EWCZ - Earnings call 3 2023 | European Wax Center, Inc.

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the European Wax Centers Third Quarter Fiscal 2023 Earnings Call. At this time, all participants are small mode. After the speaker's presentation, there will be a Q&A session. In order to facilitate as many participants as possible, we ask you please limit yourself to one question and one follow-up during the Q&A session.

questions, rejoin additional queue. have you you the may If turn would over Investor At I to Relations. the of this time, Director like conference Johns, to Bethany Ma'am, you may begin.

Bethany Johns

XXXX Wax and Willis, David Officer; Chief Third to you, Shirley, Executive With European Stacie Officer. Thank Quarter today welcome Chief Fiscal Financial Earnings and are Call. me Centers

details quarter For today's quarter provide Then and performance our discuss will will performance fiscal fiscal Stacie review XXXX XXXX. third brief call, a David regarding provide our and additional priorities financial Willis third of our for outlook. our

David the prepared Stacie Following to available take remarks, and will be questions.

Before remind you start, of would disclaimer. we like I our to legal

and financial or the of statements our the and any non-GAAP revision reflect adjust a revise SEC today, results to earnings that Also of will uncertainties which securities our factors these of events. future about could statements involve These information cause as laws, this of light forward-looking risk during refer issued also release we as impact statements certain new filings release the our publicly statements to today of within date items. to of discuss or well we measures, our our earnings of certain matters number forward-looking results call, will in eliminate call, Please of of statements our note opinion GAAP affect Please the differ detailed this today. take the forward-looking and our no only to that that in results. referenced description may which business We obligation release issued a forward-looking materially. other risks our federal meaning to actual the including more make as outlook are for the results

A a website of the also over You I non-GAAP of at this broadcast will these GAAP now additional Relations our regarding David and call measures section reconciliation turn our information Investor is Willis. available these to will on measures earnings live the financial in of release. non-GAAP find call investors.blaccenter.com. to

David Willis

It's to good to as and And my today. for for Bethany, Chief speaking new pleasure thank a the morning, be Center's to you, us want Wax you all Officer. Thank Executive European everyone. joining I first time role in you

As morning, our new bottom unit, quarter press release in we delivered line another shared line we in this top QX. of growth and

representing than We strong $XXX more units. XX% XX total in of each and million million $XX unit growth positive pipeline over in increase the and $XX our fiscal franchisees million revenue through third and delivered new new mature to a Our in X.X% sales both by XXXX center relentless net for committed franchisees in-center add generated partners to to in commitment sales, and macro growth adjusted and despite continue openings EBITDA, grateful their challenging we Furthermore, excellence. comps associates, ramping our same-store drove quarter centers. We're future of a to system-wide environment. driven

wallet evolved materialize remain to as their in and from guests guest I'll say of these represent routines, we our just throughout loyalty organic minute previous routine to and remain we grow progressed. trends how recurring to about take pleased pass each to While growth loyal share on talk a driving these of the they and these together brand holders that as third in our predictable who XX% about network comprise sales strong spend, quarter as focused and not committed did waxing groups expected. consistent visit them. have cohorts We Both business frequency wax demonstrate increased continuing metrics, quarters. of quarter I'm of revenue. delivered QX,

a who our network has sales, less of but whose predictable engaging on contribute amid focused remain been a behavior macro portion also episodic We guests smaller environment. difficult

initiatives several our deployed episodic second warehouse through guests, effective. and the to quarter, data which CRM we reengage were tools During

as exited earnings performance we with pleased our their we noted call in August, QX. in were we As

trends which Additionally, entering momentum. outlook, sales our us QX solid gave fiscal confidence in continued assumes reiterating year

that be European confirmed Wax guest work pleased In more of impacting has all substantially survey experience quarter and episodic plan a continue frequency at them that impacted. their to economic while with guests center return waxing to third their concerns particular, report are behavior However, portion been and spend.

in spend lieu in on planned we third all gas ad As X-wall across or could our digital promotional margins. reservations activity impact unnatural focused that of quarter, increased the broad driving cohorts

trends media However, less expectations. below effective these efforts proved leading line our top to planned, than

of updating our we result, rates. run remainder to As reflect guidance the year for are the a current transactional

