COVER PAGE
COVER PAGE - USD ($) | 12 Months Ended | ||
Jun. 30, 2023 | Aug. 16, 2023 | Dec. 31, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2023 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Transition Report | false | ||
Entity File Number | 1-12725 | ||
Entity Registrant Name | Regis Corp | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Tax Identification Number | 41-0749934 | ||
Entity Address, Address Line One | 3701 Wayzata Boulevard, | ||
Entity Address, City or Town | Minneapolis | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55416 | ||
City Area Code | 952 | ||
Local Phone Number | 947-7777 | ||
Title of 12(b) Security | Common Stock, $0.05 par value | ||
Trading Symbol | RGS | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 55,220,726 | ||
Entity Common Stock, Shares Outstanding | 45,566,228 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive Proxy Statement for the annual fiscal 2023 meeting of shareholders (the "2023 Proxy Statement") (to be filed pursuant to Regulation 14A within 120 days after the registrant's fiscal year-end of June 30, 2023) are incorporated by reference into Part III. | ||
Entity Central Index Key | 0000716643 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY |
AUDIT INFORMATION
AUDIT INFORMATION | 12 Months Ended |
Jun. 30, 2023 | |
Audit Information [Abstract] | |
Auditor Name | GRANT THORNTON LLP |
Auditor Firm ID | 248 |
Auditor Location | Minneapolis, Minnesota |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 9,508 | $ 17,041 |
Receivables, net | 10,885 | 14,531 |
Inventories | 1,681 | 3,109 |
Other current assets | 15,164 | 13,984 |
Total current assets | 37,238 | 48,665 |
Property and equipment, net | 6,422 | 12,835 |
Goodwill (Note 5) | 173,791 | 174,360 |
Other intangibles, net | 2,783 | 3,226 |
Right of use asset (Note 6) | 360,836 | 493,749 |
Other assets | 26,307 | 36,465 |
Total assets | 607,377 | 769,300 |
Current liabilities: | ||
Accounts payable | 14,309 | 15,860 |
Accrued expenses | 30,109 | 33,784 |
Short-term lease liability (Note 6) | 81,917 | 103,196 |
Total current liabilities | 126,335 | 152,840 |
Long-term debt, net (Note 8) | 176,830 | 179,994 |
Long-term lease liability (Note 6) | 291,901 | 408,445 |
Other non-current liabilities | 49,041 | 58,974 |
Total liabilities | 644,107 | 800,253 |
Commitments and contingencies (Note 9) | ||
Shareholders' deficit: | ||
Common stock, $0.05 par value; issued and outstanding, 45,566,228 and 45,510,245 common shares as of June 30, 2023 and 2022, respectively | 2,278 | 2,276 |
Additional paid-in capital | 64,600 | 62,562 |
Accumulated other comprehensive income | 9,023 | 9,455 |
Accumulated deficit | (112,631) | (105,246) |
Total shareholders' deficit | (36,730) | (30,953) |
Total liabilities and shareholders' deficit | $ 607,377 | $ 769,300 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Jun. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, issued (in shares) | 45,566,228 | 45,510,245 |
Common stock, outstanding (in shares) | 45,566,228 | 45,510,245 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Revenues: | ||||
Franchise rental income | $ 111,441 | $ 130,777 | $ 127,392 | |
Revenues, Total | 233,326 | 275,967 | 411,651 | |
Operating expenses: | ||||
Inventory reserve | 1,228 | 7,655 | 0 | |
General and administrative | 50,751 | 65,274 | 96,427 | |
Advertising fund expense | 31,747 | 32,573 | 22,023 | |
Depreciation and amortization | 7,716 | 6,224 | 21,749 | |
Long-lived asset impairment | 101 | 542 | 13,023 | |
Goodwill impairment (Note 5) | 0 | 13,120 | 0 | |
Total operating expenses | 224,547 | 304,865 | 506,328 | |
Operating income (loss) | 8,779 | (28,898) | (94,677) | |
Other (expense) income: | ||||
Interest expense | (22,141) | (12,914) | (13,163) | |
Loss from sale of salon assets to franchisees, net | 0 | (2,334) | (16,696) | |
Other, net | 1,364 | (296) | 15,902 | |
Loss from operations before income taxes | (11,998) | (44,442) | (108,634) | |
Income tax benefit (expense) | 655 | (2,017) | 5,428 | |
Loss from continuing operations | (11,343) | (46,459) | (103,206) | |
Income (loss) from discontinued operations (Note 3) | 3,958 | (39,398) | (10,125) | |
Net loss | $ (7,385) | $ (85,857) | $ (113,331) | |
Basic and diluted: | ||||
Loss from continuing operations (in dollars per share) | $ (0.25) | $ (1.07) | $ (2.87) | |
Income from discontinued operations (in dollars per share) | 0.09 | (0.90) | (0.28) | |
Net loss per share, basic (in dollars per share) | [1] | (0.16) | (1.97) | (3.15) |
Net loss per share, diluted (in dollars per share) | [1] | $ (0.16) | $ (1.97) | $ (3.15) |
Weighted average common and common equivalent shares outstanding: | ||||
Basic (in shares) | 46,235 | 43,582 | 35,956 | |
Diluted (in shares) | 46,235 | 43,582 | 35,956 | |
Non Franchise Lease | ||||
Operating expenses: | ||||
Rent | $ 9,196 | $ 9,357 | $ 40,754 | |
Franchisor | ||||
Operating expenses: | ||||
Rent | 111,441 | 130,777 | 127,392 | |
Royalties | ||||
Revenues: | ||||
Revenues | 65,981 | 65,753 | 52,357 | |
Fees | ||||
Revenues: | ||||
Revenues | 11,266 | 11,587 | 10,215 | |
Franchisees products | ||||
Revenues: | ||||
Revenues | 2,802 | 15,072 | 56,699 | |
Operating expenses: | ||||
Cost of product sales to franchisees | 3,540 | 17,391 | 43,756 | |
Advertising fund contributions | ||||
Revenues: | ||||
Revenues | 31,747 | 32,573 | 22,023 | |
Company-owned salon revenue | ||||
Revenues: | ||||
Revenues | 10,089 | 20,205 | 142,965 | |
Operating expenses: | ||||
Company-owned salon expense | [2] | $ 8,827 | $ 21,952 | $ 141,204 |
[1]Total is a recalculation; line items calculated individually may not sum to total due to rounding.[2]Includes cost of service and product sold to guests in our company-owned salons. Excludes general and administrative expense, rent and depreciation and amortization related to company-owned salons. |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (7,385) | $ (85,857) | $ (113,331) |
Other comprehensive (loss) income, net of tax: | |||
Net current period foreign currency translation adjustments | (448) | (547) | 1,888 |
Recognition of deferred compensation | 16 | 459 | 206 |
Other Comprehensive Income (Loss), Net of Tax, Total | (432) | (88) | 2,094 |
Comprehensive loss | $ (7,817) | $ (85,945) | $ (111,237) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings (Accumulated Deficit) |
Balance (in shares) at Jun. 30, 2020 | 35,625,716 | ||||
Balance at Jun. 30, 2020 | $ 125,703 | $ 1,781 | $ 22,011 | $ 7,449 | $ 94,462 |
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (113,331) | (113,331) | |||
Foreign currency translation | 1,888 | 1,888 | |||
Exercise of SARs (in shares) | 3,775 | ||||
Exercise of SARs | (24) | (24) | |||
Stock-based compensation | 3,254 | 3,254 | |||
Recognition of deferred compensation | 206 | 206 | |||
Net restricted stock activity (in shares) | 166,353 | ||||
Net restricted stock activity | (130) | $ 9 | (139) | ||
Minority interest | (520) | (520) | |||
Balance (in shares) at Jun. 30, 2021 | 35,795,844 | ||||
Balance at Jun. 30, 2021 | 17,046 | $ 1,790 | 25,102 | 9,543 | (19,389) |
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (85,857) | (85,857) | |||
Foreign currency translation | (547) | (547) | |||
Issuance of common stock, net of offering costs (in shares) | 9,295,618 | ||||
Issuance of common stock, net of offering costs | 37,185 | $ 465 | 36,720 | ||
Stock-based compensation | 1,285 | 1,285 | |||
Recognition of deferred compensation | 459 | 459 | |||
Net restricted stock activity (in shares) | 418,783 | ||||
Net restricted stock activity | $ (524) | $ 21 | (545) | ||
Balance (in shares) at Jun. 30, 2022 | 45,510,245 | 45,510,245 | |||
Balance at Jun. 30, 2022 | $ (30,953) | $ 2,276 | 62,562 | 9,455 | (105,246) |
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (7,385) | (7,385) | |||
Foreign currency translation | $ (448) | (448) | |||
Exercise of SARs (in shares) | 0 | ||||
Stock-based compensation | $ 2,077 | 2,077 | |||
Recognition of deferred compensation | 16 | 16 | |||
Net restricted stock activity (in shares) | 55,983 | ||||
Net restricted stock activity | $ (37) | $ 2 | (39) | ||
Balance (in shares) at Jun. 30, 2023 | 45,566,228 | 45,566,228 | |||
Balance at Jun. 30, 2023 | $ (36,730) | $ 2,278 | $ 64,600 | $ 9,023 | $ (112,631) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Cash flows from operating activities: | ||||
Net loss | $ (7,385) | $ (85,857) | $ (113,331) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
(Gain ) loss from sale of OSP | (4,562) | 36,143 | 0 | |
Depreciation and amortization | 7,189 | 6,504 | 17,871 | |
Long-lived asset impairment | 101 | 542 | 13,023 | |
Deferred income taxes | (8) | 391 | (3,388) | |
Inventory reserve | 1,228 | 10,478 | 12,068 | |
Non-cash interest | 3,790 | 0 | 0 | |
Gain from disposal of distribution center assets | 0 | 0 | (14,997) | |
Loss from sale of salon assets to franchisees, net | 0 | 2,334 | 16,696 | |
Goodwill impairment | 0 | 16,000 | 0 | |
Stock-based compensation | 2,316 | 1,334 | 3,254 | |
Amortization of debt discount and financing costs | 2,891 | 1,839 | 1,839 | |
Other non-cash items affecting earnings | 155 | 709 | (351) | |
Changes in operating assets and liabilities: | ||||
Receivables | [1] | 943 | 11,896 | (279) |
Inventories | [1] | (182) | 7,886 | 17,879 |
Income tax receivable | [1] | (577) | 1,118 | 1,295 |
Other current assets | [1] | 850 | 2,118 | 1,658 |
Other assets | [1] | 6,818 | 2,703 | (2,896) |
Accounts payable | [1] | (497) | (10,966) | (21,669) |
Accrued expenses | [1] | (6,151) | (21,983) | 5,296 |
Net lease liabilities | [1] | (4,991) | (5,960) | (19,248) |
Other non-current liabilities | [1] | (9,817) | (15,867) | (14,603) |
Net cash used in operating activities: | (7,889) | (38,638) | (99,883) | |
Cash flows from investing activities: | ||||
Capital expenditures | (481) | (5,316) | (11,475) | |
Net proceeds from sale of OSP | 4,500 | 13,000 | 0 | |
Proceeds from sale of assets to franchisees | 0 | 0 | 8,437 | |
Costs associated with sale of assets to franchisees | 0 | 0 | (261) | |
Proceeds from company-owned life insurance policies | 0 | 0 | 1,200 | |
Net cash provided by (used in) investing activities: | 4,019 | 7,684 | (2,099) | |
Cash flows from financing activities: | ||||
Borrowings on credit facility | 13,357 | 10,000 | 10,000 | |
Repayments of long-term debt | (11,083) | (16,916) | (589) | |
Proceeds from issuance of common stock, net of offering costs | 0 | 37,185 | 0 | |
Debt refinancing fees | (4,383) | 0 | 0 | |
Taxes paid for shares withheld | (36) | (845) | (348) | |
Minority interest buyout | 0 | 0 | (562) | |
Distribution center lease payments | 0 | 0 | (724) | |
Net cash (used in) provided by financing activities: | (2,145) | 29,424 | 7,777 | |
Effect of exchange rate changes on cash and cash equivalents | (53) | (158) | 477 | |
Decrease in cash, cash equivalents and restricted cash | (6,068) | (1,688) | (93,728) | |
Cash, cash equivalents and restricted cash: | ||||
Beginning of year | 27,464 | 29,152 | 122,880 | |
End of year | $ 21,396 | $ 27,464 | $ 29,152 | |
[1]Changes in operating assets and liabilities exclude assets and liabilities sold or acquired. |
BUSINESS DESCRIPTION AND SUMMAR
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Description: Regis Corporation franchises and owns hair care salons, primarily in North America. The business is evaluated in two segments, Franchise salons and Company-owned salons. Franchise salons in operation decreased from 5,395 at June 30, 2022 to 4,795 at June 30, 2023, primarily due to the closure of 616 salons. Company-owned salons in operation decreased from 105 at June 30, 2022 to 68 at June 30, 2023, primarily due to the closure of 37 salons. See Note 15 to the Consolidated Financial Statements. Salons are located in leased space in strip center locations, malls or Walmart. COVID-19 Impact: The global coronavirus pandemic (COVID-19) had an adverse impact on operations. As a result, the Company received Canadian rent relief, Canadian wage relief, U.S. employee retention payroll tax credits and a grant from the state of North Carolina. In fiscal years 2023, 2022 and 2021, the Company received the following assistance: Fiscal Years 2023 2022 2021 Financial Statement Caption (Dollars in thousands) Canadian rent relief Rent $ — $ 1,235 $ — Canadian wage relief Company-owned salon expense — 1,966 1,629 U.S. employee retention payroll tax credit Company-owned salon expense — — 1,547 North Carolina COVID-19 grant Other, net 1,106 — — Additionally, in both December 2022 and December 2021, the Company paid $2.5 million of social security contributions that had been deferred under the CARES Act. Consolidation: The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidates variable interest entities where it has determined it is the primary beneficiary of those entities' operations. Variable Interest Entities : The Company has interests in certain privately-held entities through arrangements that do not involve voting interests. Such entities, known as variable interest entities (VIE), are required to be consolidated by its primary beneficiary. The Company evaluates whether it is the primary beneficiary for each VIE using a qualitative assessment that considers the VIE's purpose and design, the involvement of each of the interest holders and the risk and benefits of the VIE. As of June 30, 2023, the Company has no VIEs where the Company is the primary beneficiary. The Company has an investment in Empire Education Group, Inc. (EEG). During fiscal year 2020, the Company signed an agreement to sell its interest in EEG to the other shareholder. Until the transaction closes, the Company continues to account for EEG as an equity investment under the voting interest model. The Company has granted the other shareholder of EEG an irrevocable proxy to vote a certain number of the Company's shares such that the other shareholder of EEG has voting control of EEG's common stock, as well as the right to appoint four of the five members of EEG's Board of Directors. The Company wrote off its investment balance in EEG in fiscal year 2016. Use of Estimates: The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes may differ from management's estimates and assumptions. Cash, Cash Equivalents and Restricted Cash: Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2023 and 2022. Restricted cash within other current assets primarily relates to consolidated advertising cooperatives funds, which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs. The self-insurance restricted cash arrangement can be canceled by the Company at any time if substituted with letters of credit. The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded within other current assets on the Consolidated Balance Sheets to the amount of cash, cash equivalents and restricted cash reported on the Consolidated Statements of Cash Flows: June 30, 2023 2022 (Dollars in thousands) Cash and cash equivalents $ 9,508 $ 17,041 Restricted cash, included in other current assets 11,888 10,423 Total cash, cash equivalents and restricted cash $ 21,396 $ 27,464 Receivables and Allowance for Doubtful Accounts: The receivable balance on the Company's Consolidated Balance Sheets primarily includes accounts and notes receivable from franchisees, credit card receivables and receivables related to salons sold to franchisees. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), related to receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables. As of June 30, 2023 and 2022, the allowance for doubtful accounts was $7.3 and $6.6 million, respectively. The allowance for doubtful accounts increased in fiscal year 2023 due to an increase in past due receivables related to underperforming franchise salons. See Note 2 to the Consolidated Financial Statements. Inventories: Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and relaxers. Inventories are stated at the lower of cost or net realizable value, with cost determined on a weighted average cost basis. The Company has inventory valuation reserves for excess and obsolete inventories, or other factors that may render inventories unmarketable at their historical costs. In fiscal year 2021, the Company announced it would transition away from its wholesale product distribution model in favor of a third-party distribution model. As a result, the Company exited its two distribution centers in fiscal year 2022 and now stores inventory at a third-party facility. To facilitate the exit of the distribution centers, the Company sold inventory at discounts. Additionally, the reduction in company-owned salons decreases the Company's ability to redistribute inventory from closed locations to other salons to be sold or used. The inventory valuation reserve as of June 30, 2023 and 2022 was $1.5 and $1.9 million, respectively. As of June 30, 2023 and 2022, the Company had inventory related to discontinued operations of $1.2 and $1.8 million, respectively, offset by a reserve of $1.2 and $1.1 million, respectively. See Note 3 to the Consolidated Financial Statements. During fiscal year 2023, the Company recorded a total inventory reserve charge of $1.2 million, which was recorded in inventory reserve in the Consolidated Statements of Operations. During fiscal year 2022, the Company recorded a total inventory reserve charge of $10.5 million, of which $7.7 and $2.8 million were recorded in inventory reserve and company-owned salon expense, respectively, in the Consolidated Statements of Operations. During fiscal year 2021, the Company recorded a total inventory reserve charge of $12.1 million, which was recorded in company-owned salon expense in the Consolidated Statements of Operations. Property and Equipment: Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful asset lives (i.e., 10 years or lease life for improvements and three The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. Estimated useful lives range from three Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets, are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income (loss). Fully depreciated or amortized assets remain in the accounts until retired from service. Right of Use Asset, Lease Liabilities and Rent Expense: At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from one five The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. All of the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The right of use (ROU) asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable. The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original lease term. Certain leases provide for contingent rents that are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheets, along with the corresponding rent expense in the Consolidated Statements of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. Salon Long-Lived Asset and Right of Use Asset Impairment Assessments: A lessee's ROU asset is subject to the same asset impairment guidance in ASC 360, Property, Plant, and Equipment, applied to other elements of property, plant, and equipment. The Company has identified its asset groups at the individual salon level as this represents the lowest level that identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Poor salon performance in fiscal years 2023, 2022 and 2021 resulted in ASC 360-10-35-21 triggering events. As a result, management assessed underperforming salon asset groups, which included the related ROU assets, for impairment in accordance with ASC 360. The Company assesses impairment of long-lived salon assets and ROU assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. The first step in the impairment test under ASC 360 is to determine whether the long-lived assets are recoverable, which is determined by comparing the net carrying value of the salon asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. Estimating cash flows for purposes of the recoverability test is subjective and requires significant judgment. Estimated future cash flows used for the purposes of the recoverability test were based upon historical cash flows for the salons, adjusted for expected changes in future market conditions and other factors. The period of time used to determine the estimates of the future cash flows for the recoverability test was based on the remaining useful life of the primary asset of the group, which was the ROU asset in all cases. The second step of the long-lived asset impairment test requires that the fair value of the asset group be estimated when determining the amount of any impairment loss. For the salon asset groups that failed the recoverability test, an impairment loss was measured as the amount by which the carrying amount of the asset group exceeds its fair value. The Company applied the fair value guidance within ASC 820-10 to determine the fair value of the asset group from the perspective of a market-participant considering, among other things, appropriate discount rates, multiple valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group. To determine the fair value of the salon asset groups, the Company utilized market-participant assumptions rather than the Company's own assumptions about how it intends to use the asset group. The significant judgments and assumptions utilized to determine the fair value of the salon asset groups include the market rent of comparable properties and a discount rate. The fair value of the salon long-lived asset group is estimated using market participant methods based on the best information available. The fair value of the ROU asset is estimated by determining what a market participant would pay over the life of the primary asset in the group, discounted back to June 30, 2023. During fiscal years 2023 and 2022, the Company recognized long-lived asset impairment charges of $0.1 and $0.5 million, respectively, related to ROU assets on the Consolidated Statements of Operations. During fiscal year 2021, the Company recognized long-lived asset impairment charges of $13.0 million, which included $9.5 million related to ROU assets on the Consolidated Statements of Operations. The impairment loss for each salon asset group that was recognized was allocated among the long-lived assets of the group on a pro-rata basis using their relative carrying amounts. Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including the ROU assets included in the salon asset groups. Assessing the long-lived assets for impairment requires management to make assumptions and to apply judgment which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses for its long-lived assets, including its ROU assets. If actual results are not consistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material. See Note 6 to the Consolidated Financial Statements. Goodwill: As of June 30, 2023 and 2022, the Franchise reporting unit had $173.8 and $174.4 million, respectively, of goodwill and the Company-owned reporting unit had no goodwill for both periods. See Note 5 to the Consolidated Financial Statements for changes to the goodwill balance. The Company assesses goodwill impairment on an annual basis as of April 30, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill impairment assessments are performed at the reporting unit level, which is the same as the Company's operating segments. The goodwill assessment involves a one-step comparison of the reporting unit's fair value to its carrying value, including goodwill (Step 1). If the reporting unit's fair value exceeds its carrying value, no further procedures are required. However, if the reporting unit's fair value is less than the carrying value, an impairment charge is recorded for the difference between the fair value and carrying value of the reporting unit. In applying the goodwill impairment assessment, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting units was less than its carrying value (Step 0). Qualitative factors could include, but are not limited to, economic, market and industry conditions, cost factors and overall financial performance of the reporting unit. If after assessing these qualitative factors, the Company determined it is more likely than not that the carrying value is less than the fair value, then performing Step 1 of the goodwill impairment assessment is unnecessary. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total salons or expenses of the reporting unit as a percent of total company expenses. The Company calculates estimated fair values of the reporting units based on discounted cash flows utilizing estimates in annual revenue, fixed expense rates, allocated corporate overhead, franchise and company-owned salon counts, and long-term growth rates for determining terminal value. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company engages third-party valuation consultants to assist in evaluating the Company's estimated fair value calculations. The following is a description of the goodwill impairment assessments for each of the fiscal years: Fiscal 2023 During fiscal year 2023, the Company did not experience any triggering events that required an interim goodwill analysis. The Company performed its annual impairment assessment as of April 30. For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the Franchise reporting unit. The discounted cash flows model reflects management's assumptions regarding revenue growth rates, economic and market trends, cost structure, and other expectations about the anticipated short-term and long-term operating results. The discount rate of 17.0% was also a key assumption utilized in the discounted cash flows. The results of this assessment indicated that the estimated fair value of the Company's Franchise reporting unit exceeded the carrying value. Fiscal 2022 During fiscal year 2022, the Company performed a quantitative impairment test over goodwill during the second quarter due to a triggering event experienced in the quarter. This determination was made considering the sustained decrease in share price and a change in the Company's chief operating decision maker. In the second quarter, the Franchise reporting unit was determined to have a fair value in excess of its carrying value and no impairment was recorded. A quantitative goodwill impairment was performed in the third quarter due to a triggering event experienced during the quarter. This determination was made considering a decrease in forecasted revenue due to slower than expected recovery from COVID-19. In the third quarter, the Franchise reporting unit was determined to have a carrying value in excess of its fair value, resulting in a goodwill impairment charge of $16.0 million. The Company performed its annual impairment assessment as of April 30. For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the Franchise reporting unit. The discounted cash flows model reflects management's assumptions regarding revenue growth rates, economic and market trends, cost structure, and other expectations about the anticipated short-term and long-term operating results. Management's assumptions related to revenue growth rates were reduced and management increased expected salon closures compared to valuations in prior years. These changes, along with a decline in value from the market approach, reduced the fair value of the reporting unit. The discount rate of 20.0% was also a key assumption utilized in the discounted cash flows. As a result of the impairment testing, the Franchise reporting unit was determined to have a fair value in excess of its carrying value. The Company derecognized $38.4 million of goodwill in fiscal year 2022 in connection to the sale of OSP. The $38.4 million represents the portion of goodwill related to the OSP business based on relative fair value. See Notes 3 and 5 to the Consolidated Financial Statements. Fiscal 2021 During fiscal year 2021, the Company did not experience any triggering events that required an interim goodwill analysis. The Company performed its annual impairment assessment as of April 30. For the fiscal year 2021 annual impairment assessment, the Company performed a Step 1 impairment test for the Franchise reporting unit. The Company compared the carrying value of the Franchise reporting unit, including goodwill, to the estimated fair value. The results of this assessment indicated that the estimated fair value of the Company's Franchise reporting unit exceeded the carrying value. Self-Insurance Accruals: The Company uses a combination of third-party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the Consolidated Balance Sheets date. The Company estimates self-insurance liabilities using a number of factors, primarily based on independent third-party actuarially-determined amounts, historical claims experience, estimates of incurred but not reported claims, demographic factors and severity factors. Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from historical trends and actuarial assumptions. For fiscal years 2023, 2022 and 2021, the Company recorded decreases in expense for changes in estimates related to prior year open policy periods of $1.4, $0.5 and $3.6 million, respectively. The Company updates loss projections bi-annually and adjusts its liability to reflect updated projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time. As of June 30, 2023, the Company had $3.6 and $7.3 million recorded in current liabilities and non-current liabilities, respectively, related to the Company's workers' compensation and general liability self-insurance accruals. As of June 30, 2022, the Company had $4.7 and $9.7 million recorded in current liabilities and non-current liabilities, respectively, related to the Company's workers' compensation and general liability self-insurance accruals. Revenue Recognition and Deferred Revenue: Franchise revenues primarily include royalties, fees, product sales to franchisees and advertising fund fees. Royalties and advertising fund revenues represent sales-based royalties that are recognized as revenue in the period in which the sales occur. The Company defers franchise fees until the salon is open and then recognizes the revenue over the term of the franchise agreement. See Note 2 to the Consolidated Financial Statements. Product sales by the Company to its franchisees are recorded at the time product is delivered to franchise locations. Company-owned salon revenues are recognized at the time when the services are provided, or the guest receives and pays for merchandise. Classification of Revenue and Expenses: Below is a summary of the primary financial statement captions. Royalties - Sales-based royalty received from franchisees. Fees - Fees received from franchisees and third parties, including franchise fees and fees received from the third-party distributor. Product sales to franchisees - Wholesale product sales to franchisees. The Company changed its franchise product sales business in fiscal year 2022 from a wholesale distribution model to a third-party distribution model. This revenue was expected to decrease significantly during fiscal year 2022 and into fiscal year 2023. Advertising fund contributions - Sales-based advertising fund contributions received from franchisees. Company-owned salon revenue - Service revenue and revenue derived from sales of product in Company-owned salons. Cost of product sales to franchisees - Direct cost of inventory and freight and other costs of sales. Company-owned salon expense - Cost of service and product sold to guests in our Company-owned salons and other salon-related costs. Excluded from this caption are general and administrative expense, rent and depreciation and amortization related to company-owned salons. Consideration Received from Vendors: The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction to the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A quarterly analysis is performed in order to ensure the estimated rebate accrued is reasonable and any necessary adjustments are recorded. Distribution Costs: In fiscal year 2022, the Company exited its two distribution centers and changed the wholesale product distribution model in favor of a third-party distribution model, reducing the cost in fiscal years 2022 and 2023. Beginning in the second half of fiscal year 2022, the Company began storing inventory at a third-party facility. Prior to closing the distribution centers in fiscal year 2022, the Company incurred costs to store, move and ship product from the Company's distribution centers to salons. Distribution costs related to product shipped to company-owned locations are included in company-owned salon expenses in the Consolidated Statements of Operations. Distribution costs, including distribution center overhead, related to shipping product to franchise locations totaled $0.0, $2.3 and $12.1 million during fiscal years 2023, 2022 and 2021, respectively, and are included in general and administrative in the Consolidated Statements of Operations. Advertising and Advertising Funds: Advertising costs consist of the Company's corporate funded advertising costs, the Company's advertising fund contributions and franchisee's advertising fund contributions. Corporate funded advertising costs are expensed as incurred. The Company has various franchising programs supporting specific franchise salon concepts. Most maintain advertising funds that provide comprehensive advertising and sales promotion support. All salons are required to participate in the advertising funds for the same salon concept. The Company administers the advertising funds in accordance with franchise operating and other agreements. Advertising fund contributions are expensed when the contribution is made. The Company's advertising costs included in the Consolidated Statements of Operations consist of the following: Fiscal Years 2023 2022 2021 (Dollars in thousands) Advertising fund contributions from franchisees $ 31,747 $ 32,573 $ 22,023 Advertising fund contributions from company-owned salons (1) 105 154 897 Corporate funded advertising costs (1) 264 671 7,015 Total advertising costs $ 32,116 $ 33,398 $ 29,935 _____________________________________________________________________________ (1) Included in general and administrative in the Consolidated Statements of Operations. The Company records all advertising funds as assets and liabilities within the Company's Consolidated Balance Sheets. As of June 30, 2023 and 2022, approximately $11.1 and $10.5 million, respectively, representing the advertising funds' assets and liabilities, were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheets. Stock-Based Employee Compensation Plans: The Company recognizes stock-based compensation expense based on the fair value of the awards at the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period of the award (or to the date a participant becomes eligible for retirement, if earlier). The Company uses fair value methods that require the input of subjective assumptions, including the expected term, expected volatility, dividend yield and risk-free interest rate. The Company estimates the likelihood and the rate of achievement for performance sensitive stock-based awards at the end of each reporting period. Changes in the estimated rate of achievement can have a significant effect on the recorded stock-based compensation expense as the effect of a change in the estimated achievement level is recognized in the period the change occurs. Interest Expense: In the first quarter of fiscal year 2023, management amended its credit agreement. The amended agreement contains variable interest rates over the term of the debt. Therefore, management developed a weighted average effective interest rate by estimating total future cash flows related to the debt to determine interest expense in fiscal year 2023. The estimated cash flows included the margin rate, PIK interest, SOFR interest, and tenor fee applied to the forecasted outstanding debt balance in each future period. The significant assumptions used in the estimate are the future SOFR and debt balance, as well |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION: Revenue Recognition and Deferred Revenue: Revenue recognized over time Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenues are billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the Consolidated Statements of Operations. The treatment increases both the gross amount of reported revenue and expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Recognition of these fees is deferred until the salon opens and is then recognized over the term of the franchise agreement, which is typically 10 years. Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees. The Company recognizes franchise rental income and expense when it is due to the landlord. Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided, or the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the guest. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales to franchisees are recorded at the time product is delivered to the franchisee. Information about receivables, broker fees and deferred revenue subject to the revenue recognition guidance is as follows: June 30, June 30, Balance Sheet Classification (Dollars in thousands) Receivables from contracts with customers, net $ 5,683 $ 10,263 Receivable, net Broker fees 12,471 15,592 Other assets Deferred revenue: Current Gift card liability $ 1,823 $ 2,037 Accrued expenses Deferred franchise fees open salons 5,325 5,770 Accrued expenses Total current deferred revenue $ 7,148 $ 7,807 Non-current Deferred franchise fees unopened salons $ 2,312 $ 3,211 Other non-current liabilities Deferred franchise fees open salons 20,839 26,827 Other non-current liabilities Total non-current deferred revenue $ 23,151 $ 30,038 Receivables relate primarily to payments due for royalties, advertising fees, rent, franchise product sales and sales of salon services and product paid by credit card. The receivables balance is presented net of an allowance for expected losses (i.e., doubtful accounts), related to receivables from franchisees. Management estimates the allowance based on the age of the receivable and creditworthiness of the franchisee. The following table is a rollforward of the allowance for doubtful accounts for the periods indicated: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period $ 6,559 $ 7,774 Provision for doubtful accounts (1) 608 967 Provision for franchisee rent (2) 1,358 1,421 Reclass of accrued rent (3) 325 149 Other 106 — Write-offs (1,659) (3,752) Balance at end of period $ 7,297 $ 6,559 _____________________________________________________________________________ (1) The provision for doubtful accounts is recognized as general and administrative expense in the Consolidated Statements of Operations. (2) The provision for franchisee rent is recognized as rent in the Consolidated Statements of Operations. (3) The reclass of accrued rent represents franchisee rent obligations guaranteed by the Company that were unbilled and deemed unrecoverable as of June 30, 2021. The amounts billed in fiscal years 2023 and 2022 and the related accrual was reclassified to allowance for doubtful accounts. Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as general and administrative expense over the term of the franchise agreement in the Consolidated Statements of Operations. The following table is a rollforward of the broker fee balance for the periods indicated: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period $ 15,592 $ 19,254 Additions — 25 Amortization (3,100) (3,189) Write-offs (21) (498) Balance at end of period $ 12,471 $ 15,592 Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons. Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue for fiscal years 2023, 2022 and 2021 was $6.7, $6.5 and $6.6 million, respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of June 30, 2023 is as follows (in thousands): 2024 $ 5,325 2025 4,954 2026 4,481 2027 4,021 2028 3,357 Thereafter 4,026 Total $ 26,164 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Jun. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On June 30, 2022, the Company sold its OSP software-as-a-service solution to Soham Inc. The Company received $13.0 million in proceeds in June 2022 and received an additional $5.0 million in proceeds in fiscal year 2023, offset by a $0.5 million transaction fee. The Company expects to receive an additional $2.0 million of proceeds held back for general indemnity provisions in December 2024 and additional proceeds as salons migrate to the Zenoti platform. As a result of the sale, the Company classified the OSP business, which had been included in the Company's franchise segment, as discontinued operations in the financial statements for all years presented. The following summarizes the results of discontinued operations for the periods presented: Fiscal Years 2023 2022 2021 (Dollars in thousands) Discontinued operations: Fees $ (226) $ 3,811 $ 3,461 Cost of product sales to franchisees — (1,037) (2,790) General and administrative (27) (3,517) (9,006) Rent (351) (194) (176) Depreciation and amortization — (1,322) (964) Goodwill impairment (1) — (2,880) — Interest expense — (715) (650) Gain (loss) from sale of OSP 4,562 (36,143) — Income (loss) from discontinued operations, before taxes 3,958 (41,997) (10,125) Income tax benefit from discontinued operations (2) — 2,599 — Income (loss) from discontinued operations, net of tax $ 3,958 $ (39,398) $ (10,125) _______________________________________________________________________________ (1) Goodwill impairment included in discontinued operations represents the portion of impairment allocated to the OSP business based on relative fair value. (2) Income taxes have been allocated to continuing and discontinued operations based on the methodology required by accounting for income taxes guidance. There was no tax impact in fiscal years 2023 and 2021 due to a valuation allowance. The Company exited its office space in Fremont, California, but remains liable for lease payments through September 2024. The related liability is included in accrued expenses as of June 30, 2023 in the Consolidated Balance Sheets. The Company is actively trying to sublet the space. The following summarizes the gain (loss) from sale of OSP for the periods presented: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash proceeds $ 5,000 $ 13,000 $ — Goodwill derecognition — (38,358) — Software write-off (1) (64) (8,408) — Hardware write-down (2) (367) (1,825) — Other, net, including professional fees (7) (552) — Gain (loss) from sale of OSP $ 4,562 $ (36,143) $ — _______________________________________________________________________________ (1) Write-off of internally developed capitalized software. (2) Prior to the sale, hardware used to run OSP was sold to franchisees. As a result of the sale, the Company wrote-down the value of the hardware to its net realizable value and the charge is included in the loss on the sale of OSP. The following summarizes capital expenditures related to discontinued operations for the periods presented: Fiscal Years 2023 2022 2021 (Dollars in thousands) Capital expenditures $ — $ 1,067 $ 3,591 |
OTHER FINANCIAL STATEMENT DATA
OTHER FINANCIAL STATEMENT DATA | 12 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
OTHER FINANCIAL STATEMENT DATA | OTHER FINANCIAL STATEMENT DATA The following provides additional information concerning selected balance sheet accounts: June 30, 2023 2022 (Dollars in thousands) Other current assets: Prepaid assets $ 1,510 $ 1,816 Restricted cash 11,888 10,423 Other 1,766 1,745 Total other current assets $ 15,164 $ 13,984 Property and equipment: Buildings and improvements $ 4,594 $ 8,228 Equipment, furniture and leasehold improvements 10,126 14,260 Internal use software 20,722 34,824 Total property and equipment 35,442 57,312 Less accumulated depreciation and amortization (29,020) (44,477) Total property and equipment, net $ 6,422 $ 12,835 Accrued expenses: Payroll and payroll related costs $ 4,179 $ 7,767 Insurance 3,777 5,012 Interest expense 4,124 77 Rent and related real estate costs 5,968 4,585 Deferred revenue 7,148 7,807 Other 4,913 8,536 Total accrued expenses $ 30,109 $ 33,784 Other non-current liabilities: Deferred income taxes $ 10,936 $ 10,979 Insurance 7,291 9,744 Deferred benefits 5,975 6,308 Deferred franchise fees 23,151 30,038 Other 1,688 1,905 Total other non-current liabilities $ 49,041 $ 58,974 The following provides additional information concerning other intangibles, net: June 30, 2023 2022 Weighted Average Amortization Periods (1) Cost (2) Accumulated Net Weighted Average Amortization Periods (1) Cost (2) Accumulated Net (In years) (Dollars in thousands) (In years) (Dollars in thousands) Brand assets and trade names 36 $ 5,290 $ (3,312) $ 1,978 36 $ 5,421 $ (3,234) $ 2,187 Franchise agreements 20 7,565 (6,809) 756 20 7,719 (6,756) 963 Other 20 289 (240) 49 20 354 (278) 76 Total 26 $ 13,144 $ (10,361) $ 2,783 26 $ 13,494 $ (10,268) $ 3,226 _______________________________________________________________________________ (1) All intangible assets have been assigned an estimated finite useful life and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from three (2) The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency. Total amortization expense related to intangible assets during fiscal years 2023, 2022 and 2021 was approximately $0.3, $0.4 and $0.8 million, respectively. As of June 30, 2023, future estimated amortization expense related to intangible assets is estimated as follows (in thousands): 2024 $ 292 2025 292 2026 292 2027 292 2028 165 Thereafter 1,450 Total $ 2,783 The following provides supplemental disclosures of cash flow activity: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash paid (received) for: Interest $ 15,457 $ 11,786 $ 11,940 Taxes and penalties, net (1) 265 (1,400) (2,636) Non-cash investing activities: Unpaid capital expenditures 25 35 312 _______________________________________________________________________________ (1) The Company also received a $1.1 million COVID-19 relief grant from the State of North Carolina in fiscal year 2023. The grant is included in other, net on the Consolidated Statements of Operations. |
