substantial indebtedness, which carries financial risk.
• The impact of paying some of the company's pre-IPO owners for certain tax benefits the company may claim could affect cash flow.
• Changes in general economic and business conditions, including changes due to tariff policy and geopolitical tensions, can affect consumer spending.
• The company and its franchisees' ability to comply with existing and future health, employment, and other governmental regulations is a compliance risk.
• Complaints or litigation may adversely affect the company's business and reputation.
• The seasonality of the company's business results in fluctuations in its results of operations.
• The impact of global crises on the company's operations and financial performance is a broad risk.
• The impact of inflation and rising interest rates on the company's business could increase costs and reduce consumer discretionary spending.
• The company's access to sources of liquidity and capital to finance its continued operations and growth strategy is vital.

Future Outlook

The company will not host a conference call or provide financial guidance for fiscal year 2026 due to the pending definitive agreement to be taken private by General Atlantic. Upon completion of this transaction, European Wax Center's Class A common stock will no longer be publicly listed, and the company will become privately held.

Industry Context

StockSavvy.ai notes that the personal care and beauty services industry, particularly specialized segments like waxing, continues to see consolidation and private equity interest, as evidenced by General Atlantic's move to take European Wax Center private. The decline in center count and mixed sales performance suggest a challenging environment for growth through new franchise openings, potentially making a private structure more suitable for strategic adjustments away from public market scrutiny.

Legal Proceedings

• The company recorded an estimated exposure of $15 thousand in Q4 2025 relating to a lawsuit, which was not a result of core operations.

Related Party Transactions

• Distributions to EWC Ventures LLC members totaling $3.754 million were made in fiscal year 2025.
• Dividend equivalents to holders of EWC Ventures units totaling $10 thousand were paid in fiscal year 2025.
• Income tax expense increased due to an increase related to the company's investment in EWC Ventures LLC.
• The company faces a risk related to the impact of paying some of its pre-IPO owners for certain tax benefits the company may claim.

Stakeholder Impact

• Shareholders will receive cash for their Class A common stock upon completion of the take-private transaction, leading to the delisting of the shares.
• Franchisees experienced a net decrease in center count and received 'one-time support investments' from the company, impacting company revenue.
• Employees saw strategic investments in headcount for long-term growth initiatives, but executive severance costs were also noted.
• Creditors face a company with substantial indebtedness ($386.0 million in senior secured notes) and a Net Leverage Ratio of 4.2x.

Next Steps

• Completion of the take-private transaction by General Atlantic, after which European Wax Center's Class A common stock will no longer be publicly listed.
• Filing of the Annual Report on Form 10-K for the fiscal year 2025 ended January 3, 2026, with the SEC.

Key Dates

Recommendation

The company is in the process of being taken private by General Atlantic in an all-cash transaction. For existing shareholders, the primary consideration is the acquisition price. While the reported financial results show significant declines in revenue, net income, and Adjusted EBITDA, the stock price will likely be driven by the agreed-upon acquisition terms rather than these operational results. Investors should hold until the transaction closes, assuming the acquisition price is favorable or at least at a premium to the pre-announcement market price. New investors should avoid initiating a position unless there's a clear arbitrage opportunity related to the acquisition.

Keywords

European Wax Center, EWCZ, financial results, Q4 2025, fiscal year 2025, waxing services, franchise, system-wide sales, revenue, net income, Adjusted EBITDA, same-store sales, General Atlantic, take-private, acquisition, beauty services, personal care