We the potential have which have trends media reservation retained believe agency a new is to strategies, that we time. new also impact over favorably implementing

revised change provide more color will our trend XXXX guidance a has However, QX outlook prudently not for to momentarily. in assumed fiscal and QX from date. Stacie near-term our on

drive committed We pass only and sales and consistency European strength growth dive new vectors, sales into we to focused of our new and through growth. X center we guests to customers and engage very an our that driving not Wax more our underscore recognize to episodic brand footprint existing both ever to than also wax our that and model. expanding but remain opportunity We are better encouraged end, the routine are guests the that same-store our have growth benefit center system-wide shortly. brand, To on which I'll in-center

to Turning unit first growth.

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not franchisees or are development. seeing their interest We unit our new slow

long-term unit we XX% growth our As and continue unit algorithm. our in outlook growth more multiyear a confident our of year, feel pipeline result, this to than

lenders capital growth and even our supporting their relatively recognize centers, Given access expansion. initial in have access investment to interest our elevated network to fund our model's franchisee who an believe well capitalized sufficient environment. cash-on-cash We are strong returns to the modest for committed rate to is with franchisees base our

our has tirelessly through Additionally, inflation by the to engineering process, drive offset savings our and in worked both to vendors. scale leveraging development value industry-wide construction team with

openings We all our are comprise incredibly nearly upfront on and ultimately, year focused return more our has reinvestment costs capital, continued are than new franchisees on XX% who our managing and forward-looking encouraged franchisee existing driving which pipeline. center of this of from

including practices, how advising are facilitating efforts, X-wall controllable to pipeline best franchisees and grassroots to revenue top With implementing sales driving wax benchmarks marketing our hyper always, on to as these performance team network address support costs, continues drive our efforts to in on specialists franchisees incremental near-term line And of focused long-term teams pipeline the build various mind, initiatives, through staffing and growth. in center-specific identifying opportunities.

we QX, utilization which gathering line improved than centers were a year-over-year During and third recruitment sessions has levels hosted XXX retention. staffing helpful Wax quarter featured more franchisees, specialist several associate in of and with targets. on in

growth years experienced also initiatives our mix the making centers remain both of more to come. to confident wax ability progress specialist We new We for specialists. existing through towards support center brand's and in the optimal wax our are

both our to sales vector, system-wide driving increasing growth and same-store second sales. Turning by in-center

Chief team pleased welcome this earlier Officer. ever we were Andrea I executive As to our our last to Wasserman first summer as Commercial quarter, mentioned

new While our focused driving to we as well guests and search remain under and are as media media agency discipline attract from and existing guests strategy an engaged attracting pillars recently more the Andrea's streamlined to brand. implementing evolving efforts. our marketing across digital all visits on We approach more, a media a paid and new more, around visit with buy both our leadership, greater marketing even more channels

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the refine to We continue at guest high action more frequency to right implemented drive better insights guests we to audiences messaging we creative rates. the lapsing. target and guests, enhanced that conversion drive of the right additional visits from risk have already deliver at leverage existing To are target,

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long term. to hair Lastly, believe method the and we getting mentioned to as that and modalities buy attracting be guests removal products last we more brand, visits guests offering the effective quarter, an over more services encouraging more of additional could

customer Our hair share robust has both an over belief capture demographic four-wall is increased already guests time. that potential enhancing wax of from laser existing wallet the and economics in removal to turn, incremental

in are New very the our and about in this area early stages effort X officially York of test month launched a laser ago. We centers

from early results during we're initial these and While test franchisees to further share XXXX, the with plan in both we pleased enthusiasm days. guests

the As we values our release efforts a these our to campaign underscore the inaugural think top every sustainable Shirley as guidance that, about our like review more first to domestic to supporting inclusive build day. commitment of Biolin performance XXXX. as responsibilities, third our I fiscal to of ESG Stacie and detailing I'd company and brand-wide community the our of the Stacie? want and to updated well report, to a for and as living balance quarter line. With sustainability call also efforts corporate confident, over our hand our Both financial highlight longer-term opportunities fundraising national