GOODWILL
GOODWILL | 12 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The table below contains details related to the Company's goodwill: June 30, 2023 2022 Gross Accumulated Net Gross Accumulated Net (Dollars in thousands) Goodwill $ 304,055 $ (130,264) $ 173,791 $ 304,624 $ (130,264) $ 174,360 _______________________________________________________________________________ (1) The change in the gross carrying value of goodwill relates to foreign currency translation adjustments. The table below contains details related to the Company's goodwill related to the Franchise reporting unit: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period (1) $ 174,360 $ 229,582 Derecognition of OSP goodwill — (38,358) Goodwill impairment related to continuing operations — (13,120) Goodwill impairment related to discontinued operations — (2,880) Translation rate adjustments (569) (864) Balance at end of period $ 173,791 $ 174,360 _______________________________________________________________________________ (1) The goodwill balance at the beginning of fiscal year 2022 included $41.3 million related to discontinued operations. |
LEASES
LEASES | 12 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from one five Fiscal Years 2023 2022 2021 (Dollars in thousands) Office and warehouse rent $ 3,594 $ 4,575 $ 5,234 Lease termination expense (1) 1,627 1,835 13,544 Lease liability benefit (2) (1,773) (3,620) (20,022) Franchise salon rent 2,109 1,695 3,376 Company-owned salon rent 3,639 4,872 38,622 Total $ 9,196 $ 9,357 $ 40,754 _______________________________________________________________________________ (1) During fiscal year 2023, the Company incurred costs of $1.6 million to exit salons before the lease end date in order to relieve the company of future lease obligations. During fiscal year 2022, lease termination expense includes $0.9 million to exit the Company's distribution centers before the lease end dates and $0.9 million to exit salons before the lease end dates in order to relieve the Company of future lease obligations. During fiscal year 2021, lease termination fees include $8.3 million of early termination payments to close salons before the lease end date to relieve the Company of future lease obligations and $5.3 million to accrue future lease payments for salons that are no longer operating. (2) Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities which results in a net gain. In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired. The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to the franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. In fiscal years 2023, 2022 and 2021, franchise rental income and franchise rent expense were $111.4, $130.8 and $127.4 million, respectively. These leases generally have lease terms of approximately five years. The Company expects to renew the SmartStyle master lease and some leases for locations subleased to our franchisees upon expiration of those leases. Other leases are expected to be renewed by the franchisee upon expiration. All the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable. The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original lease term. The weighted average remaining lease term was 5.52 years and 6.02 years and the weighted average discount rate was 4.55% and 4.25% for all salon operating leases as of June 30, 2023 and 2022, respectively. A lessee's ROU asset is subject to the same asset impairment guidance in ASC 360, Property, Plant, and Equipment, applied to other elements of property, plant, and equipment. The Company has identified its asset groups at the individual salon level as this represents the lowest level that identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Poor salon performance in fiscal years 2023, 2022 and 2021 resulted in ASC 360-10-35-21 triggering events. As a result, management assessed underperforming salon asset groups, which included the related ROU assets, for impairment in accordance with ASC 360. The first step in the impairment test under ASC 360 is to determine whether the long-lived assets are recoverable, which is determined by comparing the net carrying value of the salon asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. Estimating cash flows for purposes of the recoverability test is subjective and requires significant judgment. Estimated future cash flows used for the purposes of the recoverability test were based upon historical cash flows for the salons, adjusted for expected changes in future market conditions related to the COVID-19 pandemic, and other factors. The period of time used to determine the estimates of the future cash flows for the recoverability test was based on the remaining useful life of the primary asset of the group, which was the ROU asset in all cases. The second step of the long-lived asset impairment test requires that the fair value of the asset group be estimated when determining the amount of any impairment loss. For the salon asset groups that failed the recoverability test, an impairment loss was measured as the amount by which the carrying amount of the asset group exceeds its fair value. The Company applied the fair value guidance within ASC 820-10 to determine the fair value of the asset group from the perspective of a market-participant considering, among other things, appropriate discount rates, multiple valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group. To determine the fair value of the salon asset groups, the Company utilized market-participant assumptions rather than the Company's own assumptions about how it intends to use the asset group. The significant judgments and assumptions utilized to determine the fair value of the salon asset groups include the market rent of comparable properties and a discount rate. The fair value of the salon long-lived asset group is estimated using market participant methods based on the best information available. The Company engaged a third-party valuation specialist to assist with the research related to inputs used in their determination of the fair value of the ROU asset which included providing information related to significant inputs and assumptions utilized in the measurement of the impairment loss. During fiscal years 2023 and 2022, the Company recognized long-lived asset impairment charges of $0.1 and $0.5 million, respectively, related to ROU assets on the Consolidated Statements of Operations. During fiscal year 2021, the Company recognized long-lived asset impairment charges of $13.0 million, which included $9.5 million related to ROU assets on the Consolidated Statements of Operations. The impairment loss for each salon asset group that was recognized was allocated among the long-lived assets of the group on a pro-rata basis using their relative carrying amounts. Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including for the ROU assets included in the salon asset groups. Assessing the long-lived assets for impairment requires management to make assumptions and to apply judgment, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses for its long-lived asset, including its ROU assets. If actual results are not consistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material. As of June 30, 2023, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (in thousands): Fiscal Year Leases For Franchise Salons Leases For Company-Owned Salons Corporate Leases Total Operating Lease Commitments Sublease Income to be Received From Franchisees Net Rent Commitments 2024 $ 93,838 $ 1,629 $ 1,301 $ 96,768 $ (93,838) $ 2,930 2025 78,344 677 1,334 80,355 (78,344) 2,011 2026 64,992 458 1,367 66,817 (64,992) 1,825 2027 55,273 229 1,401 56,903 (55,273) 1,630 2028 46,758 218 1,436 48,412 (46,758) 1,654 Thereafter 70,053 56 2,981 73,090 (70,053) 3,037 Total future obligations $ 409,258 $ 3,267 $ 9,820 $ 422,345 $ (409,258) $ 13,087 Less amounts representing interest 46,970 240 1,317 48,527 Present value of lease liabilities $ 362,288 $ 3,027 $ 8,503 $ 373,818 Less current lease liabilities 79,420 1,526 971 81,917 Long-term lease liabilities $ 282,868 $ 1,501 $ 7,532 $ 291,901 Supplemental operating cash flow information and non-cash activity related to our operating leases are as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash paid for amounts included in the measurement of lease liabilities (1) $ 57,598 $ 74,507 $ 130,039 Right of use assets obtained in exchange for new lease liabilities 458 2,011 4,242 _______________________________________________________________________________ (1) Cash paid for amounts included in the measurement of lease liabilities includes rent, termination fees, settlements and legal fees, and commission payments. Other than Walmart, franchisees pay landlords directly. |
LEASES | LEASES At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from one five Fiscal Years 2023 2022 2021 (Dollars in thousands) Office and warehouse rent $ 3,594 $ 4,575 $ 5,234 Lease termination expense (1) 1,627 1,835 13,544 Lease liability benefit (2) (1,773) (3,620) (20,022) Franchise salon rent 2,109 1,695 3,376 Company-owned salon rent 3,639 4,872 38,622 Total $ 9,196 $ 9,357 $ 40,754 _______________________________________________________________________________ (1) During fiscal year 2023, the Company incurred costs of $1.6 million to exit salons before the lease end date in order to relieve the company of future lease obligations. During fiscal year 2022, lease termination expense includes $0.9 million to exit the Company's distribution centers before the lease end dates and $0.9 million to exit salons before the lease end dates in order to relieve the Company of future lease obligations. During fiscal year 2021, lease termination fees include $8.3 million of early termination payments to close salons before the lease end date to relieve the Company of future lease obligations and $5.3 million to accrue future lease payments for salons that are no longer operating. (2) Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities which results in a net gain. In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired. The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to the franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. In fiscal years 2023, 2022 and 2021, franchise rental income and franchise rent expense were $111.4, $130.8 and $127.4 million, respectively. These leases generally have lease terms of approximately five years. The Company expects to renew the SmartStyle master lease and some leases for locations subleased to our franchisees upon expiration of those leases. Other leases are expected to be renewed by the franchisee upon expiration. All the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable. The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original lease term. The weighted average remaining lease term was 5.52 years and 6.02 years and the weighted average discount rate was 4.55% and 4.25% for all salon operating leases as of June 30, 2023 and 2022, respectively. A lessee's ROU asset is subject to the same asset impairment guidance in ASC 360, Property, Plant, and Equipment, applied to other elements of property, plant, and equipment. The Company has identified its asset groups at the individual salon level as this represents the lowest level that identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Poor salon performance in fiscal years 2023, 2022 and 2021 resulted in ASC 360-10-35-21 triggering events. As a result, management assessed underperforming salon asset groups, which included the related ROU assets, for impairment in accordance with ASC 360. The first step in the impairment test under ASC 360 is to determine whether the long-lived assets are recoverable, which is determined by comparing the net carrying value of the salon asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. Estimating cash flows for purposes of the recoverability test is subjective and requires significant judgment. Estimated future cash flows used for the purposes of the recoverability test were based upon historical cash flows for the salons, adjusted for expected changes in future market conditions related to the COVID-19 pandemic, and other factors. The period of time used to determine the estimates of the future cash flows for the recoverability test was based on the remaining useful life of the primary asset of the group, which was the ROU asset in all cases. The second step of the long-lived asset impairment test requires that the fair value of the asset group be estimated when determining the amount of any impairment loss. For the salon asset groups that failed the recoverability test, an impairment loss was measured as the amount by which the carrying amount of the asset group exceeds its fair value. The Company applied the fair value guidance within ASC 820-10 to determine the fair value of the asset group from the perspective of a market-participant considering, among other things, appropriate discount rates, multiple valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group. To determine the fair value of the salon asset groups, the Company utilized market-participant assumptions rather than the Company's own assumptions about how it intends to use the asset group. The significant judgments and assumptions utilized to determine the fair value of the salon asset groups include the market rent of comparable properties and a discount rate. The fair value of the salon long-lived asset group is estimated using market participant methods based on the best information available. The Company engaged a third-party valuation specialist to assist with the research related to inputs used in their determination of the fair value of the ROU asset which included providing information related to significant inputs and assumptions utilized in the measurement of the impairment loss. During fiscal years 2023 and 2022, the Company recognized long-lived asset impairment charges of $0.1 and $0.5 million, respectively, related to ROU assets on the Consolidated Statements of Operations. During fiscal year 2021, the Company recognized long-lived asset impairment charges of $13.0 million, which included $9.5 million related to ROU assets on the Consolidated Statements of Operations. The impairment loss for each salon asset group that was recognized was allocated among the long-lived assets of the group on a pro-rata basis using their relative carrying amounts. Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including for the ROU assets included in the salon asset groups. Assessing the long-lived assets for impairment requires management to make assumptions and to apply judgment, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses for its long-lived asset, including its ROU assets. If actual results are not consistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material. As of June 30, 2023, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (in thousands): Fiscal Year Leases For Franchise Salons Leases For Company-Owned Salons Corporate Leases Total Operating Lease Commitments Sublease Income to be Received From Franchisees Net Rent Commitments 2024 $ 93,838 $ 1,629 $ 1,301 $ 96,768 $ (93,838) $ 2,930 2025 78,344 677 1,334 80,355 (78,344) 2,011 2026 64,992 458 1,367 66,817 (64,992) 1,825 2027 55,273 229 1,401 56,903 (55,273) 1,630 2028 46,758 218 1,436 48,412 (46,758) 1,654 Thereafter 70,053 56 2,981 73,090 (70,053) 3,037 Total future obligations $ 409,258 $ 3,267 $ 9,820 $ 422,345 $ (409,258) $ 13,087 Less amounts representing interest 46,970 240 1,317 48,527 Present value of lease liabilities $ 362,288 $ 3,027 $ 8,503 $ 373,818 Less current lease liabilities 79,420 1,526 971 81,917 Long-term lease liabilities $ 282,868 $ 1,501 $ 7,532 $ 291,901 Supplemental operating cash flow information and non-cash activity related to our operating leases are as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash paid for amounts included in the measurement of lease liabilities (1) $ 57,598 $ 74,507 $ 130,039 Right of use assets obtained in exchange for new lease liabilities 458 2,011 4,242 _______________________________________________________________________________ (1) Cash paid for amounts included in the measurement of lease liabilities includes rent, termination fees, settlements and legal fees, and commission payments. Other than Walmart, franchisees pay landlords directly. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). Assets and Liabilities Measured at Fair Value on a Recurring Basis As of June 30, 2023 and 2022, the estimated fair value of the Company's cash, cash equivalents, restricted cash, receivables, inventory, deferred compensation assets, debt and accounts payable approximated their carrying values. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We measure certain assets, including the Company's equity method investments, tangible fixed and other assets, and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined, when applicable, based on valuation techniques using the best information available, and may include quoted market prices, market comparables and discounted cash flow projections. The following impairment charges were based on fair values using Level 3 inputs (1): Fiscal Years 2023 2022 2021 (Dollars in thousands) Goodwill impairment $ — $ 16,000 $ — Long-lived asset impairment 101 542 13,023 _______________________________________________________________________________ (1) See Notes 1 and 5 to the Consolidated Financial Statements. |
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS | 12 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS The Company's financing arrangements consists of the following: June 30, Maturity Date 2023 2022 2023 2022 (Fiscal year) (Interest rate %) (Dollars in thousands) Term loan 2026 9.54% N/A $ 172,268 $ — Deferred financing fees (6,471) — Term loan, net 165,797 — Revolving credit facility 2026 9.54% 5.50% 10,000 179,994 Paid-in-kind interest 1,033 — Total long-term debt, net $ 176,830 $ 179,994 In August 2022, the Company amended its credit agreement. The amendment, among other things, converted $180.0 million of the previous $295.0 million revolving credit facility to a new term loan, reduced commitments under the revolving credit facility to $55.0 million, and extended the term of the credit facility from March 26, 2023 to August 31, 2025, with no scheduled amortization prior to maturity. The amendment is accounted for as a modification of debt and any unamortized financing fees that existed at the date of the amendment and new financing fees incurred are amortized through the extended term of the credit facility. At June 30, 2023, the Company had outstanding standby letters of credit under the revolving credit facility of $11.8 million, primarily related to the Company's self-insurance program. As of June 30, 2023, the total liquidity and available credit under the revolving credit facility, as defined by the agreement, were $42.8 and $33.3 million, respectively. As of June 30, 2023, the Company had cash and cash equivalents of $9.5 million and current liabilities of $126.3 million. The agreement utilizes an interest rate margin that is subject to annual increases. The margin applicable to term secured overnight financing rate (SOFR) loans was 3.875% through March 27, 2023. Effective March 27, 2023, the margin increased to 6.25%, of which 4.25% is paid currently in cash and 2.00% is PIK interest (added to the principal balance and thereafter accruing interest). Effective March 27, 2024, the margin will increase to 7.25%, of which 4.25% will be paid currently in cash and 3.00% will be PIK interest. The margin applicable to base rate loans will be 100 basis points (1.00%) less than the margin applicable to term SOFR loans. Interest expense is recorded based on a weighted average effective interest rate method. The significant assumptions used in the weighted average estimate are the future SOFR rates and debt balance, as well as the length of time the debt will be outstanding. Due to the interest rate increasing over the debt term, the Company recorded more interest expense than interest paid in cash in fiscal year 2023. The related accrued interest of $3.8 million as of June 30, 2023 is included in accrued expenses on the Consolidated Balance Sheets. The agreement contains typical provisions and financial covenants regarding minimum EBITDA, maximum leverage and minimum fixed-charge coverage and a minimum liquidity threshold of $10.0 million. The Company was in compliance with its covenants and other requirements of the financing arrangements as of June 30, 2023. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Contingencies: As of June 30, 2023, the Company was self-insured for most workers' compensation, employment practice liability and general liability. Workers' compensation and general liability losses are subject to per occurrence and aggregate annual liability limitations. The Company is insured for losses in excess of these limitations. The Company is also self-insured for health care claims for eligible participating employees subject to certain deductibles and limitations. The Company determines its liability for claims incurred but not reported on an actuarial basis. Beginning in fiscal year 2024, the Company transitioned to a third-party insurance plan for new workers' compensation and general liability claims. Litigation and Settlements: The Company is a plaintiff or defendant in various lawsuits and claims arising out of the normal course of business. Like certain other franchisors, the Company has faced allegations of franchise regulation and agreement violations. Additionally, because the Company may be the tenant under a master lease for a location subleased to a franchisee, the Company has faced allegations of nonpayment of rent and associated charges. Further, similar to other large retail employers, the Company has faced, and may continue to face, allegations of purported class-wide consumer and wage and hour violations. During fiscal year 2023, the Company recorded $1.0 million of expense related to litigation and paid $1.5 million settlements of claims during the year. Legal costs are expensed as incurred. During fiscal year 2022, the Company recorded $2.2 million of expense related to litigation, of which $1.7 million was paid during the year. The Company's previous point-of-sale system supplier had challenged the development of certain parts of the Company's technology systems in litigation brought in the Northern District of California. The Company and the supplier entered into an agreement, effective June 25, 2021, that provided for the dismissal of the lawsuit and set forth a Transition Services Agreement pursuant to which the supplier will assist in the transfer of franchise salons from its point-of-sale system to the Company's salon management system, OSP. The Company and the supplier entered into an amendment to the Settlement Agreement, effective June 15, 2022, in which the Company agreed to pay $2.0 million to the supplier in installments commencing on June 15, 2022, and ending on December 10, 2022, in consideration of a release of claims arising out of or related to the Transition Services Agreement and for the supplier to continue to provide the services set forth in that agreement. As of June 30, 2023, the Company has made all payments under the agreement. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The components of loss from continuing operations before income taxes are as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) Loss before income taxes U.S. $ (10,204) $ (41,231) $ (143,104) International (1,794) (3,211) 34,470 $ (11,998) $ (44,442) $ (108,634) The (benefit) provision for income taxes consists of: Fiscal Years 2023 2022 2021 (Dollars in thousands) Current: U.S. $ (219) $ (535) $ (620) International (428) (425) (1,421) Deferred: U.S. (270) 3,130 (3,701) International 262 (153) 314 $ (655) $ 2,017 $ (5,428) The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to loss from continuing operations before income taxes, as a result of the following: Fiscal Years 2023 2022 2021 U.S. statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal income tax benefit (2.7) 1.4 7.9 Valuation allowance (1) (12.9) (6.6) (61.5) Foreign income taxes at other than U.S. rates (0.2) 3.0 9.4 Uncertain tax positions 6.7 (17.9) 0.2 Stock-based compensation (2.7) (2.8) (0.7) Loss on investment in Luxembourg — — 29.3 Deferred tax rate remeasurement (3.6) — — Other, net (2) (0.1) (2.6) (0.6) Effective tax rate 5.5 % (4.5) % 5.0 % _______________________________________________________________________________ (1) See Note 1 to the Consolidated Financial Statements. (2) The (0.1)% of other, net in fiscal year 2023 includes the rate impact of the federal provision to return true-up, tax attribute expirations and miscellaneous items of 1.3%, (1.1)% and (0.3)%, respectively. The (2.6)% of other, net in fiscal year 2022 includes the rate impact of the federal provision to return true-up and miscellaneous items of (2.0)% and (0.6)%, respectively. The (0.6)% of other, net in fiscal year 2021 does not include the rate impact of any items in excess of 5% of computed tax. The components of the net deferred tax assets and liabilities are as follows: June 30, 2023 2022 (Dollars in thousands) Deferred tax assets: Payroll and payroll related costs $ 5,041 $ 5,267 Net operating loss carryforwards 154,514 153,190 Tax credit carryforwards 37,515 37,664 Capital loss carryforwards 5,845 5,338 Deferred franchise fees 7,018 8,694 Operating lease liabilities 92,666 124,905 Other (1) 18,826 17,542 Subtotal 321,425 352,600 Valuation allowance (202,185) (201,731) Total deferred tax assets $ 119,240 $ 150,869 Deferred tax liabilities: Goodwill and intangibles $ (35,001) $ (33,466) Operating lease assets (91,921) (123,333) Other (3,254) (5,049) Total deferred tax liabilities (130,176) (161,848) Net deferred tax liability $ (10,936) $ (10,979) _______________________________________________________________________________ (1) The $18.8 million of Other in fiscal year 2023 includes $3.4 million of deferred tax assets with a corresponding valuation allowance of the same amount related to discontinued operations. The $17.5 million of Other in fiscal year 2022 includes $5.3 million of deferred tax assets with a corresponding valuation allowance of the same amount related to discontinued operations. At June 30, 2023, the Company has tax-effected federal, state, Canada, and U.K. net operating loss carryforwards of approximately $118.1, $27.9, $8.3 and $0.2 million, respectively. The Company's federal loss carryforward consists of $27.3 million that will expire from fiscal years 2034 to 2038 and $90.8 million that has no expiration. The state loss carryforwards consist of $24.4 million that will expire from fiscal years 2024 to 2043 and $3.5 million that has no expiration. The Canada loss carryforward will expire from fiscal years 2036 to 2043. The U.K. loss carryforward has no expiration. The Company's tax credit carryforward of $37.5 million primarily consists of Work Opportunity Tax Credits that will expire from fiscal years 2031 to 2043. The Company's capital loss carryforward of $5.8 million will expire in fiscal year 2025. We consider the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the U.S. Accordingly, we have not recorded deferred taxes related to the U.S. federal and state income taxes and foreign withholding taxes on approximately $6.6 million of undistributed earnings of foreign subsidiaries, which have been reinvested outside the U.S. As a result of the Tax Cuts and Jobs Act of 2017, taxes payable on the remittance of such earnings is expected to be minimal. The Company files tax returns and pays tax primarily in the U.S., Canada, and the U.K., as well as states, cities, and provinces within these jurisdictions. With limited exceptions, due to net operating loss carryforwards, the Company's federal, state and foreign tax returns are open to examination for all years since 2014, 2012 and 2016, respectively. A rollforward of the unrecognized tax benefits is as follows: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period $ 22,173 $ 13,858 Additions based on tax positions related to the current year 10 8,636 (Reductions) additions based on tax positions of prior years (663) 81 Reductions on tax positions related to the expiration of the statute of limitations (127) (402) Balance at end of period $ 21,393 $ 22,173 If the Company were to prevail on all unrecognized tax benefits recorded, a net benefit of approximately $0.9 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. The Company recorded interest and penalties of approximately $0.1, $0.2 and $0.2 million as reductions to the accrual, net of the respective reversal of previously accrued interest and penalties during fiscal years 2023, 2022 and 2021, respectively. As of June 30, 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of $0.6 million. This amount is not included in the gross unrecognized tax benefits noted above. It is reasonably possible the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next fiscal year. However, an estimate of the amount or range of the change cannot be made at this time. On August 16, 2022, the Inflation Reduction Act (the IRA) was signed into law. The IRA contains a number of tax related provisions, including a 15% minimum corporate income tax on certain large corporations, as well as an excise tax on stock repurchases. The Company has evaluated the IRA and does not expect it to have a material impact on the Company's Consolidated Financial Statements. |
BENEFIT PLANS
BENEFIT PLANS | 12 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
BENEFIT PLANS | BENEFIT PLANS Regis Retirement Savings Plan: The Company maintains a defined contribution 401(k) plan, the Regis Retirement Savings Plan (RRSP). The RRSP is a defined contribution profit-sharing plan with a 401(k) feature that is intended to qualify under Section 401(a) of the Internal Revenue Code (the Code) and is subject to the Employee Retirement Income Security Act of 1974 (ERISA). The 401(k) portion of the RRSP is a cash or deferred arrangement intended to qualify under section 401(k) of the Code and under which eligible employees may elect to contribute a percentage of their eligible compensation. Employees who are 18 years of age or older and who were not highly compensated employees as defined by the Code during the preceding RRSP year are eligible to participate in the RRSP commencing with the first day of the month following their completion of one month of service. The discretionary employer contribution profit-sharing portion of the RRSP is a noncontributory defined contribution component covering full-time and part-time employees of the Company who have at least one year of eligible service, defined as 1,000 hours of service during the RRSP year, are employed by the Company on the last day of the RRSP year and are Salon Support employees, field leaders, artistic directors or consultants, and that are not highly compensated employees as defined by the Code. Participants' interest in the noncontributory defined contribution component become 20.0% vested after completing two years of service with vesting increasing 20.0% for each additional year of service with participants becoming fully vested after six Nonqualified Deferred Salary Plan: The Company maintains a Nonqualified Deferred Salary Plan (Executive Plan), which covers Company officers and all other employees who are highly compensated as defined by the Code. The discretionary employer contribution portion of the Executive Plan is a profit-sharing component in which a participant's interest becomes 20.0% vested after completing two years of service with vesting increasing 20.0% for each additional year of service with participants becoming fully vested after six Regis Individual Secured Retirement Plan (RiSRP): The Company maintains a Regis Individual Secured Retirement Plan (RiSRP), pursuant to which eligible employees may use post-tax dollars to purchase life insurance benefits. Salon Support employees at the director level and above qualify. The Company may make discretionary contributions on behalf of participants within the RiSRP, which may be calculated as a matching contribution. The participant is the owner of the life insurance policy under the RiSRP. Stock Purchase Plan: The Company has an employee stock purchase plan (ESPP) available to qualifying employees. Under the terms of the ESPP, eligible employees may purchase the Company's common stock through payroll deductions. The Company contributes an amount equal to 15.0% of the purchase price of the stock to be purchased on the open market and pays all expenses of the ESPP and its administration, not to exceed an aggregate contribution of $14.0 million or when 4.6 million shares registered under the SEC for issuance under the plan have been purchased. As of June 30, 2023, the Company's cumulative contributions to the ESPP totaled $11.2 million. Deferred Compensation Contracts: The Company has unfunded deferred compensation contracts covering certain current and former key executives. Effective June 30, 2012, these contracts were amended and the benefits were frozen. The table below presents the projected benefit obligation of these deferred compensation contracts in the Consolidated Balance Sheets: June 30, 2023 2022 (Dollars in thousands) Current portion (included in accrued expenses) $ 314 $ 303 Long-term portion (included in other non-current liabilities) 2,013 2,320 Total $ 2,327 $ 2,623 The accumulated other comprehensive loss for the deferred compensation contracts, consisting of primarily unrecognized actuarial income, was $0.7 and $0.7 million at June 30, 2023 and 2022, respectively. Additionally, the Company had previously agreed to pay the former Vice Chairman and his spouse an annual benefit for life. Costs associated with this benefit included in general and administrative expense on the Consolidated Statements of Operations totaled $0.6, $0.5 and $0.4 million for fiscal years 2023, 2022 and 2021, respectively. The fair value of the related obligations totaled $2.3 and $2.3 million at June 30, 2023 and 2022, respectively, with $0.6 and $0.5 million within accrued expenses at June 30, 2023 and 2022, respectively, and the remainder included in other non-current liabilities on the Consolidated Balance Sheets. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The Company's basic earnings per share is calculated as net loss divided by weighted average common shares outstanding, excluding unvested outstanding stock options (SOs), outstanding stock appreciation rights (SARs), restricted stock units (RSUs) and stock-settled performance units (PSUs). The Company's diluted earnings per share is calculated as net income divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company's stock-based compensation plans. Stock-based awards with exercise prices greater than the average market price of the Company's common stock are excluded from the computation of diluted earnings per share. As the Company is in a net loss position, basic earnings per share is equivalent to dilutive earnings per share. For fiscal years 2023, 2022 and 2021, 492,715, 608,503 and 636,310 common stock equivalents of dilutive common stock, respectively, were excluded from the diluted earnings per share calculation due to net loss from continuing operations. The computation of weighted average shares outstanding, assuming dilution, excluded the following stock-based awards as they were not dilutive under the treasury stock method: Fiscal Years 2023 2022 2021 Equity-based compensation awards 3,955,941 2,269,335 2,322,006 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company grants long-term equity-based awards under the 2018 Long Term Incentive Plan (the 2018 Plan). The 2018 Plan, which was approved by the Company's shareholders at its 2018 Annual Meeting of Shareholders, provides for the granting of nonqualified SOs, equity-based SARs and cash-settled SARs, RSUs and PSUs, to employees and non-employee directors of the Company. Under the 2018 Plan, a maximum of 3,818,895 shares are approved for issuance. The 2018 Plan incorporates a fungible share design, under which full value awards (such as RSUs and PSUs) count against the shares reserved for issuance at a rate 2.0 times higher than appreciation awards (such as SARs and SOs). As of June 30, 2023, a maximum of 1,481,215 shares were available for grant under the 2018 Plan. All unvested awards are subject to forfeiture in the event of termination of employment, unless accelerated. SAR and RSU awards granted under the 2018 Plan generally include various acceleration terms, including upon retirement for participants aged 62 years or older or who are aged 55 years or older and have 15 years of continuous service. The Company also has outstanding awards under the 2016 Long Term Incentive Plan (the 2016 Plan), although the 2016 Plan terminated in October 2018 and no additional awards have since been or will be made under the 2016 Plan. The 2016 Plan provided for the granting of SARs, restricted stock awards (RSAs), RSUs and PSUs, as well as cash-based performance grants, to employees and non-employee directors of the Company. The Company also has outstanding awards under the Amended and Restated 2004 Long Term Incentive Plan (the 2004 Plan), although the 2004 Plan terminated in October 2016 and no additional awards have since been or will be made under the 2004 Plan. The 2004 Plan provided for the granting of nonqualified SOs, SARs, RSAs, RSUs and PSUs, as well as cash-based performance grants, to employees and non-employee directors of the Company. Under the 2018 Plan, 2016 Plan and the 2004 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant. The fair value of cash-settled SARs granted in fiscal year 2022 are re-valued on a quarterly basis. Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2023, 2022 and 2021 were as follows (1): Fiscal Years 2023 2022 2021 SARs $ 1.52 $ 2.56 $ — SOs 1.43 1.82 2.89 RSUs — 2.69 7.15 PSUs — — 5.83 _______________________________________________________________________________ (1) The fair value of cash-settled SARs granted are estimated on the date of grant using a Black-Scholes valuation model, with the fair value recalculated on a quarterly basis. The fair value of market-based SOs granted are estimated on the date of grant using either a Monte Carlo valuation model or a Black-Scholes valuation model. The fair value of market-based RSUs and PSUs granted are estimated on the date of grant using a Monte Carlo valuation model. The significant assumptions used in determining the estimated fair value of the market-based awards granted during fiscal years 2023, 2022 and 2021 were as follows: Fiscal Years 2023 2022 2021 Risk-free interest rate 3.08 - 4.30% 1.25 - 3.04% 0.16 - 0.78% Expected volatility 69.5 - 82.6% 58.3 - 64.5% 44.9 - 66.8% Expected dividend yield — % — % — % Expected term of share options 6.0 - 7.9 years 6.1 - 7.7 years 7.0 years The risk-free interest rate is determined based on the U.S. Treasury rates approximating the expected life of the market-based SARs, SOs, RSUs and PSUs granted. Expected volatility is established based on historical volatility of the Company's stock price. The Company uses historical data to estimate pre-vesting forfeiture rates. The expected term is based on a review of historical exercise experience. Stock-based compensation expense was as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) SARs & SOs (1) $ 1,352 $ (241) $ 456 RSUs & PSUs 964 1,575 2,798 Total stock-based compensation expense (recorded in general and administrative) 2,316 1,334 3,254 Less: Income tax benefit (2) — — — Total stock-based compensation expense, net of tax $ 2,316 $ 1,334 $ 3,254 _______________________________________________________________________________ (1) A benefit was recognized in fiscal year 2022 due to forfeiture of SARs and SOs. (2) Federal statutory income tax rate utilized of 0% due to a valuation allowance in fiscal years 2023, 2022 and 2021. Stock Appreciation Rights: SARs granted under the 2018 Plan, 2016 Plan and the 2004 Plan generally vest 20%, 20%, and 60% over a three-year period subsequent to the grant date or vest ratably over a three Activity for all the Company's outstanding SARs is as follows: Shares/Units Weighted Weighted Aggregate SARs Outstanding balance at June 30, 2022 1,611 $ 7.95 Granted 600 1.52 Forfeited/Expired (113) 1.61 Exercised — — Outstanding balance at June 30, 2023 2,098 $ 6.45 6.37 $ (11,203) Exercisable at June 30, 2023 1,119 $ 10.33 4.22 $ (10,317) Unvested awards, net of estimated forfeitures 825 $ 2.02 8.82 $ (751) As of June 30, 2023, there was $0.4 million of unrecognized expense related to SARs that is to be recognized over a weighted average period of 1.9 years. Stock Options: SOs granted under the 2018 Plan, 2016 Plan and the 2004 Plan generally vest 20%, 20%, and 60% over a three-year period subsequent to the grant date or vest ratably over a three Activity for all the Company's outstanding SOs is as follows: Shares/Units Weighted Weighted Aggregate SOs Outstanding balance at June 30, 2022 1,495 $ 1.81 Granted 1,644 1.43 Forfeited/Expired (148) 1.59 Exercised — — Outstanding balance at June 30, 2023 2,991 $ 1.61 8.98 $ (1,496) Exercisable at June 30, 2023 645 $ 1.54 9.05 $ (277) Unvested awards, net of estimated forfeitures 1,958 $ 1.63 8.97 $ (1,018) As of June 30, 2023, there was $1.4 million of unrecognized expense related to SOs that is to be recognized over a weighted average period of 1.7 years. Restricted Stock Units: RSUs granted to employees under the 2018 Plan, 2016 Plan and 2004 Plan generally vest 20%, 20%, and 60% over a three-year period subsequent to the grant date, vest ratably over a one one three Activity for all the Company's RSUs is as follows: Shares/Units Weighted Aggregate Intrinsic RSUs Outstanding balance at June 30, 2022 907 $ 6.27 Granted — — Forfeited (34) 4.79 Vested (88) 6.13 Outstanding balance at June 30, 2023 785 $ 6.35 $ 871 Vested at June 30, 2023 543 $ 7.24 $ 603 Unvested awards, net of estimated forfeitures 162 $ 5.58 $ 180 As of June 30, 2023, there was $0.3 million of unrecognized expense related to RSUs that is expected to be recognized over a weighted average period of 1.6 years. The fair value of the shares vested was $0.5, $5.8 and $3.2 million in fiscal years 2023, 2022 and 2021, respectively. Performance Share Units: PSUs are grants of restricted stock units which are earned based on the achievement of performance goals established by the Compensation Committee over a performance period, typically three years. There were no PSUs granted in fiscal year 2023. Activity for all the Company's PSUs is as follows: Shares/Units Weighted Aggregate Intrinsic PSUs Outstanding balance at June 30, 2022 74 $ 9.82 Granted — — Forfeited (74) 9.82 Vested — — Outstanding balance at June 30, 2023 — $ — $ — Vested at June 30, 2023 — $ — $ — Unvested awards, net of estimated forfeitures — $ — $ — |
SHAREHOLDERS' DEFICIT
SHAREHOLDERS' DEFICIT | 12 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