Stacie Shirley

and good David, morning. Thanks,

will Before speak to some remarks, everyone call. I that in like metrics remind adjusted my instances, I'd begin to on this I

reconciliation in to release with filed today. most comparable can SEC our tables and find the press the GAAP figures X-K You

with entered results. which exited how our as largely begin quarter and were financial we third QX, expected. QX Let's pleased we began We with

From macro sales we QX growth our And instead delivered increased of pass reporting quarter. challenged system-wide to the to prior QX of planned, expectations by last and our as quarter a reminder, year. we continued to driver. described, as over $XX.X and transactions largest quarter X some payments Same-store into of third and environment as a X.X% profit both a with calendar this line David the average driven first centers. component X.X% wax Nonetheless, through ramping XX.X% trigger largely shifted mature efforts trail QX. top as revenue the period. Overall, growth top and were were impact line passes However, are for us media was over growth the increased of increased that a was primary by our year higher sales effective trends than Consistent days growth growth our total royalty of of million, XX.X% the year, unit Year-over-year also our year causing of this a revenue X.X%, in promotional comp third move tickets line $XXX.X rates margin less wax standpoint, with franchisor. reflect system-wide expectations. driven still million. including for impacted sales gross the vectors, half a our

Third line, the QX exceeding margin quarter fourth improvement than Adjusted This million X higher was was in driven and EBITDA from X.X% XXs low the percent and advertising net expectations, XX $XX.X SG&A XX.X%, quarter. timing primary representing increase primarily EBITDA and professional points an of a into basis as million. $X.X the revenue, of point due to that fees an factors. increased income adjusted was million corporate $XX.X to Below QX due million. differs adjusted year-over-year shifted adjusted our by $XX.X last funded was EBITDA marketing. year, in XX.X%, XXX to basis

First, additional was from in interest due $X.X million, short-term decrease interest this expense XXXX year. slight to million income $X.X a QX

assets the this income Second, expenses noncash intangible We of franchisee of and at And taxes. were our million. item allowance the to deferred released established line on IPO. assets, prior quarters, area $X to with QX third, relates depreciation the prior our relationships were XXXX. as such and amortization representative tax Consistent rights end of valuation amortization majority vast that

annual As expect covered income result, tax compared expense the by to expense a allowance. recognize during the valuation negligible incurred we period to

approximately ending expect to year. outflows the to continued during delever leverage continue the quarter. our last QX on decrease quarter nothing under buyback generate approximately and to quarter liquidity, We flows our of shareholders. expense of cash free notes to million drawn Even reflect in adjusted Ultimately, deliver For by reflects $XXX,XXX. model purchased at compared of on our adjusted to our authorization. business strong our current stock the QX, third in investing QX both Based our $XX.X in of outstanding cash million cash $XX.X further $X.X flows now our long-term revolver. generated Operating secured million QX activities and and asset-light EBITDA benefit senior sequentially, the We X.Xx million. had million environment, strength position expense. approximately net From And to $X.X our we X.Xx fourth of million and roughly of GAAP income net outlook, our environment. and million for QX, to value Net income million to our a our to $XX $XX tax shareholder under $XXX have we reflects monitor still compared to $X.X increased way in network asset-light, determine the $XX best the during which as we tough to remaining cash million significant enables model. us tax continue adjusted capital-light

Turning remain in strong more growth XX% in updated for delivering our for franchisee we to unit than demand, now With XXXX. outlook fiscal confident XXXX. confidence

the We end clear XXX to of new outlook. to our now is year, towards visibility high have and centers net open XX this which previous expect

and our the top and of line, to back initiatives efforts this improvement start as a quarter incorporated of drive David strategic would previous terms half mentioned solid continued through guidance that year. earlier, media our In the the assumed

show our trends not sustain momentum While LastPass resilience guests less we expected. and guests and frequent continued the routine consistency, did to among

reflect our of the year trends QX updating a to date. in balance As the are outlook observed we to result, and the current QX for we financial

between Our expected $XXX million, total now and XXXX are and sales revenue million system-wide with $XXX $XXX million. million expectations $XXX between

of Our X.X% full year same-store X.X%. sales to expectations range moved a to

$XX.X outlook is impact top Our to the $XX line. adjusted lower million, of EBITDA million reflecting a

includes committed fourth and As the challenged X-wall we SG&A, support up range $X environment, remarks a consistent laser quarter million quarter, our with promotional our to hair preserving removal primarily discipline in are this our a of reminder, to last Despite in test. economics. to

from As gross unchanged expectations margin a result, our full our previous XX%, outlook. year approximately remain

XXXX interest $XX to a Our slightly in expense XXrd million, remains QX, weighted week XXXX. outlook approximately given

return fiscal a will and XXrd week, but reminder, fiscal we both to a XXXX in XX-week XXXX included As XXXX. a years year

million have shares. Class in, We our expect been to exiting continue is income blended on Class B $XX.X approximate based trends to between Transaction expect net to into exchanges we XX%, rate QX relatively million. tax XXXX which statutory QX year-to-date A from stable known All adjusted and $XX.X and to date.

we increases. year, incorporates sales, unit deceleration a long-term the outcomes category, and balance continued total adjusted remain of more feel Our to unit growth At in moderate full revised translates EBITDA range current centers guidance states. are adjusted mid-single-digit XX spend EBITDA and brand, for updated an expect proud undisputed to In the system-wide and our reinvest than growth midpoint, growth we we outlook delighting our to the core guests the margins network year or in of rate. more solid the in and XX% revenue X,XXX year-over-year. confident conclusion, the leader from stability stable organic in our algorithm. line are importantly, our across including Even continues guests top existing meaningful in uncertain among and franchisee environment, consistent. than Most run Frequency alongside our

existing among reinvestment maturity. guests. unit to lucrative year our in remains compelling robust believe sustained this headwind best-in-class franchisees. We business from enjoy at our model a been has economics turn environment returns franchisees macro Those the However, less drive cash-on-cash frequent for

to back turn value cost creating will like that, turn for flow, it for for wrap our cash on profile With to center, and in European further and long expect leverage free over growth unit and us EBITDA expansion term corporate significant and call prepared David enable our to up David? Wax franchisees remarks network generating continue fixed up to I'd revenue, in-center both shareholders. grow open We Q&A. our our and margin the focus growth continued our sales the

David Willis

Stacie. you, Thank

and also macro at confident this the offering by growth top our I a to resilient Despite out growth model. the opportunities laid promotional margin in on the and challenges while we're we presented environment, focused amid long-term of discipline near-term and As and expand top driving call, our the maintaining line have We remain with profile. continued challenges, believe potential. service core loyal our brand these guests we reservations

trajectory. franchisees X/X As and highly a space our for in With excited ahead up the we centers fragmented are continued leverage of well white committed yet a our ever and and much of only future all questions. market take disruption. be our significant, in dominant reinvestment unit like to category, At are scale to call opportunities as we is as growth of target open share player we about the long-term positioned to Operator? benefit to the of from realized, period We'd so our our now remain from for support stakeholders. potential growth X,XXX

Operator

[Operator's Konik Jefferies. from with question Randall Instructions]Our first comes

Randal Konik

guess quarter David, spend. little differential very seeing let's I how very changes -- there be bit that ago? give us you're on would episodic color And the a a XX just days that helpful. you little frequency a XX from color maybe has Maybe get second I much to more the can just that maybe pattern changed or ago maybe, guests, there days want more versus, little and potentially the would helpful. be how more say, flavor

David Willis

Randy. bet, You

us last We our And and guide really is There's quarter So but Randy. the that X pull to our that what less pull with spend year entering our were third frequent our the or back things into change wax in disruption on in transaction late happened or routine quarter gave call. reiterating guests began that confidence quarter. past trends saw earnings to full back September. began the during exiting our or guests solid, no time. guest, second guests less The in frequent frequency in and August

signals could additional the our digital be ad cohorts. from macro spend try to this all guest As saw that impacting reservations drive we to we increased cohort,

it we quarter, Randy, kind August through really So as saw half September. was of the movement back through of and

our about most we're the we messaging effectively through and touched them. continue on with our what with them. more important. So also our Those in the value-oriented Will guests. our briefly to data want. we valuable is guests I within with just that valuable are prepared retain online to guests transact new couple channels And We're And to of launched elements gift they doing more brands trying leverage to reservations passes last more probably as recently target cards to it with driving to the we that where resonates allow are of weeks our brain most messaging. acquire remarks, and wax

in So bit of hopefully, we that more the of terms Randy, gives you in color through what movement quarter terms saw. the a