SHAREHOLDERS' DEFICIT | SHAREHOLDERS' DEFICIT Authorized Shares and Designation of Preferred Class: The Company has 100.0 million shares of capital stock authorized, par value $0.05, of which all outstanding shares, and shares available under the Stock Option Plans, have been designated as common stock. Share Issuance Program: In February 2021, the Company filed a $150.0 million shelf registration statement and $50.0 million prospectus supplement with the Securities and Exchange Commission (SEC) under which it may offer and sell, from time to time, up to $50.0 million worth of its common stock in "at-the-market" offerings. Net proceeds from sales of shares under the "at-the-market" program, if any, may be used to, among other things, fund working capital requirements, repay debt and support growth strategies. During fiscal year 2023, the Company did not issue shares under the prospectus supplement. As of June 30, 2023, 9.3 million shares have been cumulatively issued for $38.4 million, and $11.6 million remains outstanding under the share issuance program. Share Repurchase Program: In May 2000, the Company's Board approved a stock repurchase program with no stated expiration date. Originally, the program authorized up to $50.0 million to be expended for the repurchase of the Company's stock. The Board elected to increase this maximum to $100.0 million in August 2003, to $200.0 million in May 2005, to $300.0 million in April 2007, to $350.0 million in April 2015, to $400.0 million in September 2015, to $450.0 million in January 2016, and to $650.0 million in August 2018. All repurchased shares become authorized but unissued shares of the Company. As of June 30, 2023, 30.0 million shares have been cumulatively repurchased for $595.4 million, and $54.6 million remained authorized for repurchase. The Company does not anticipate repurchasing shares of common stock for the foreseeable future. Accumulated Other Comprehensive Income: The components of accumulated other comprehensive income are as follows: June 30, 2023 2022 (Dollars in thousands) Foreign currency translation $ 8,284 $ 8,732 Unrealized gain on deferred compensation contracts 739 723 Accumulated other comprehensive income $ 9,023 $ 9,455 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Financial information concerning the Company's reportable operating segments is shown in the table below. Segment information is presented on the same basis that the Company internally organizes the business for assessing performance and making decisions regarding allocation of resources. In the second quarter of fiscal year 2023, the Company revised its internal reporting such that the Chief Operating Decision Maker's (CODM) primary measures of segment performance are revenue and segment adjusted EBITDA. Revenue and segment adjusted EBITDA are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments, assess current performance and forecast future performance. The Company's CODM does not evaluate reportable segments using assets and capital expenditure information. Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation, amortization and impairment. Consistent with our internal management reporting, unallocated expenses include certain items impacting comparability. These unallocated items are not defined terms within U.S. GAAP. They are based on how management views the business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment. Unallocated fees include distribution center wind down fees, inventory reserve, one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired ROU assets, lease termination fees, asset retirement obligation costs and goodwill and long-lived asset impairment charges. Figures for prior reporting periods have been restated to conform to the current period. The Franchise reportable operating segment is comprised of 4,795 franchise salons located mainly in strip center locations and Walmart. Franchise salons offer high quality, convenient and value priced hair care and beauty services and retail products. This segment operates primarily in the U.S., Puerto Rico and Canada and primarily includes the Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters and Magicuts concepts. The Company-owned salons reportable operating segment is comprised of 68 company-owned salons located mainly in strip center locations and Walmart. Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products. SmartStyle, Supercuts, Cost Cutters and other regional trade names operating in the U.S. and Canada are generally within the Company-owned salons segment. Fiscal Years 2023 2022 2021 (Dollars in thousands) Revenues: Franchise $ 223,237 $ 255,762 $ 268,686 Company-owned 10,089 20,205 142,965 Total revenue 233,326 275,967 411,651 Segment adjusted EBITDA: Franchise 22,799 7,730 (29,417) Company-owned (1,789) (9,529) (47,497) Total 21,010 (1,799) (76,914) Unallocated (expenses) benefits (3,050) (9,843) 16,215 Depreciation and amortization (7,716) (6,224) (21,749) Long-lived asset impairment (101) (542) (13,023) Goodwill impairment — (13,120) — Interest expense (22,141) (12,914) (13,163) Income tax benefit (expense) 655 (2,017) 5,428 Income (loss) from discontinued operations 3,958 (39,398) (10,125) Total net loss $ (7,385) $ (85,857) $ (113,331) Total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate were as follows: June 30, 2023 2022 2021 Total Property and Total Property and Total Property and (Dollars in thousands) U.S. $ 211,429 $ 6,410 $ 249,285 $ 12,808 $ 380,506 $ 16,807 Other countries 21,897 12 26,682 27 31,145 99 Total $ 233,326 $ 6,422 $ 275,967 $ 12,835 $ 411,651 $ 16,906 |
BUSINESS DESCRIPTION AND SUMM_2
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation: The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidates variable interest entities where it has determined it is the primary beneficiary of those entities' operations. |
Variable Interest Entities | Variable Interest Entities : The Company has interests in certain privately-held entities through arrangements that do not involve voting interests. Such entities, known as variable interest entities (VIE), are required to be consolidated by its primary beneficiary. The Company evaluates whether it is the primary beneficiary for each VIE using a qualitative assessment that considers the VIE's purpose and design, the involvement of each of the interest holders and the risk and benefits of the VIE. As of June 30, 2023, the Company has no VIEs where the Company is the primary beneficiary. |
Use of Estimates | Use of Estimates: The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes may differ from management's estimates and assumptions. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash: Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2023 and 2022. Restricted cash within other current assets primarily relates to consolidated advertising cooperatives funds, which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs. The self-insurance restricted cash arrangement can be canceled by the Company at any time if substituted with letters of credit. The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded within other current assets on the Consolidated Balance Sheets to the amount of cash, cash equivalents and restricted cash reported on the Consolidated Statements of Cash Flows: June 30, 2023 2022 (Dollars in thousands) Cash and cash equivalents $ 9,508 $ 17,041 Restricted cash, included in other current assets 11,888 10,423 Total cash, cash equivalents and restricted cash $ 21,396 $ 27,464 |
Receivables and Allowance for Doubtful Accounts | Receivables and Allowance for Doubtful Accounts:The receivable balance on the Company's Consolidated Balance Sheets primarily includes accounts and notes receivable from franchisees, credit card receivables and receivables related to salons sold to franchisees. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), related to receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables. |
Inventories | Inventories: Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and relaxers. Inventories are stated at the lower of cost or net realizable value, with cost determined on a weighted average cost basis. The Company has inventory valuation reserves for excess and obsolete inventories, or other factors that may render inventories unmarketable at their historical costs. In fiscal year 2021, the Company announced it would transition away from its wholesale product distribution model in favor of a third-party distribution model. As a result, the Company exited its two distribution centers in fiscal year 2022 and now stores inventory at a third-party facility. To facilitate the exit of the distribution centers, the Company sold inventory at discounts. Additionally, the reduction in company-owned salons decreases the Company's ability to redistribute inventory from closed locations to other salons to be sold or used. The inventory valuation reserve as of June 30, 2023 and 2022 was $1.5 and $1.9 million, respectively. As of June 30, 2023 and 2022, the Company had inventory related to discontinued operations of $1.2 and $1.8 million, respectively, offset by a reserve of $1.2 and $1.1 million, respectively. See Note 3 to the Consolidated Financial Statements. During fiscal year 2023, the Company recorded a total inventory reserve charge of $1.2 million, which was recorded in inventory reserve in the Consolidated Statements of Operations. During fiscal year 2022, the Company recorded a total inventory reserve charge of $10.5 million, of which $7.7 and $2.8 million were recorded in inventory reserve and company-owned salon expense, respectively, in the Consolidated Statements of Operations. During fiscal year 2021, the Company recorded a total inventory reserve charge of $12.1 million, which was recorded in company-owned salon expense in the Consolidated Statements of Operations. |
Property and Equipment | Property and Equipment: Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful asset lives (i.e., 10 years or lease life for improvements and three The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. Estimated useful lives range from three Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets, are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income (loss). Fully depreciated or amortized assets remain in the accounts until retired from service. |
Right of Use Asset, Lease Liabilities and Rent Expense | Right of Use Asset, Lease Liabilities and Rent Expense: At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from one five The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. All of the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The right of use (ROU) asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable. The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original lease term. Certain leases provide for contingent rents that are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheets, along with the corresponding rent expense in the Consolidated Statements of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. |
Right of Use Asset Lease Liabilities and Rent Expense | Right of Use Asset, Lease Liabilities and Rent Expense: At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from one five The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. All of the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The right of use (ROU) asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable. The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original lease term. Certain leases provide for contingent rents that are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheets, along with the corresponding rent expense in the Consolidated Statements of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. |
Salon Long-Lived Asset and Right of Use Asset Impairment Assessments | Salon Long-Lived Asset and Right of Use Asset Impairment Assessments: A lessee's ROU asset is subject to the same asset impairment guidance in ASC 360, Property, Plant, and Equipment, applied to other elements of property, plant, and equipment. The Company has identified its asset groups at the individual salon level as this represents the lowest level that identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Poor salon performance in fiscal years 2023, 2022 and 2021 resulted in ASC 360-10-35-21 triggering events. As a result, management assessed underperforming salon asset groups, which included the related ROU assets, for impairment in accordance with ASC 360. The Company assesses impairment of long-lived salon assets and ROU assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. The first step in the impairment test under ASC 360 is to determine whether the long-lived assets are recoverable, which is determined by comparing the net carrying value of the salon asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. Estimating cash flows for purposes of the recoverability test is subjective and requires significant judgment. Estimated future cash flows used for the purposes of the recoverability test were based upon historical cash flows for the salons, adjusted for expected changes in future market conditions and other factors. The period of time used to determine the estimates of the future cash flows for the recoverability test was based on the remaining useful life of the primary asset of the group, which was the ROU asset in all cases. The second step of the long-lived asset impairment test requires that the fair value of the asset group be estimated when determining the amount of any impairment loss. For the salon asset groups that failed the recoverability test, an impairment loss was measured as the amount by which the carrying amount of the asset group exceeds its fair value. The Company applied the fair value guidance within ASC 820-10 to determine the fair value of the asset group from the perspective of a market-participant considering, among other things, appropriate discount rates, multiple valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group. To determine the fair value of the salon asset groups, the Company utilized market-participant assumptions rather than the Company's own assumptions about how it intends to use the asset group. The significant judgments and assumptions utilized to determine the fair value of the salon asset groups include the market rent of comparable properties and a discount rate. The fair value of the salon long-lived asset group is estimated using market participant methods based on the best information available. The fair value of the ROU asset is estimated by determining what a market participant would pay over the life of the primary asset in the group, discounted back to June 30, 2023. |
Goodwill | Goodwill: As of June 30, 2023 and 2022, the Franchise reporting unit had $173.8 and $174.4 million, respectively, of goodwill and the Company-owned reporting unit had no goodwill for both periods. See Note 5 to the Consolidated Financial Statements for changes to the goodwill balance. The Company assesses goodwill impairment on an annual basis as of April 30, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill impairment assessments are performed at the reporting unit level, which is the same as the Company's operating segments. The goodwill assessment involves a one-step comparison of the reporting unit's fair value to its carrying value, including goodwill (Step 1). If the reporting unit's fair value exceeds its carrying value, no further procedures are required. However, if the reporting unit's fair value is less than the carrying value, an impairment charge is recorded for the difference between the fair value and carrying value of the reporting unit. In applying the goodwill impairment assessment, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting units was less than its carrying value (Step 0). Qualitative factors could include, but are not limited to, economic, market and industry conditions, cost factors and overall financial performance of the reporting unit. If after assessing these qualitative factors, the Company determined it is more likely than not that the carrying value is less than the fair value, then performing Step 1 of the goodwill impairment assessment is unnecessary. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total salons or expenses of the reporting unit as a percent of total company expenses. The Company calculates estimated fair values of the reporting units based on discounted cash flows utilizing estimates in annual revenue, fixed expense rates, allocated corporate overhead, franchise and company-owned salon counts, and long-term growth rates for determining terminal value. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company engages third-party valuation consultants to assist in evaluating the Company's estimated fair value calculations. |
Self-Insurance Accruals | Self-Insurance Accruals: The Company uses a combination of third-party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the Consolidated Balance Sheets date. The Company estimates self-insurance liabilities using a number of factors, primarily based on independent third-party actuarially-determined amounts, historical claims experience, estimates of incurred but not reported claims, demographic factors and severity factors. Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from historical trends and actuarial assumptions. For fiscal years 2023, 2022 and 2021, the Company recorded decreases in expense for changes in estimates related to prior year open policy periods of $1.4, $0.5 and $3.6 million, respectively. The Company updates loss projections bi-annually and adjusts its liability to reflect updated projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time. |
Revenue Recognition and Deferred Revenue, Classification of Expenses, Consideration Received from Vendors, Distribution Costs | Revenue Recognition and Deferred Revenue: Franchise revenues primarily include royalties, fees, product sales to franchisees and advertising fund fees. Royalties and advertising fund revenues represent sales-based royalties that are recognized as revenue in the period in which the sales occur. The Company defers franchise fees until the salon is open and then recognizes the revenue over the term of the franchise agreement. See Note 2 to the Consolidated Financial Statements. Product sales by the Company to its franchisees are recorded at the time product is delivered to franchise locations. Company-owned salon revenues are recognized at the time when the services are provided, or the guest receives and pays for merchandise. Classification of Revenue and Expenses: Below is a summary of the primary financial statement captions. Royalties - Sales-based royalty received from franchisees. Fees - Fees received from franchisees and third parties, including franchise fees and fees received from the third-party distributor. Product sales to franchisees - Wholesale product sales to franchisees. The Company changed its franchise product sales business in fiscal year 2022 from a wholesale distribution model to a third-party distribution model. This revenue was expected to decrease significantly during fiscal year 2022 and into fiscal year 2023. Advertising fund contributions - Sales-based advertising fund contributions received from franchisees. Company-owned salon revenue - Service revenue and revenue derived from sales of product in Company-owned salons. Cost of product sales to franchisees - Direct cost of inventory and freight and other costs of sales. Company-owned salon expense - Cost of service and product sold to guests in our Company-owned salons and other salon-related costs. Excluded from this caption are general and administrative expense, rent and depreciation and amortization related to company-owned salons. Consideration Received from Vendors: The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction to the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A quarterly analysis is performed in order to ensure the estimated rebate accrued is reasonable and any necessary adjustments are recorded. Distribution Costs: In fiscal year 2022, the Company exited its two distribution centers and changed the wholesale product distribution model in favor of a third-party distribution model, reducing the cost in fiscal years 2022 and 2023. Beginning in the second half of fiscal year 2022, the Company began storing inventory at a third-party facility. Prior to closing the distribution centers in fiscal year 2022, the Company incurred costs to store, move and ship product from the Company's distribution centers to salons. Distribution costs related to product shipped to company-owned locations are included in company-owned salon expenses in the Consolidated Statements of Operations. Distribution costs, including distribution center overhead, related to shipping product to franchise locations totaled $0.0, $2.3 and $12.1 million during fiscal years 2023, 2022 and 2021, respectively, and are included in general and administrative in the Consolidated Statements of Operations. Revenue Recognition and Deferred Revenue: Revenue recognized over time Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenues are billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the Consolidated Statements of Operations. The treatment increases both the gross amount of reported revenue and expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Recognition of these fees is deferred until the salon opens and is then recognized over the term of the franchise agreement, which is typically 10 years. Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees. The Company recognizes franchise rental income and expense when it is due to the landlord. Revenue recognized at point of sale |
Advertising and Advertising Funds | Advertising and Advertising Funds:Advertising costs consist of the Company's corporate funded advertising costs, the Company's advertising fund contributions and franchisee's advertising fund contributions. Corporate funded advertising costs are expensed as incurred. The Company has various franchising programs supporting specific franchise salon concepts. Most maintain advertising funds that provide comprehensive advertising and sales promotion support. All salons are required to participate in the advertising funds for the same salon concept. The Company administers the advertising funds in accordance with franchise operating and other agreements. Advertising fund contributions are expensed when the contribution is made. |
Stock-Based Employee Compensation Plans | Stock-Based Employee Compensation Plans: The Company recognizes stock-based compensation expense based on the fair value of the awards at the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period of the award (or to the date a participant becomes eligible for retirement, if earlier). The Company uses fair value methods that require the input of subjective assumptions, including the expected term, expected volatility, dividend yield and risk-free interest rate. The Company estimates the likelihood and the rate of achievement for performance sensitive stock-based awards at the end of each reporting period. Changes in the estimated rate of achievement can have a significant effect on the recorded stock-based compensation expense as the effect of a change in the estimated achievement level is recognized in the period the change occurs. |
Interest Expense | Interest Expense:In the first quarter of fiscal year 2023, management amended its credit agreement. The amended agreement contains variable interest rates over the term of the debt. Therefore, management developed a weighted average effective interest rate by estimating total future cash flows related to the debt to determine interest expense in fiscal year 2023. The estimated cash flows included the margin rate, PIK interest, SOFR interest, and tenor fee applied to the forecasted outstanding debt balance in each future period. The significant assumptions used in the estimate are the future SOFR and debt balance, as well as the length of time the debt will be outstanding. Management applied the weighted average rate to the debt balance to record interest expense for the period. Due to the interest rate increases over the debt term, the Company recorded more interest expense than interest paid in cash in fiscal year 2023. |
Sales Taxes | Sales Taxes: Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statements of Operations. |