Randal Konik

it for share learnings. out tests done does. that Yes, some final question of the with you stand that be early us? me far. it's a can then so laser early And I on impressions would you've I Anything guess early know or very

David Willis

Sure.

laser? incremental would to by but by So we mentioned, early test, enhance X customer results kind the our those understand. brand to into think encouraging. hypothesis, Randy, are we're the expand the could as wax least an encouraged we XXXX, X from we guests we an Could in details of share to more kind our incremental we're Could had we And hypothesis. The are weeks capture City laser? overall, of wallet discussed We very the demographic the wanted to call, we as share existing with of initial centers EWC things reason area. at hypothesis on robust offering we what our last already York all on suggest all the this fronts X-wall of New plan in X reads in pilot economics. of reads Four

Operator

from question of comes with next Bank Hutchinson Our America. Lorraine

Lorraine Maikis

sales has think model? that zoom anything just really anything would wanted guest to ramp seeing choppy like seems your cause or store if I to change franchise your you're episodic expectations, maturity been change you quarter-by-quarter. at out It would ask the you new that and the

David Willis

It the bullish You're our part terms the kind that impact had forthcoming I of on guest an NCOs. exactly development, We now of file. unit delivered, right. remain quarter pipeline choppy. has This on very is in the that not but our been of sixth new of just think NCOs macros

franchisees -- really properly drive a ramping properly supporting that ensure right? additional team opening Our is can our are and the ultimately every management sure focused only making going we we centers supporting ramping that franchisees do not doesn't helpful hyper deliver profitable, those is center to profitably. way if But not because we're not system, teams is we're are brand. new center and our to certainly reinvestment, that into to those see the So but on tickets and

Lorraine, now, suggest in seeing right nothing that we're slowdown a So demand. would

and by franchisees, capitalized. well large, Our are

last group, macro with think, we to ensure NCO our We to marketing our on, have those their in so an a We franchisees of they this effective, market we're familiar day model that we're lender in call efforts open. guests our disciplines place preopening very to number build I can But our file franchisees' that's some touched adequate not the are that putting taking supportive support that on development. environment that further to continues lightly.

to of things tickets. to very, are the new support ensure very to We Both ground off those properly efficiently. want that ensure also staffed reservations are important get centers centers that the those and

Stacie Shirley

that I one most as balanced we're -- trying it to more last and add we're transactions. sure drive making in-center relates to or thing, reservations would importantly,

not we're And from and standpoint protecting of margins. just that doing broad-based making perspective how that sure on overly discounting so balanced we're we're a so a

Operator

Telsey Telsey Dana Advisory from with Our next question comes Group.

Dana Telsey

you've the any terms sales looking determining the terms Is or to different structure of we to then there are wax you grow country? are more acquisitions? about of of around you're region in in the there in what less or this macro managing pricing expense business think that over as one franchisees, do Do work the or pass How you that with cadence And speak frequency? of acquisitions adjustments if from it grow seeing, managing there's seeing need Are another. you regions forward survey the as they go anything or are in all you events? you done environment? and to to As continue the how in

Stacie Shirley

Dana. appreciate I is that's be geography occurring, a based From going question. some that There's to out. the and generated and here NCOs much really Thanks, not standpoint, to there. to where seeing call there be going on and spots obviously of but nothing really

piece. as schools, As continue a center-by-center the sure relates goals we our the comments to a the orange been level at we on of I'd far and But the it of successful, might really WAC that our or kind I'll with couple I'm talked pipeline. meeting David relationships as wax only specialists, have And deepen -- looking basis. say, but have as at we're a important also some the that not things, say beauty specialists, well. number and that We've we've red that's of to about

David Willis

feel targeted has would that average specialists. I to of we just say, comfortable add on, the Yes. that, spot Stacie's center to number wax the Dana, requisite

on elevated the of we're terms rates. towards in And be and labor to of the We're centers. your experienced want to continue we our our We question kind terms for retention. call where we what working way with on leveling mix solid that. optimal mix, a our got We but average back of exactly franchisees the work in up to most waxers not

markets or have XXXX not their did spread profitability. our we those local cases, network. an price peanut franchisees recall, level do didn't pricing better costs. for elevated may And this certain at year. have we fiscal recommend do protect increase many certainly with in across-the-board, the But in to We across-the-board increase X-wall taken operating franchisees an You price in labor

Operator

comes Scott Securities. Ciccarelli Our next with Truist question from

Scot Ciccarelli

away Scott. in and know you you is aggressive This episodic get? mentioned quarter. the typically broader from activity more unnatural getting guests maybe away whether have nearby stayed insight those I peers you you into Do that promotional any that drawing are for might on Joe

David Willis

not question. episodic event-driven good that have an not we in Joe, And a would is survey cases, waxer. many losing completed we're to this suggest The that. She's competitor. her waxing she guests,

her wax guests before the values Wax suggest episodic she we so not vacation the pulling the of some as we She's a would Center. guests She of us So that to haven't trip, us she's European she's lost walks have The best things that competitor. back not a doing she trip. from taking before still routine she trip. luxury our and intelligence that other leading to takes up makes environment. given guests view Unlike macro a the guests us nondiscretionary, our simply a and pass view as more given

Scot Ciccarelli

makes Can are then And just sales it. That talk Got the how sense. Pass about quick follow-up. quarter trending Wax your for one you maybe versus expectations?

David Willis

Yes, Joe, good question.

about are where launched a ago. weeks good sales Pass trending. We So we period. Wax couple are in our feel We of promotional semiannual

wax and In revised are factored rates, fact, trends our those pass all the guide current transaction for of the year. the conversion into

Operator

Thank you.

Morgan Our Gutman Stanley. Simeon next from with comes question

Simeon Gutman

Jackie cession for This is Simeon.

I just of light guide, versus more know the the implied Just in the you quarter-to-date called assumptions side? lower could seeing. you're in terms of out but any there transactions, the talk QX ticket that transactions on guys within you environment color about

Stacie Shirley

Yes.

and X didn't break in pricing 'XX, can mentioned took out tell we a increase a what minute So quarters, of that of just we first that kind what that bit that's QX had little and we that that is to. QX. certainly ago. But the of David transactions in tailwind you pricing, of speaking still that you're between if I

comp our has this So been heavily driven by pricing year.

that on additional sort centers their to of or be still expect as going there took that QX the relates on own. some I So that would of in it our will pricing franchisees

Operator

Our comes with from Instructions] next Wolfmeyer Piper Sandler.[Operation's question Korinne

Operator

comes Our from John with Partners. Guggenheim next question Heinbockel

David Willis

Okay.

-- opposed as needle? the more episodic. to to the So is into curious that, ability that showing the within David, I'm the And loyal is consumer loyal idea lean going maybe the I'm curious, move now more test an is bundling how

David Willis

my in the with do remarks, share apologies a We John, wanting existing and that guests candidly prepared want of reengaging new Part are absolutely guests, Yes, primary to wallet attracting in question. guests marketing is of to teams. if our to both. is but tickets drive episodic increasing clear And wasn't commercial our great of I general. we focus brand,

solid of on couple did the calls a read started the months to And the data greater kind on we've longer-term center behavior. XXX longer-term test, a to pilot ago, we benefit ticket. bundles, that teams, -- And influence talked In the near-term a be through to our ticket, pilot. inter a X the bundling of would to ability to of goal would now get expanded this that. with guest of drive average got operational The by terms be couple with of to benefit increase encouraged work we we're

So guess visit. service us only more would purchased from one commit X have per to per visit purchasing might it or services us I from

extended over anticipate roll extended encouraged continue number have that we bundles that of We're the to further going enough service we're that XXX. centers throughout will I But the measure. the bundles now We have out monitor to network. and to

Stacie Shirley

and I'd going center. to come lot that strategies leaning place, I'd agency, that we of about the say. thing it's question more it's in we media to leaning as our -- is into good as more but very the more with putting to change And feel talked they're in broad-based, guests about episodic, And add, your attracting more John, one to the just far really as a