Income Taxes | Income Taxes: Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the differences are expected to reverse. We recognize deferred tax assets to the extent we believe these assets are more likely than not to be realized. The Company evaluates all evidence, including recent financial performance, the existence of cumulative year losses and our forecast of future taxable income, to assess the need for a valuation allowance against our deferred tax assets. While the determination of whether to record a valuation allowance is not fully governed by a specific objective test, accounting guidance places significant weight on recent financial performance. The Company has a valuation allowance on its deferred tax assets of $202.2 and $201.7 million at June 30, 2023 and 2022, respectively. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make necessary adjustments to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In fiscal year 2022, the Company determined that it no longer had sufficient U.S. state indefinite-lived taxable temporary differences to support realization of its U.S. state indefinite-lived NOLs and its existing U.S. deferred tax assets that upon reversal are expected to generate state indefinite-lived NOLs. As a result, the Company recorded a $4.1 million valuation allowance on its U.S. state indefinite-lived deferred tax assets. The Company reserves for unrecognized tax benefits, interest and penalties related to anticipated tax audit positions in the U.S. and other tax jurisdictions based on an estimate of whether additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of these liabilities would result in tax benefits being recognized in the period in which it is determined that the liabilities are no longer necessary. If the estimate of unrecognized tax benefits, interest and penalties proves to be less than the ultimate assessment, additional expenses would result. Inherent in the measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities. See Note 10 to the Consolidated Financial Statements. |
Net Loss Per Share | Net Loss Per Share: The Company's basic earnings per share is calculated as net loss divided by weighted average common shares outstanding, excluding unvested outstanding stock awards. The Company's dilutive earnings per share is calculated as net income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted earnings per share. Due to the Company's net loss in all periods presented, basic and dilutive earnings per share are equal. |
Comprehensive Loss | Comprehensive Loss: Components of comprehensive loss include net loss, foreign currency translation adjustments and recognition of deferred compensation, net of tax within shareholders' deficit. |
Foreign Currency Translation | Foreign Currency Translation:The Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows of the Company's international operations are measured using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each Consolidated Balance Sheets date. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' deficit. Consolidated Statements of Operations accounts are translated at the average rates of exchange prevailing during the year. |
Accounting Standards Recently Adopted by the Company and Recently Issued Accounting Standards Not Yet Adopted | Accounting Standards Recently Adopted by the Company: The Company did not adopt any material accounting pronouncements during fiscal year 2023. Recently Issued Accounting Standards Not Yet Adopted: The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and it does not believe any of these pronouncements will have a material impact to the Company's financial statements. |
BUSINESS DESCRIPTION AND SUMM_3
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule Of COVID-19 Impact | In fiscal years 2023, 2022 and 2021, the Company received the following assistance: Fiscal Years 2023 2022 2021 Financial Statement Caption (Dollars in thousands) Canadian rent relief Rent $ — $ 1,235 $ — Canadian wage relief Company-owned salon expense — 1,966 1,629 U.S. employee retention payroll tax credit Company-owned salon expense — — 1,547 North Carolina COVID-19 grant Other, net 1,106 — — |
Cash and Cash Equivalents | The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded within other current assets on the Consolidated Balance Sheets to the amount of cash, cash equivalents and restricted cash reported on the Consolidated Statements of Cash Flows: June 30, 2023 2022 (Dollars in thousands) Cash and cash equivalents $ 9,508 $ 17,041 Restricted cash, included in other current assets 11,888 10,423 Total cash, cash equivalents and restricted cash $ 21,396 $ 27,464 |
Restricted Cash | The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded within other current assets on the Consolidated Balance Sheets to the amount of cash, cash equivalents and restricted cash reported on the Consolidated Statements of Cash Flows: June 30, 2023 2022 (Dollars in thousands) Cash and cash equivalents $ 9,508 $ 17,041 Restricted cash, included in other current assets 11,888 10,423 Total cash, cash equivalents and restricted cash $ 21,396 $ 27,464 |
Advertising Costs | The Company's advertising costs included in the Consolidated Statements of Operations consist of the following: Fiscal Years 2023 2022 2021 (Dollars in thousands) Advertising fund contributions from franchisees $ 31,747 $ 32,573 $ 22,023 Advertising fund contributions from company-owned salons (1) 105 154 897 Corporate funded advertising costs (1) 264 671 7,015 Total advertising costs $ 32,116 $ 33,398 $ 29,935 _____________________________________________________________________________ (1) Included in general and administrative in the Consolidated Statements of Operations. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of receivables, broker fees and deferred revenue | Information about receivables, broker fees and deferred revenue subject to the revenue recognition guidance is as follows: June 30, June 30, Balance Sheet Classification (Dollars in thousands) Receivables from contracts with customers, net $ 5,683 $ 10,263 Receivable, net Broker fees 12,471 15,592 Other assets Deferred revenue: Current Gift card liability $ 1,823 $ 2,037 Accrued expenses Deferred franchise fees open salons 5,325 5,770 Accrued expenses Total current deferred revenue $ 7,148 $ 7,807 Non-current Deferred franchise fees unopened salons $ 2,312 $ 3,211 Other non-current liabilities Deferred franchise fees open salons 20,839 26,827 Other non-current liabilities Total non-current deferred revenue $ 23,151 $ 30,038 |
Allowance for doubtful accounts | The following table is a rollforward of the allowance for doubtful accounts for the periods indicated: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period $ 6,559 $ 7,774 Provision for doubtful accounts (1) 608 967 Provision for franchisee rent (2) 1,358 1,421 Reclass of accrued rent (3) 325 149 Other 106 — Write-offs (1,659) (3,752) Balance at end of period $ 7,297 $ 6,559 _____________________________________________________________________________ (1) The provision for doubtful accounts is recognized as general and administrative expense in the Consolidated Statements of Operations. (2) The provision for franchisee rent is recognized as rent in the Consolidated Statements of Operations. (3) The reclass of accrued rent represents franchisee rent obligations guaranteed by the Company that were unbilled and deemed unrecoverable as of June 30, 2021. The amounts billed in fiscal years 2023 and 2022 and the related accrual was reclassified to allowance for doubtful accounts. |
Broker fees | The following table is a rollforward of the broker fee balance for the periods indicated: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period $ 15,592 $ 19,254 Additions — 25 Amortization (3,100) (3,189) Write-offs (21) (498) Balance at end of period $ 12,471 $ 15,592 |
Estimated revenue expected to be recognized | Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of June 30, 2023 is as follows (in thousands): 2024 $ 5,325 2025 4,954 2026 4,481 2027 4,021 2028 3,357 Thereafter 4,026 Total $ 26,164 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedules of discontinued operations | The following summarizes the results of discontinued operations for the periods presented: Fiscal Years 2023 2022 2021 (Dollars in thousands) Discontinued operations: Fees $ (226) $ 3,811 $ 3,461 Cost of product sales to franchisees — (1,037) (2,790) General and administrative (27) (3,517) (9,006) Rent (351) (194) (176) Depreciation and amortization — (1,322) (964) Goodwill impairment (1) — (2,880) — Interest expense — (715) (650) Gain (loss) from sale of OSP 4,562 (36,143) — Income (loss) from discontinued operations, before taxes 3,958 (41,997) (10,125) Income tax benefit from discontinued operations (2) — 2,599 — Income (loss) from discontinued operations, net of tax $ 3,958 $ (39,398) $ (10,125) _______________________________________________________________________________ (1) Goodwill impairment included in discontinued operations represents the portion of impairment allocated to the OSP business based on relative fair value. (2) Income taxes have been allocated to continuing and discontinued operations based on the methodology required by accounting for income taxes guidance. There was no tax impact in fiscal years 2023 and 2021 due to a valuation allowance. The following summarizes the gain (loss) from sale of OSP for the periods presented: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash proceeds $ 5,000 $ 13,000 $ — Goodwill derecognition — (38,358) — Software write-off (1) (64) (8,408) — Hardware write-down (2) (367) (1,825) — Other, net, including professional fees (7) (552) — Gain (loss) from sale of OSP $ 4,562 $ (36,143) $ — _______________________________________________________________________________ (1) Write-off of internally developed capitalized software. (2) Prior to the sale, hardware used to run OSP was sold to franchisees. As a result of the sale, the Company wrote-down the value of the hardware to its net realizable value and the charge is included in the loss on the sale of OSP. The following summarizes capital expenditures related to discontinued operations for the periods presented: Fiscal Years 2023 2022 2021 (Dollars in thousands) Capital expenditures $ — $ 1,067 $ 3,591 |
OTHER FINANCIAL STATEMENT DATA
OTHER FINANCIAL STATEMENT DATA (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of additional information concerning selected balance sheet accounts | The following provides additional information concerning selected balance sheet accounts: June 30, 2023 2022 (Dollars in thousands) Other current assets: Prepaid assets $ 1,510 $ 1,816 Restricted cash 11,888 10,423 Other 1,766 1,745 Total other current assets $ 15,164 $ 13,984 Property and equipment: Buildings and improvements $ 4,594 $ 8,228 Equipment, furniture and leasehold improvements 10,126 14,260 Internal use software 20,722 34,824 Total property and equipment 35,442 57,312 Less accumulated depreciation and amortization (29,020) (44,477) Total property and equipment, net $ 6,422 $ 12,835 Accrued expenses: Payroll and payroll related costs $ 4,179 $ 7,767 Insurance 3,777 5,012 Interest expense 4,124 77 Rent and related real estate costs 5,968 4,585 Deferred revenue 7,148 7,807 Other 4,913 8,536 Total accrued expenses $ 30,109 $ 33,784 Other non-current liabilities: Deferred income taxes $ 10,936 $ 10,979 Insurance 7,291 9,744 Deferred benefits 5,975 6,308 Deferred franchise fees 23,151 30,038 Other 1,688 1,905 Total other non-current liabilities $ 49,041 $ 58,974 |
Schedule of additional information concerning other intangibles, net | The following provides additional information concerning other intangibles, net: June 30, 2023 2022 Weighted Average Amortization Periods (1) Cost (2) Accumulated Net Weighted Average Amortization Periods (1) Cost (2) Accumulated Net (In years) (Dollars in thousands) (In years) (Dollars in thousands) Brand assets and trade names 36 $ 5,290 $ (3,312) $ 1,978 36 $ 5,421 $ (3,234) $ 2,187 Franchise agreements 20 7,565 (6,809) 756 20 7,719 (6,756) 963 Other 20 289 (240) 49 20 354 (278) 76 Total 26 $ 13,144 $ (10,361) $ 2,783 26 $ 13,494 $ (10,268) $ 3,226 _______________________________________________________________________________ (1) All intangible assets have been assigned an estimated finite useful life and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from three (2) The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency. |
Schedule of future estimated amortization expense related to amortizable intangible assets | As of June 30, 2023, future estimated amortization expense related to intangible assets is estimated as follows (in thousands): 2024 $ 292 2025 292 2026 292 2027 292 2028 165 Thereafter 1,450 Total $ 2,783 |
Schedule of supplemental disclosures of cash flow activity | The following provides supplemental disclosures of cash flow activity: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash paid (received) for: Interest $ 15,457 $ 11,786 $ 11,940 Taxes and penalties, net (1) 265 (1,400) (2,636) Non-cash investing activities: Unpaid capital expenditures 25 35 312 _______________________________________________________________________________ (1) The Company also received a $1.1 million COVID-19 relief grant from the State of North Carolina in fiscal year 2023. The grant is included in other, net on the Consolidated Statements of Operations. |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The table below contains details related to the Company's goodwill: June 30, 2023 2022 Gross Accumulated Net Gross Accumulated Net (Dollars in thousands) Goodwill $ 304,055 $ (130,264) $ 173,791 $ 304,624 $ (130,264) $ 174,360 _______________________________________________________________________________ (1) The change in the gross carrying value of goodwill relates to foreign currency translation adjustments. The table below contains details related to the Company's goodwill related to the Franchise reporting unit: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period (1) $ 174,360 $ 229,582 Derecognition of OSP goodwill — (38,358) Goodwill impairment related to continuing operations — (13,120) Goodwill impairment related to discontinued operations — (2,880) Translation rate adjustments (569) (864) Balance at end of period $ 173,791 $ 174,360 _______________________________________________________________________________ (1) The goodwill balance at the beginning of fiscal year 2022 included $41.3 million related to discontinued operations. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Rent Expenses | Total rent from continuing operations includes the following: Fiscal Years 2023 2022 2021 (Dollars in thousands) Office and warehouse rent $ 3,594 $ 4,575 $ 5,234 Lease termination expense (1) 1,627 1,835 13,544 Lease liability benefit (2) (1,773) (3,620) (20,022) Franchise salon rent 2,109 1,695 3,376 Company-owned salon rent 3,639 4,872 38,622 Total $ 9,196 $ 9,357 $ 40,754 _______________________________________________________________________________ (1) During fiscal year 2023, the Company incurred costs of $1.6 million to exit salons before the lease end date in order to relieve the company of future lease obligations. During fiscal year 2022, lease termination expense includes $0.9 million to exit the Company's distribution centers before the lease end dates and $0.9 million to exit salons before the lease end dates in order to relieve the Company of future lease obligations. During fiscal year 2021, lease termination fees include $8.3 million of early termination payments to close salons before the lease end date to relieve the Company of future lease obligations and $5.3 million to accrue future lease payments for salons that are no longer operating. (2) Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities which results in a net gain. In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired. |
Lessor, Future Operating Lease Commitments | As of June 30, 2023, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (in thousands): Fiscal Year Leases For Franchise Salons Leases For Company-Owned Salons Corporate Leases Total Operating Lease Commitments Sublease Income to be Received From Franchisees Net Rent Commitments 2024 $ 93,838 $ 1,629 $ 1,301 $ 96,768 $ (93,838) $ 2,930 2025 78,344 677 1,334 80,355 (78,344) 2,011 2026 64,992 458 1,367 66,817 (64,992) 1,825 2027 55,273 229 1,401 56,903 (55,273) 1,630 2028 46,758 218 1,436 48,412 (46,758) 1,654 Thereafter 70,053 56 2,981 73,090 (70,053) 3,037 Total future obligations $ 409,258 $ 3,267 $ 9,820 $ 422,345 $ (409,258) $ 13,087 Less amounts representing interest 46,970 240 1,317 48,527 Present value of lease liabilities $ 362,288 $ 3,027 $ 8,503 $ 373,818 Less current lease liabilities 79,420 1,526 971 81,917 Long-term lease liabilities $ 282,868 $ 1,501 $ 7,532 $ 291,901 |
Lessee, Future Operating Lease Commitments | As of June 30, 2023, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (in thousands): Fiscal Year Leases For Franchise Salons Leases For Company-Owned Salons Corporate Leases Total Operating Lease Commitments Sublease Income to be Received From Franchisees Net Rent Commitments 2024 $ 93,838 $ 1,629 $ 1,301 $ 96,768 $ (93,838) $ 2,930 2025 78,344 677 1,334 80,355 (78,344) 2,011 2026 64,992 458 1,367 66,817 (64,992) 1,825 2027 55,273 229 1,401 56,903 (55,273) 1,630 2028 46,758 218 1,436 48,412 (46,758) 1,654 Thereafter 70,053 56 2,981 73,090 (70,053) 3,037 Total future obligations $ 409,258 $ 3,267 $ 9,820 $ 422,345 $ (409,258) $ 13,087 Less amounts representing interest 46,970 240 1,317 48,527 Present value of lease liabilities $ 362,288 $ 3,027 $ 8,503 $ 373,818 Less current lease liabilities 79,420 1,526 971 81,917 Long-term lease liabilities $ 282,868 $ 1,501 $ 7,532 $ 291,901 |
Operating Lease, Lease Income | Supplemental operating cash flow information and non-cash activity related to our operating leases are as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) Cash paid for amounts included in the measurement of lease liabilities (1) $ 57,598 $ 74,507 $ 130,039 Right of use assets obtained in exchange for new lease liabilities 458 2,011 4,242 _______________________________________________________________________________ (1) Cash paid for amounts included in the measurement of lease liabilities includes rent, termination fees, settlements and legal fees, and commission payments. Other than Walmart, franchisees pay landlords directly. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair values using Level 3 inputs | The following impairment charges were based on fair values using Level 3 inputs (1): Fiscal Years 2023 2022 2021 (Dollars in thousands) Goodwill impairment $ — $ 16,000 $ — Long-lived asset impairment 101 542 13,023 _______________________________________________________________________________ (1) See Notes 1 and 5 to the Consolidated Financial Statements. |
FINANCING ARRANGEMENTS (Tables)
FINANCING ARRANGEMENTS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company's financing arrangements consists of the following: June 30, Maturity Date 2023 2022 2023 2022 (Fiscal year) (Interest rate %) (Dollars in thousands) Term loan 2026 9.54% N/A $ 172,268 $ — Deferred financing fees (6,471) — Term loan, net 165,797 — Revolving credit facility 2026 9.54% 5.50% 10,000 179,994 Paid-in-kind interest 1,033 — Total long-term debt, net $ 176,830 $ 179,994 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Components of loss before income taxes | The components of loss from continuing operations before income taxes are as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) Loss before income taxes U.S. $ (10,204) $ (41,231) $ (143,104) International (1,794) (3,211) 34,470 $ (11,998) $ (44,442) $ (108,634) |
Benefit for income taxes | The (benefit) provision for income taxes consists of: Fiscal Years 2023 2022 2021 (Dollars in thousands) Current: U.S. $ (219) $ (535) $ (620) International (428) (425) (1,421) Deferred: U.S. (270) 3,130 (3,701) International 262 (153) 314 $ (655) $ 2,017 $ (5,428) |
Benefit for income taxes, reconciliation to applicable U.S. statutory rate | The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to loss from continuing operations before income taxes, as a result of the following: Fiscal Years 2023 2022 2021 U.S. statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal income tax benefit (2.7) 1.4 7.9 Valuation allowance (1) (12.9) (6.6) (61.5) Foreign income taxes at other than U.S. rates (0.2) 3.0 9.4 Uncertain tax positions 6.7 (17.9) 0.2 Stock-based compensation (2.7) (2.8) (0.7) Loss on investment in Luxembourg — — 29.3 Deferred tax rate remeasurement (3.6) — — Other, net (2) (0.1) (2.6) (0.6) Effective tax rate 5.5 % (4.5) % 5.0 % _______________________________________________________________________________ (1) See Note 1 to the Consolidated Financial Statements. (2) The (0.1)% of other, net in fiscal year 2023 includes the rate impact of the federal provision to return true-up, tax attribute expirations and miscellaneous items of 1.3%, (1.1)% and (0.3)%, respectively. The (2.6)% of other, net in fiscal year 2022 includes the rate impact of the federal provision to return true-up and miscellaneous items of (2.0)% and (0.6)%, respectively. The (0.6)% of other, net in fiscal year 2021 does not include the rate impact of any items in excess of 5% of computed tax. |
Components of the net deferred tax assets and liabilities | The components of the net deferred tax assets and liabilities are as follows: June 30, 2023 2022 (Dollars in thousands) Deferred tax assets: Payroll and payroll related costs $ 5,041 $ 5,267 Net operating loss carryforwards 154,514 153,190 Tax credit carryforwards 37,515 37,664 Capital loss carryforwards 5,845 5,338 Deferred franchise fees 7,018 8,694 Operating lease liabilities 92,666 124,905 Other (1) 18,826 17,542 Subtotal 321,425 352,600 Valuation allowance (202,185) (201,731) Total deferred tax assets $ 119,240 $ 150,869 Deferred tax liabilities: Goodwill and intangibles $ (35,001) $ (33,466) Operating lease assets (91,921) (123,333) Other (3,254) (5,049) Total deferred tax liabilities (130,176) (161,848) Net deferred tax liability $ (10,936) $ (10,979) _______________________________________________________________________________ |
Unrecognized tax benefits | A rollforward of the unrecognized tax benefits is as follows: Fiscal Years 2023 2022 (Dollars in thousands) Balance at beginning of period $ 22,173 $ 13,858 Additions based on tax positions related to the current year 10 8,636 (Reductions) additions based on tax positions of prior years (663) 81 Reductions on tax positions related to the expiration of the statute of limitations (127) (402) Balance at end of period $ 21,393 $ 22,173 |
BENEFIT PLANS (Tables)
BENEFIT PLANS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of deferred compensation | The table below presents the projected benefit obligation of these deferred compensation contracts in the Consolidated Balance Sheets: June 30, 2023 2022 (Dollars in thousands) Current portion (included in accrued expenses) $ 314 $ 303 Long-term portion (included in other non-current liabilities) 2,013 2,320 Total $ 2,327 $ 2,623 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average number of shares | The computation of weighted average shares outstanding, assuming dilution, excluded the following stock-based awards as they were not dilutive under the treasury stock method: Fiscal Years 2023 2022 2021 Equity-based compensation awards 3,955,941 2,269,335 2,322,006 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of weighted average fair values per stock-based compensation award granted | Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2023, 2022 and 2021 were as follows (1): Fiscal Years 2023 2022 2021 SARs $ 1.52 $ 2.56 $ — SOs 1.43 1.82 2.89 RSUs — 2.69 7.15 PSUs — — 5.83 _______________________________________________________________________________ |
Schedule of assumptions used in determining estimated fair value of stock options, SARs and market-based RSUs granted | The significant assumptions used in determining the estimated fair value of the market-based awards granted during fiscal years 2023, 2022 and 2021 were as follows: Fiscal Years 2023 2022 2021 Risk-free interest rate 3.08 - 4.30% 1.25 - 3.04% 0.16 - 0.78% Expected volatility 69.5 - 82.6% 58.3 - 64.5% 44.9 - 66.8% Expected dividend yield — % — % — % Expected term of share options 6.0 - 7.9 years 6.1 - 7.7 years 7.0 years |
Schedule of stock-based compensation expense | Stock-based compensation expense was as follows: Fiscal Years 2023 2022 2021 (Dollars in thousands) SARs & SOs (1) $ 1,352 $ (241) $ 456 RSUs & PSUs 964 1,575 2,798 Total stock-based compensation expense (recorded in general and administrative) 2,316 1,334 3,254 Less: Income tax benefit (2) — — — Total stock-based compensation expense, net of tax $ 2,316 $ 1,334 $ 3,254 _______________________________________________________________________________ (1) A benefit was recognized in fiscal year 2022 due to forfeiture of SARs and SOs. (2) Federal statutory income tax rate utilized of 0% due to a valuation allowance in fiscal years 2023, 2022 and 2021. |
Share-based Payment Arrangement, Outstanding Award, Activity, Excluding Option | Activity for all the Company's outstanding SARs is as follows: Shares/Units Weighted Weighted Aggregate SARs Outstanding balance at June 30, 2022 1,611 $ 7.95 Granted 600 1.52 Forfeited/Expired (113) 1.61 Exercised — — Outstanding balance at June 30, 2023 2,098 $ 6.45 6.37 $ (11,203) Exercisable at June 30, 2023 1,119 $ 10.33 4.22 $ (10,317) Unvested awards, net of estimated forfeitures 825 $ 2.02 8.82 $ (751) |
Share-based Payment Arrangement, Option, Activity | Activity for all the Company's outstanding SOs is as follows: Shares/Units Weighted Weighted Aggregate SOs Outstanding balance at June 30, 2022 1,495 $ 1.81 Granted 1,644 1.43 Forfeited/Expired (148) 1.59 Exercised — — Outstanding balance at June 30, 2023 2,991 $ 1.61 8.98 $ (1,496) Exercisable at June 30, 2023 645 $ 1.54 9.05 $ (277) Unvested awards, net of estimated forfeitures 1,958 $ 1.63 8.97 $ (1,018) |
Schedule of activity for RSUs | Activity for all the Company's RSUs is as follows: Shares/Units Weighted Aggregate Intrinsic RSUs Outstanding balance at June 30, 2022 907 $ 6.27 Granted — — Forfeited (34) 4.79 Vested (88) 6.13 Outstanding balance at June 30, 2023 785 $ 6.35 $ 871 Vested at June 30, 2023 543 $ 7.24 $ 603 Unvested awards, net of estimated forfeitures 162 $ 5.58 $ 180 |
Schedule of activity for PSUs | Activity for all the Company's PSUs is as follows: Shares/Units Weighted Aggregate Intrinsic PSUs Outstanding balance at June 30, 2022 74 $ 9.82 Granted — — Forfeited (74) 9.82 Vested — — Outstanding balance at June 30, 2023 — $ — $ — Vested at June 30, 2023 — $ — $ — Unvested awards, net of estimated forfeitures — $ — $ — |
SHAREHOLDERS' DEFICIT (Tables)
SHAREHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of components of accumulated other comprehensive income | The components of accumulated other comprehensive income are as follows: June 30, 2023 2022 (Dollars in thousands) Foreign currency translation $ 8,284 $ 8,732 Unrealized gain on deferred compensation contracts 739 723 Accumulated other comprehensive income $ 9,023 $ 9,455 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of summarized financial information of reportable operating segments | Financial information concerning the Company's reportable operating segments is shown in the table below. Segment information is presented on the same basis that the Company internally organizes the business for assessing performance and making decisions regarding allocation of resources. In the second quarter of fiscal year 2023, the Company revised its internal reporting such that the Chief Operating Decision Maker's (CODM) primary measures of segment performance are revenue and segment adjusted EBITDA. Revenue and segment adjusted EBITDA are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments, assess current performance and forecast future performance. The Company's CODM does not evaluate reportable segments using assets and capital expenditure information. Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation, amortization and impairment. Consistent with our internal management reporting, unallocated expenses include certain items impacting comparability. These unallocated items are not defined terms within U.S. GAAP. They are based on how management views the business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment. Unallocated fees include distribution center wind down fees, inventory reserve, one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired ROU assets, lease termination fees, asset retirement obligation costs and goodwill and long-lived asset impairment charges. Figures for prior reporting periods have been restated to conform to the current period. The Franchise reportable operating segment is comprised of 4,795 franchise salons located mainly in strip center locations and Walmart. Franchise salons offer high quality, convenient and value priced hair care and beauty services and retail products. This segment operates primarily in the U.S., Puerto Rico and Canada and primarily includes the Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters and Magicuts concepts. The Company-owned salons reportable operating segment is comprised of 68 company-owned salons located mainly in strip center locations and Walmart. Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products. SmartStyle, Supercuts, Cost Cutters and other regional trade names operating in the U.S. and Canada are generally within the Company-owned salons segment. Fiscal Years 2023 2022 2021 (Dollars in thousands) Revenues: Franchise $ 223,237 $ 255,762 $ 268,686 Company-owned 10,089 20,205 142,965 Total revenue 233,326 275,967 411,651 Segment adjusted EBITDA: Franchise 22,799 7,730 (29,417) Company-owned (1,789) (9,529) (47,497) Total 21,010 (1,799) (76,914) Unallocated (expenses) benefits (3,050) (9,843) 16,215 Depreciation and amortization (7,716) (6,224) (21,749) Long-lived asset impairment (101) (542) (13,023) Goodwill impairment — (13,120) — Interest expense (22,141) (12,914) (13,163) Income tax benefit (expense) 655 (2,017) 5,428 Income (loss) from discontinued operations 3,958 (39,398) (10,125) Total net loss $ (7,385) $ (85,857) $ (113,331) |
Schedule of total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate | Total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate were as follows: June 30, 2023 2022 2021 Total Property and Total Property and Total Property and (Dollars in thousands) U.S. $ 211,429 $ 6,410 $ 249,285 $ 12,808 $ 380,506 $ 16,807 Other countries 21,897 12 26,682 27 31,145 99 Total $ 233,326 $ 6,422 $ 275,967 $ 12,835 $ 411,651 $ 16,906 |
BUSINESS DESCRIPTION AND SUMM_4
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business Description (Details) | 12 Months Ended | |
Jun. 30, 2023 salon segment | Jun. 30, 2022 salon | |
Business Description [Line Items] | ||
Number of reportable segments | segment | 2 | |
Franchise | ||
Business Description [Line Items] | ||
Number of stores | 4,795 | 5,395 |
Number of stores closed | 616 | |
Company-owned | ||
Business Description [Line Items] | ||
Number of stores | 68 | 105 |
Number of stores closed | 37 |
BUSINESS DESCRIPTION AND SUMM_5
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - COVID-19 Impact (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Dec. 01, 2022 | Dec. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Canadian rent relief | $ 0 | $ 1,235 | $ 0 | ||
Canadian wage relief | 0 | 1,966 | 1,629 | ||
U.S. employee retention payroll tax credit | 0 | 0 | 1,547 | ||
North Carolina COVID-19 grant | $ 1,106 | $ 0 | $ 0 | ||
Social security contributions, CARES Act | $ 2,500 | $ 2,500 |
BUSINESS DESCRIPTION AND SUMM_6
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Variable Interest Entities (Details) - Empire Education Group Inc | Jun. 30, 2023 director |
Variable interest entities | |
Number of members appointed to board of directors by investee | 4 |
Number of board of directors members | 5 |
BUSINESS DESCRIPTION AND SUMM_7
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 9,508 | $ 17,041 | ||
Restricted cash, included in other current assets | 11,888 | 10,423 | ||
Total cash, cash equivalents and restricted cash | $ 21,396 | $ 27,464 | $ 29,152 | $ 122,880 |
BUSINESS DESCRIPTION AND SUMM_8
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Receivables and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Accounting Policies [Abstract] | |||
Allowance for doubtful accounts | $ 7,297 | $ 6,559 | $ 7,774 |
BUSINESS DESCRIPTION AND SUMM_9
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) distributionCenter | Jun. 30, 2021 USD ($) | |
Inventory [Line Items] | |||
Number of distribution centers | distributionCenter | 2 | ||
Inventory valuation reserves | $ 1,500 | $ 1,900 | |
Disposal group, including discontinued operation, inventory | 1,200 | 1,800 | |
Disposal group, including discontinued operation, inventory reserves | 1,200 | 1,100 | |
Inventory reserve | 1,228 | 10,478 | $ 12,068 |
Inventory reserve charges | $ 1,228 | 7,655 | $ 0 |
Inventory Reserve | |||
Inventory [Line Items] | |||
Inventory reserve charges | 7,700 | ||
Company-Owned Salon Expense | |||
Inventory [Line Items] | |||
Inventory reserve charges | $ 2,800 |
BUSINESS DESCRIPTION AND SUM_10
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Property and Equipment: | |||
Depreciation expense | $ 7.4 | $ 5.8 | $ 20.9 |
Asset retirement obligation | $ 0.5 | $ 1 | $ 4.7 |
Improvements | Maximum | |||
Property and Equipment: | |||
Estimated useful asset lives | 10 years | ||
Equipment | Minimum | |||
Property and Equipment: | |||
Estimated useful asset lives | 3 years | ||
Equipment | Maximum | |||
Property and Equipment: | |||
Estimated useful asset lives | 10 years | ||
Furniture | Minimum | |||
Property and Equipment: | |||
Estimated useful asset lives | 3 years | ||
Furniture | Maximum | |||
Property and Equipment: | |||
Estimated useful asset lives | 10 years | ||
Computer Software | Minimum | |||
Property and Equipment: | |||
Estimated useful asset lives | 3 years | ||
Computer Software | Maximum | |||
Property and Equipment: | |||
Estimated useful asset lives | 10 years | ||
Software Development | Minimum | |||
Property and Equipment: | |||
Estimated useful asset lives | 3 years | ||
Software Development | Maximum | |||
Property and Equipment: | |||
Estimated useful asset lives | 7 years |
BUSINESS DESCRIPTION AND SUM_11
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Right of Use Asset, Lease Liabilities and Rent Expense (Details) | Jun. 30, 2023 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 1 year |
Renewal term | 5 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 11 years |
Renewal term | 10 years |
BUSINESS DESCRIPTION AND SUM_12
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Salon Long-Lived Asset and Right of Use Asset Impairment Assessments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Accounting Policies [Abstract] | |||
Long-lived asset, including right of use and salon property and equipment, impairment charge | $ 101 | $ 542 | $ 13,023 |
Right of use asset impairment | $ 9,500 |
BUSINESS DESCRIPTION AND SUM_13
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Goodwill [Line Items] | ||||
Goodwill | $ 173,791,000 | $ 174,360,000 | ||
Goodwill impairment | $ 16,000,000 | 0 | 16,000,000 | $ 0 |
Opensalon Pro | ||||
Goodwill [Line Items] | ||||
Goodwill impairment | 0 | 2,880,000 | 0 | |
Derecognition of goodwill | $ 0 | $ 38,358,000 | $ 0 | |
Discount Rate | ||||
Goodwill [Line Items] | ||||
Goodwill measurement input | 17% | 20% | ||
Franchise reporting unit | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 173,800,000 | $ 174,400,000 | ||
Company-owned reporting unit | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 0 | $ 0 |
BUSINESS DESCRIPTION AND SUM_14
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Self-Insurance Accruals and Distribution Costs (Details) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) distributionCenter | Jun. 30, 2021 USD ($) | |
Self-Insurance Accruals | |||
Decrease in self-insurance expense | $ 1.4 | $ 0.5 | $ 3.6 |
Self-insurance accruals, current | 3.6 | 4.7 | |
Self-insurance accruals, noncurrent | 7.3 | $ 9.7 | |
Distribution Costs | |||
Number of distribution centers | distributionCenter | 2 | ||
Distribution | |||
Distribution Costs | |||
Costs of goods sold | $ 0 | $ 2.3 | $ 12.1 |
BUSINESS DESCRIPTION AND SUM_15
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising, Interest Income and Other, Income Taxes and Foreign Currency Translation (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Advertising Expense | ||||
Advertising fund contributions from franchisees | $ 31,747 | $ 32,573 | $ 22,023 | |
Advertising fund contributions from company-owned salons | 105 | 154 | 897 | |
Corporate funded advertising costs | 264 | 671 | 7,015 | |
Total advertising costs | 32,116 | 33,398 | 29,935 | |
Advertising funds, assets | 11,100 | 10,500 | ||
Advertising funds, liabilities | 11,100 | 10,500 | ||
Interest and Other Income [Abstract] | ||||
Gain from disposal of distribution center assets | $ 15,000 | 0 | 0 | 14,997 |
Income Taxes | ||||
Deferred tax assets, valuation allowance | 202,185 | 201,731 | ||
Valuation allowance | 4,100 | |||
Foreign Currency Translation | ||||
Foreign currency gain (loss) | $ (300) | $ (600) | $ 300 |
REVENUE RECOGNITION - Additiona
REVENUE RECOGNITION - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue recognized over time | |||
Disaggregation of Revenue [Line Items] | |||
Performance obligations expected to be satisfied, expected timing | 10 years | ||
Franchise Fees | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 6.7 | $ 6.5 | $ 6.6 |
REVENUE RECOGNITION - Receivabl
REVENUE RECOGNITION - Receivables, Broker Fees and Deferred Revenue (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Revenue from Contract with Customer [Abstract] | |||
Receivables from contracts with customers, net | $ 5,683 | $ 10,263 | |
Broker fees | 12,471 | 15,592 | $ 19,254 |
Deferred revenue | |||
Current deferred revenue | 7,148 | 7,807 | |
Non-current deferred revenue | 23,151 | 30,038 | |
Gift card liability | |||
Deferred revenue | |||
Current deferred revenue | 1,823 | 2,037 | |
Deferred franchise fees unopened salons | |||
Deferred revenue | |||
Non-current deferred revenue | 2,312 | 3,211 | |
Deferred franchise fees open salons | |||
Deferred revenue | |||
Current deferred revenue | 5,325 | 5,770 | |
Non-current deferred revenue | $ 20,839 | $ 26,827 |
REVENUE RECOGNITION - Allowance
REVENUE RECOGNITION - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 6,559 | $ 7,774 |
Provision for doubtful accounts | 608 | 967 |
Provision for franchisee rent | 1,358 | 1,421 |
Reclass of accrued rent | 325 | 149 |
Other | 106 | 0 |
Write-offs | (1,659) | (3,752) |
Balance at end of period | $ 7,297 | $ 6,559 |
REVENUE RECOGNITION - Broker Fe
REVENUE RECOGNITION - Broker Fee Balance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Change In Deferred Costs [Roll Forward] | ||
Balance at beginning of period | $ 15,592 | $ 19,254 |
Additions | 0 | 25 |
Amortization | (3,100) | (3,189) |
Write-offs | (21) | (498) |
Balance at end of period | $ 12,471 | $ 15,592 |
REVENUE RECOGNITION - Future Es
REVENUE RECOGNITION - Future Estimated Expected Revenue (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 26,164 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 5,325 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 4,954 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 4,481 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 4,021 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 3,357 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 4,026 |
Performance obligations expected to be satisfied, expected timing |
DISCONTINUED OPERATIONS - Addit
DISCONTINUED OPERATIONS - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disposal Group, General Indemnity Provision Satisfaction | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Holdback | $ 2,000 | |||
Opensalon Pro | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash proceeds | $ 13,000 | 5,000 | $ 13,000 | $ 0 |
Transaction fees | $ 500 |
DISCONTINUED OPERATIONS - Sched
DISCONTINUED OPERATIONS - Schedule of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
General and administrative | $ (50,751) | $ (65,274) | $ (96,427) | |
Depreciation and amortization | (7,716) | (6,224) | (21,749) | |
Goodwill impairment | $ (16,000) | 0 | (16,000) | 0 |
Gain (loss) from sale of OSP | 4,562 | (36,143) | 0 | |
Income (loss) from discontinued operations, net of tax | 3,958 | (39,398) | (10,125) | |
Opensalon Pro | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Fees | (226) | 3,811 | 3,461 | |
Cost of product sales to franchisees | 0 | (1,037) | (2,790) | |
General and administrative | (27) | (3,517) | (9,006) | |
Rent | (351) | (194) | (176) | |
Depreciation and amortization | 0 | (1,322) | (964) | |
Goodwill impairment | 0 | (2,880) | 0 | |
Interest expense | 0 | (715) | (650) | |
Gain (loss) from sale of OSP | 4,562 | (36,143) | 0 | |
Loss from discontinued operations, before taxes | 3,958 | (41,997) | (10,125) | |
Income tax benefit from discontinued operations | 0 | 2,599 | 0 | |
Income (loss) from discontinued operations, net of tax | $ 3,958 | $ (39,398) | $ (10,125) |
DISCONTINUED OPERATIONS - Compo
DISCONTINUED OPERATIONS - Components of Loss (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Gain (loss) from sale of OSP | $ 4,562 | $ (36,143) | $ 0 | |
Opensalon Pro | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash proceeds | $ 13,000 | 5,000 | 13,000 | 0 |
Goodwill derecognition | 0 | (38,358) | 0 | |
Software write-off | (64) | (8,408) | 0 | |
Hardware write-down | (367) | (1,825) | 0 | |
Other, net, including professional fees | (7) | (552) | 0 | |
Gain (loss) from sale of OSP | $ 4,562 | $ (36,143) | $ 0 |
DISCONTINUED OPERATIONS - Capit
DISCONTINUED OPERATIONS - Capital Expenditures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Capital expenditures | $ 0 | $ 1,067 | $ 3,591 |
OTHER FINANCIAL STATEMENT DAT_2
OTHER FINANCIAL STATEMENT DATA - Schedule of Additional Information Concerning Selected Balance Sheet Accounts (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Other current assets: | |||
Prepaid assets | $ 1,510 | $ 1,816 | |
Restricted cash | 11,888 | 10,423 | |
Other | 1,766 | 1,745 | |
Total other current assets | 15,164 | 13,984 | |
Property and equipment: | |||
Property and equipment, gross | 35,442 | 57,312 | |
Less accumulated depreciation and amortization | (29,020) | (44,477) | |
Total property and equipment, net | 6,422 | 12,835 | $ 16,906 |
Accrued expenses: | |||
Payroll and payroll related costs | 4,179 | 7,767 | |
Insurance | 3,777 | 5,012 | |
Interest expense | 4,124 | 77 | |
Rent and related real estate costs | 5,968 | 4,585 | |
Deferred revenue | 7,148 | 7,807 | |
Other | 4,913 | 8,536 | |
Total accrued expenses | 30,109 | 33,784 | |
Other non-current liabilities: | |||
Deferred income taxes | 10,936 | 10,979 | |
Insurance | 7,291 | 9,744 | |
Deferred benefits | 5,975 | 6,308 | |
Deferred franchise fees | 23,151 | 30,038 | |
Other | 1,688 | 1,905 | |
Total other non-current liabilities | 49,041 | 58,974 | |
Buildings and improvements | |||
Property and equipment: | |||
Property and equipment, gross | 4,594 | 8,228 | |
Equipment, furniture and leasehold improvements | |||
Property and equipment: | |||
Property and equipment, gross | 10,126 | 14,260 | |
Internal use software | |||
Property and equipment: | |||
Property and equipment, gross | $ 20,722 | $ 34,824 |
OTHER FINANCIAL STATEMENT DAT_3
OTHER FINANCIAL STATEMENT DATA - Schedule of Additional Information Concerning Other Intangibles, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Amortized intangible assets: | ||
Weighted Average Amortization Periods | 26 years | 26 years |
Cost | $ 13,144 | $ 13,494 |
Accumulated Amortization | (10,361) | (10,268) |
Total | $ 2,783 | $ 3,226 |
Minimum | ||
Amortized intangible assets: | ||
Weighted Average Amortization Periods | 3 years | |
Maximum | ||
Amortized intangible assets: | ||
Weighted Average Amortization Periods | 40 years | |
Brand assets and trade names | ||
Amortized intangible assets: | ||
Weighted Average Amortization Periods | 36 years | 36 years |
Cost | $ 5,290 | $ 5,421 |
Accumulated Amortization | (3,312) | (3,234) |
Total | $ 1,978 | $ 2,187 |
Franchise agreements | ||
Amortized intangible assets: | ||
Weighted Average Amortization Periods | 20 years | 20 years |
Cost | $ 7,565 | $ 7,719 |
Accumulated Amortization | (6,809) | (6,756) |
Total | $ 756 | $ 963 |
Other | ||
Amortized intangible assets: | ||
Weighted Average Amortization Periods | 20 years | 20 years |
Cost | $ 289 | $ 354 |
Accumulated Amortization | (240) | (278) |
Total | $ 49 | $ 76 |
OTHER FINANCIAL STATEMENT DAT_4
OTHER FINANCIAL STATEMENT DATA - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Text Block [Abstract] | |||
Amortization of intangible assets | $ 0.3 | $ 0.4 | $ 0.8 |
OTHER FINANCIAL STATEMENT DAT_5
OTHER FINANCIAL STATEMENT DATA - Schedule of Intangible Asset Amortization Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Future estimated amortization expense related to amortizable intangible assets | ||
2024 | $ 292 | |
2025 | 292 | |
2026 | 292 | |
2027 | 292 | |
2028 | 165 | |
Thereafter | 1,450 | |
Total | $ 2,783 | $ 3,226 |
OTHER FINANCIAL STATEMENT DAT_6
OTHER FINANCIAL STATEMENT DATA - Supplementary Cash Flow Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cash paid (received) for: | |||
Interest | $ 15,457 | $ 11,786 | $ 11,940 |
Taxes and penalties, net | 265 | (1,400) | (2,636) |
Non-cash investing activities: | |||
Unpaid capital expenditures | 25 | 35 | 312 |
North Carolina COVID-19 grant | $ 1,106 | $ 0 | $ 0 |
GOODWILL - Schedule of Goodwill
GOODWILL - Schedule of Goodwill (Details) - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 |