John Heinbockel

And then invest for the these the of on go some So mean where here, months centers I less levers a macro, I a in because obviously, to you of not P&L, right? going run right, as pressure royalty. period down is first curious AUV to How have touch on to franchisees? less right, well, you right? specialists, the year about do you maybe we you to levers? through I'm Could the mean take XX you're think have to the take off wax. margin those follow-up,

David Willis

John. Yes,

P&L, our if you in had driving to evaluate AUVs look would trending we're opportunities So If said, a would we've direction that a of we got, seeing, we at support we to we number as course, was of reinvestment those. the our franchisees. not use saw that levers. And rates

in these Our ensure marketing focus on support been maturity. has and profitably and to X can through centers productively X that recruitment operational years ramp and

absolutely you a a large has reinvestment we discount pull levers marketing fortunate been that But we profitably number performance in center so back we're to pull, grow enjoy royalties the haven't that grow way point. could continue can There's fund. So seeing. raised had we our rates continue think performed level to that sure or of we I to make want an have such interesting at can we and to franchisees the

Operator

from comes Sandler. Korinne Piper question with Our Wolfmeyer next

Korinne Wolfmeyer

pressure macro And is the being added the The that Is you've affected first guests? trends I magnitude is started by XX% little bit a those one to press on think that guest case? talked to then about X% gas still pressures. a of XX% to for just you're episodic more. to increase? seeing Or about X% And previously the has stronger

David Willis

guests. system-wide That our pass comprises If of wax file I and me think our start routine bucket, guest let part of about first sales. over XX% with episodic this

if this So in you've episodic network XX% lump else What is into of of sales. bucket it's kind got bucket, about our pretty this everyone I widespread.

got appears guests. only impacted, going more are be you folks to our group event-driven they going Pass year that that a to times as X nondiscretionary come some their And service that are and Wax part this You've folks their event. for waxing special not like of before us view have are or a come in X routine waxes to that

more file guest feel Wax available, of average our and routine there's have of this a that our our environment. guest more best we on data is, we pinched than demographic lower-income suggests our is part part Pass of guests. part feel We macroeconomic which guest this file it's the a So from

the speculate on our having macro we impact of So is a guest file. bigger more part this

Korinne Wolfmeyer

also Got some this increased it. marketing of on you some as you ad spend about, said not helpful. you maybe QX but spend and I Very spend said talked then you briefly from believe then quarter, got And ad into proved QX. effective. the it pushed But some

going should even for into of XXXX? what So we on exactly there the QX on what and expect early just can you is touch spending and parts maybe

David Willis

and can part anticipated spend. touch address the your kind me Yes. Maybe let of on of Stacie first question,

frequent kind of back less September. X pull earlier, had quarter. One guests begin said had this I is As and in things into happened August to we the late

to miss all that up guest thing spend that I'll error what for. had an ad planned fewer than on increase So second is our This reservations by that. generated from drive follow reservations to the we execution we impacted try cohorts had isolated did digital was of -- happened intermediate technical portfolio. we an

year impact transactions of it? change highlight last our new that if in you I but we was to that kind the we engaged for assume to the positive are transaction of what of a time, onboarded anticipate this guidance doing So Stacie, Well, we've would timing want from agency touch on trends. spend, weeks, great. and do over really want be not couple does our current on a about

Stacie Shirley

Yes.

what the right? things, out XXX timing QX. points into where called that fund marketing, centers in just QX and It's to, difference paying million the between -- was advertising, basically us. is $X X David So is which SG&A we our our or The timing the that's that what call a the are what basis just we spoke

than, obviously, it's changed piece if sense. So like there that really different we're makes what that. -- X that that just we've timing optimizing spend. optimize changing to agencies it's or buckets But anything and doing a we're media are not that. But continuing on Other

Operator

from remarks. at turn Baird. no Jonathan for question call to questions the time. next are I'd Willis with comes Instructions]Our you.[Operation's any [Operation's back to this over like Thank Instructions]There further further David Komp

David Willis

call. days questions weeks us. to appreciate really we so your the in much and Well, time. appreciate the joining Thanks your you come. today's participation to and Michelle. We the We speaking look for on forward really with Thanks,

Operator

conclude you your the day. program, does now This for participation. may a Thank Everyone, have and disconnect. you great

European Wax Center (EWCZ) 8 Nov 232023 Q3 Earnings call transcript