Goodwill [Line Items] | ||
Gross Carrying Value | $ 304,055,000 | $ 304,624,000 |
Accumulated Impairment | (130,264,000) | (130,264,000) |
Net | 173,791,000 | 174,360,000 |
Company-owned reporting unit | ||
Goodwill [Line Items] | ||
Net | 0 | 0 |
Franchise reporting unit | ||
Goodwill [Line Items] | ||
Net | $ 173,800,000 | $ 174,400,000 |
GOODWILL - Additional Schedule
GOODWILL - Additional Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Goodwill [Roll Forward] | |||
Goodwill, Beginning Balance | $ 174,360 | ||
Goodwill impairment related to continuing operations | 0 | $ (13,120) | $ 0 |
Goodwill, Ending Balance | 173,791 | 174,360 | |
Goodwill, discontinued operations | 41,300 | ||
Franchise | |||
Goodwill [Roll Forward] | |||
Goodwill, Beginning Balance | 174,360 | 229,582 | |
Derecognition of OSP goodwill | 0 | (38,358) | |
Goodwill impairment related to continuing operations | 0 | (13,120) | |
Goodwill impairment related to discontinued operations | 0 | (2,880) | |
Translation rate adjustments | (569) | (864) | |
Goodwill, Ending Balance | $ 173,791 | $ 174,360 | $ 229,582 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 USD ($) lease | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
Lessor, Lease, Description [Line Items] | |||
Franchise rent expense | $ 111,400 | $ 130,800 | $ 127,400 |
Franchise rental income | $ 111,400 | $ 130,800 | 127,400 |
Lessor, term of contract | 5 years | ||
Number of leases expected to be renewed | lease | 1 | ||
Weighted average remaining lease term | 5 years 6 months 7 days | 6 years 7 days | |
Weighted average discount rate | 4.55% | 4.25% | |
Long-lived asset impairment | $ 101 | $ 542 | 13,023 |
Right of use asset impairment | $ 9,500 | ||
Minimum | |||
Lessor, Lease, Description [Line Items] | |||
Term of contract | 1 year | ||
Renewal term | 5 years | ||
Maximum | |||
Lessor, Lease, Description [Line Items] | |||
Term of contract | 11 years | ||
Renewal term | 10 years |
LEASES - Rent Expense (Details)
LEASES - Rent Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Lessor, Lease, Description [Line Items] | |||
Adjustment to accrue future lease payments | $ 5,300 | ||
Non Franchise Lease | |||
Lessor, Lease, Description [Line Items] | |||
Office and warehouse rent | $ 3,594 | $ 4,575 | 5,234 |
Lease termination expense | 1,627 | 1,835 | 13,544 |
Lease liability benefit | (1,773) | (3,620) | (20,022) |
Franchise salon rent | 2,109 | 1,695 | 3,376 |
Company-owned salon rent | 3,639 | 4,872 | 38,622 |
Total | 9,196 | 9,357 | 40,754 |
Early termination penalties | 900 | ||
Franchise Lease | |||
Lessor, Lease, Description [Line Items] | |||
Early termination penalties | $ 1,600 | $ 900 | $ 8,300 |
LEASES - Future Operating Commi
LEASES - Future Operating Commitments to be Paid and Received (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2024 | $ 96,768 | |
2025 | 80,355 | |
2026 | 66,817 | |
2027 | 56,903 | |
2028 | 48,412 | |
Thereafter | 73,090 | |
Total future obligations | 422,345 | |
Less amounts representing interest | 48,527 | |
Present value of lease liabilities | 373,818 | |
Less current lease liabilities | 81,917 | $ 103,196 |
Long-term lease liabilities | 291,901 | $ 408,445 |
Sublease Income to be Received From Franchisees | ||
2024 | (93,838) | |
2025 | (78,344) | |
2026 | (64,992) | |
2027 | (55,273) | |
2028 | (46,758) | |
Thereafter | (70,053) | |
Total future obligations | (409,258) | |
Net Rent Commitments | ||
2024 | 2,930 | |
2025 | 2,011 | |
2026 | 1,825 | |
2027 | 1,630 | |
2028 | 1,654 | |
Thereafter | 3,037 | |
Total future obligations | 13,087 | |
Operating Segments | Franchise | ||
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2024 | 93,838 | |
2025 | 78,344 | |
2026 | 64,992 | |
2027 | 55,273 | |
2028 | 46,758 | |
Thereafter | 70,053 | |
Total future obligations | 409,258 | |
Less amounts representing interest | 46,970 | |
Present value of lease liabilities | 362,288 | |
Less current lease liabilities | 79,420 | |
Long-term lease liabilities | 282,868 | |
Operating Segments | Company-owned | ||
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2024 | 1,629 | |
2025 | 677 | |
2026 | 458 | |
2027 | 229 | |
2028 | 218 | |
Thereafter | 56 | |
Total future obligations | 3,267 | |
Less amounts representing interest | 240 | |
Present value of lease liabilities | 3,027 | |
Less current lease liabilities | 1,526 | |
Long-term lease liabilities | 1,501 | |
Corporate | ||
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2024 | 1,301 | |
2025 | 1,334 | |
2026 | 1,367 | |
2027 | 1,401 | |
2028 | 1,436 | |
Thereafter | 2,981 | |
Total future obligations | 9,820 | |
Less amounts representing interest | 1,317 | |
Present value of lease liabilities | 8,503 | |
Less current lease liabilities | 971 | |
Long-term lease liabilities | $ 7,532 |
LEASES Supplemental Operating C
LEASES Supplemental Operating Cash Information and Non-Cash Related to Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Leases [Abstract] | |||
Cash paid for amounts included in the measurement of lease liabilities | $ 57,598 | $ 74,507 | $ 130,039 |
Right of use assets obtained in exchange for new lease liabilities | $ 458 | $ 2,011 | $ 4,242 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Impairments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Goodwill impairment | $ 16,000 | $ 0 | $ 16,000 | $ 0 |
Long-lived asset impairment | 101 | 542 | 13,023 | |
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Goodwill impairment | 0 | 16,000 | ||
Long-lived asset impairment | $ 101 | $ 542 | $ 13,023 |
FINANCING ARRANGEMENTS - Schedu
FINANCING ARRANGEMENTS - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 176,830 | $ 179,994 |
Paid-in-kind interest | $ 1,033 | $ 0 |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Interest rate | 9.54% | 5.50% |
Long-term debt | $ 10,000 | $ 179,994 |
Line of Credit | Term Loan | ||
Debt Instrument [Line Items] | ||
Interest rate | 9.54% | |
Term loan | $ 172,268 | 0 |
Deferred financing fees | (6,471) | 0 |
Long-term debt | $ 165,797 | $ 0 |
FINANCING ARRANGEMENTS - Additi
FINANCING ARRANGEMENTS - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Aug. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 176,830 | $ 179,994 | ||
Liquidity Amount | 42,800 | |||
Current liabilities | 126,335 | 152,840 | ||
Interest expense | 4,124 | 77 | ||
Minimum liquidity | 10,000 | |||
Line of Credit | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 180,000 | |||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 10,000 | $ 179,994 | ||
Maximum borrowing capacity | $ 55,000 | $ 295,000 | ||
Unused borrowing amount capacity, amount | 33,300 | |||
Cash, cash equivalents, and short-term investments | 9,500 | |||
Interest expense | 3,800 | |||
Line of Credit | Revolving Credit Facility | Variable Rate Component Two | ||||
Debt Instrument [Line Items] | ||||
Cash payment | 4.25% | |||
Paid-in-kind | 2% | |||
Line of Credit | Revolving Credit Facility | Variable Rate Component Three | ||||
Debt Instrument [Line Items] | ||||
Cash payment | 4.25% | |||
Paid-in-kind | 3% | |||
Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Variable Rate Component One | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 3.875% | |||
Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Variable Rate Component Two | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 6.25% | |||
Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Variable Rate Component Three | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 7.25% | |||
Line of Credit | Revolving Credit Facility | Base rate | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1% | |||
Line of Credit | Standby Letters of Credit | ||||
Debt Instrument [Line Items] | ||||
Long-term line of credit | $ 11,800 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 15, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Litigation settlement, expense | $ 1 | $ 2.2 | |
Payments for legal settlements | $ 1.5 | $ 1.7 | |
Supplier installments | $ 2 |
INCOME TAXES - Components of Lo
INCOME TAXES - Components of Loss Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Loss before income taxes | |||
U.S. | $ (10,204) | $ (41,231) | $ (143,104) |
International | (1,794) | (3,211) | 34,470 |
Loss from operations before income taxes | $ (11,998) | $ (44,442) | $ (108,634) |
INCOME TAXES - (Benefit) Provis
INCOME TAXES - (Benefit) Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Current: | |||
U.S. | $ (219) | $ (535) | $ (620) |
International | (428) | (425) | (1,421) |
Deferred: | |||
U.S. | (270) | 3,130 | (3,701) |
International | 262 | (153) | 314 |
Benefit for income taxes | $ (655) | $ 2,017 | $ (5,428) |
INCOME TAXES - Effective Income
INCOME TAXES - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Provision for income taxes reconciliation | |||
U.S. statutory rate | 21% | 21% | 21% |
State income taxes, net of federal income tax benefit | (2.70%) | 1.40% | 7.90% |
Valuation allowance | (12.90%) | (6.60%) | (61.50%) |
Foreign income taxes at other than U.S. rates | (0.20%) | 3% | 9.40% |
Uncertain tax positions | 6.70% | (17.90%) | 0.20% |
Stock-based compensation | (2.70%) | (2.80%) | (0.70%) |
Loss on investment in Luxembourg | 0% | 0% | 29.30% |
Deferred tax rate remeasurement | (3.60%) | 0% | 0% |
Other, net | (0.10%) | (2.60%) | (0.60%) |
Total | 5.50% | (4.50%) | 5% |
Federal provisions to return true-up | 1.30% | (2.00%) | |
Tax attribute expirations | (1.10%) | ||
Rate impact of miscellaneous items | (0.30%) | (0.60%) | |
Excess of computed tax | 5% |
INCOME TAXES - Components of Ne
INCOME TAXES - Components of Net Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Deferred tax assets: | ||
Payroll and payroll related costs | $ 5,041 | $ 5,267 |
Net operating loss carryforwards | 154,514 | 153,190 |
Tax credit carryforwards | 37,515 | 37,664 |
Capital loss carryforwards | 5,845 | 5,338 |
Deferred franchise fees | 7,018 | 8,694 |
Operating lease liabilities | 92,666 | 124,905 |
Other | 18,826 | 17,542 |
Subtotal | 321,425 | 352,600 |
Valuation allowance | (202,185) | (201,731) |
Total deferred tax assets | 119,240 | 150,869 |
Deferred tax liabilities: | ||
Goodwill and intangibles | (35,001) | (33,466) |
Operating lease assets | (91,921) | (123,333) |
Other | (3,254) | (5,049) |
Total deferred tax liabilities | (130,176) | (161,848) |
Net deferred tax liability | (10,936) | (10,979) |
Deferred tax assets, discontinued operations | $ 3,400 | $ 5,300 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Taxes | |||
Operating loss carryforwards, subject to expiration | $ 27.3 | ||
Operating loss carryforwards, not subject to expiration | 90.8 | ||
Tax credit carryforward amount subject to expiration | 37.5 | ||
Undistributed earnings of international subsidiaries | 6.6 | ||
Reserve on unrecognized tax benefits that would benefit the effective tax rate | 0.9 | ||
Interest and penalties | 0.1 | $ 0.2 | $ 0.2 |
Accrued interest and penalties related to unrecognized tax benefits | 0.6 | ||
Capital loss carryforward | |||
Income Taxes | |||
Tax credit carryforward amount subject to expiration | 5.8 | ||
Domestic Tax Authority | |||
Income Taxes | |||
Operating loss carryforwards | 118.1 | ||
State and Local Jurisdiction | |||
Income Taxes | |||
Operating loss carryforwards | 27.9 | ||
Operating loss carryforwards, subject to expiration | 24.4 | ||
Operating loss carryforwards, not subject to expiration | 3.5 | ||
Foreign Tax Authority | Canada | |||
Income Taxes | |||
Operating loss carryforwards | 8.3 | ||
Foreign Tax Authority | U.K. | |||
Income Taxes | |||
Operating loss carryforwards | $ 0.2 |
INCOME TAXES - Rollforward of U
INCOME TAXES - Rollforward of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Rollforward of unrecognized tax benefits | ||
Balance at beginning of period | $ 22,173 | $ 13,858 |
Additions based on tax positions related to the current year | 10 | 8,636 |
Reductions based on tax positions of prior years | (663) | |
Additions based on tax positions of prior years | 81 | |
Reductions on tax positions related to the expiration of the statute of limitations | (127) | (402) |
Balance at end of period | $ 21,393 | $ 22,173 |
BENEFIT PLANS - Regis Retiremen
BENEFIT PLANS - Regis Retirement Savings Plan (Details) - Other Postretirement Benefit Plan - Regis Retirement Savings Plan | 12 Months Ended |
Jun. 30, 2023 hour | |
Defined Contribution Plan Disclosure [Line Items] | |
Eligibility age to participate in 401(k) plan | 18 years |
Service period for eligibility to participation in 401(k) plan | 1 month |
Minimum period of eligible service to participate in the plan | 1 year |
Minimum eligibility service hours | 1,000 |
Percentage of noncontributory defined contribution component vested after completing two years of service | 20% |
Noncontributory defined contribution component, service period for initial vesting | 2 years |
Percentage of noncontributory defined contribution component vesting after each additional year of service | 20% |
Period after which noncontributory defined contribution component becomes fully vested | 6 years |
BENEFIT PLANS - Nonqualified De
BENEFIT PLANS - Nonqualified Deferred Salary Plan (Details) - Deferred Profit Sharing | 12 Months Ended |
Jun. 30, 2023 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Percentage of noncontributory defined contribution component vested after completing two years of service | 20% |
Minimum period of eligible service to participate in the plan | 2 years |
Percentage of noncontributory defined contribution component vesting after each additional year of service | 20% |
Period after which noncontributory defined contribution component becomes fully vested | 6 years |
BENEFIT PLANS - Stock Purchase
BENEFIT PLANS - Stock Purchase Plan (Details) shares in Millions, $ in Millions | 12 Months Ended |
Jun. 30, 2023 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Cumulative employer contribution to plan | $ 11.2 |
Employee Stock | Stock Purchase Plan (ESPP) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Employer contribution as percent of stock purchase price | 15% |
Employer contribution to plan, maximum | $ 14 |
Shares registered (in shares) | shares | 4.6 |
BENEFIT PLANS - Schedule of Pro
BENEFIT PLANS - Schedule of Projected Benefit Obligation (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Long-term portion (included in other non-current liabilities) | $ 5,975 | $ 6,308 |
Deferred Compensation Contracts | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total | 2,327 | 2,623 |
Deferred Compensation Contracts | Accrued Liabilities | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Current portion (included in accrued expenses) | 314 | 303 |
Deferred Compensation Contracts | Other Noncurrent Liabilities | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Long-term portion (included in other non-current liabilities) | $ 2,013 | $ 2,320 |
BENEFIT PLANS - Deferred Compen
BENEFIT PLANS - Deferred Compensation Contracts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Other comprehensive income for deferred compensation contracts | $ 739 | $ 723 | |
Former Vice Chairman | General and Administrative Expense | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Projected benefit obligation | 600 | 500 | $ 400 |
Deferred Compensation Contracts | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Projected benefit obligation | 2,327 | 2,623 | |
Deferred Compensation Contracts | Former Vice Chairman | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Compensation expense | 2,300 | 2,300 | |
Deferred Compensation Contracts | Former Vice Chairman | Accrued Liabilities | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Projected benefit obligation | $ 600 | $ 500 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dilutive shares included in per share calculation (in shares) | 492,715 | 608,503 | 636,310 |
Equity-based compensation awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 3,955,941 | 2,269,335 | 2,322,006 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized expense | $ | $ 1.4 | ||
SARs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | 3 years | |
Unrecognized compensation expense | $ | $ 0.4 | ||
Weighted average period of recognition | 1 year 10 months 24 days | ||
Granted (in shares) | 600,000 | ||
SARs | Former Chief Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 2 years | ||
SARs | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
SARs | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
SARs | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 60% | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
Expiration period | 10 years | ||
Weighted average period of recognition | 1 year 8 months 12 days | ||
Employee Stock Option | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
Employee Stock Option | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 5 years | ||
Employee Stock Option | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
Employee Stock Option | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
Employee Stock Option | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 60% | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
Vested in period, fair value | $ | $ 0.5 | $ 5.8 | $ 3.2 |
Unrecognized compensation expense | $ | $ 0.3 | ||
Weighted average period of recognition | 1 year 7 months 6 days | ||
Granted (in shares) | 0 | ||
RSUs | Non-Employee Directors | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 1 year | ||
RSUs | Minimum | Grant Date Anniversary | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 1 year | ||
RSUs | Minimum | Period After Grant Date | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 1 year | ||
RSUs | Median | Period After Grant Date | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
RSUs | Maximum | Grant Date Anniversary | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 5 years | ||
RSUs | Maximum | Period After Grant Date | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 5 years | ||
RSUs | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
RSUs | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
RSUs | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 60% | ||
PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
Granted (in shares) | 0 | ||
2018 Long Term Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for issuance (in shares) | 3,818,895 | ||
Full value awards, appreciation multiplier | 2 | ||
Number of shares available for grant (in shares) | 1,481,215 | ||
Participants' age required under award vesting terms | 62 years | ||
Employees' age required under award vesting terms | 55 years | ||
Number of years of continuous service to be completed by an employee under award vesting terms | 15 years | ||
2018 Plan, 2016 Plan and 2004 Plan | SARs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
Expiration period | 10 years | ||
2018 Plan, 2016 Plan and 2004 Plan | SARs | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 3 years | ||
2018 Plan, 2016 Plan and 2004 Plan | SARs | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting or performance period | 5 years | ||
2018 Plan, 2016 Plan and 2004 Plan | SARs | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
2018 Plan, 2016 Plan and 2004 Plan | SARs | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 20% | ||
2018 Plan, 2016 Plan and 2004 Plan | SARs | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting | 60% |
STOCK-BASED COMPENSATION - Sche
STOCK-BASED COMPENSATION - Schedule of Weighted Average Fair Values (Details) - $ / shares | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair values per stock based compensation award granted, options (in dollars per share) | $ 1.43 | $ 1.82 | $ 2.89 |
SARs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair values per stock based compensation award granted (in dollars per share) | 1.52 | 2.56 | 0 |
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair values per stock based compensation award granted (in dollars per share) | 0 | 2.69 | 7.15 |
PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair values per stock based compensation award granted (in dollars per share) | $ 0 | $ 0 | $ 5.83 |
STOCK-BASED COMPENSATION - Sc_2
STOCK-BASED COMPENSATION - Schedule of Assumptions, Estimated Fair Value of SARs, RSUs and PSUs (Details) | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Assumptions used in determining estimated fair value of stock based compensation awards | |||
Expected dividend yield | 0% | 0% | 0% |
Expected term of share options | 7 years | ||
Minimum | |||
Assumptions used in determining estimated fair value of stock based compensation awards | |||
Risk-free interest rate | 3.08% | 1.25% | 0.16% |
Expected volatility | 69.50% | 58.30% | 44.90% |
Expected term of share options | 6 years | 6 years 1 month 6 days | |
Maximum | |||
Assumptions used in determining estimated fair value of stock based compensation awards | |||
Risk-free interest rate | 4.30% | 3.04% | 0.78% |
Expected volatility | 82.60% | 64.50% | 66.80% |
Expected term of share options | 7 years 10 months 24 days | 7 years 8 months 12 days |
STOCK-BASED COMPENSATION - Sc_3
STOCK-BASED COMPENSATION - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (recorded in general and administrative) | $ 2,316 | $ 1,334 | $ 3,254 |
Less: Income tax benefit | 0 | 0 | 0 |
Total stock-based compensation expense, net of tax | $ 2,316 | $ 1,334 | $ 3,254 |
Federal statutory tax rate, valuation allowance | 0% | 0% | 0% |
Share-Based Payment Arrangement, Option And Stock Appreciation Rights (SARs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (recorded in general and administrative) | $ 1,352 | $ (241) | $ 456 |
RSUs & PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense (recorded in general and administrative) | $ 964 | $ 1,575 | $ 2,798 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Appreciation Rights (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Aggregate Intrinsic Value (in thousands) | |
Outstanding balance at end of period | $ | $ (1,496) |
Exercisable | $ | (277) |
Unvested awards, net of estimated forfeitures | $ | $ (1,018) |
SARs | |
Shares/Units | |
Outstanding balance at the beginning of the period (in shares) | shares | 1,611 |
Granted (in shares) | shares | 600 |
Forfeited (in shares) | shares | (113) |
Vested (in shares) | shares | 0 |
Outstanding balance at the end of the period (in shares) | shares | 2,098 |
Exercisable at the end of the period (in shares) | shares | 1,119 |
Unvested awards, net of estimated forfeitures (in shares) | shares | 825 |
Weighted Average Exercise Price | |
Outstanding Balance at June 30, 2021 (in dollars per share) | $ / shares | $ 7.95 |
Granted (in dollars per share) | $ / shares | 1.52 |
Forfeited/Expired (in dollars per share) | $ / shares | 1.61 |
Exercised (in dollars per share) | $ / shares | 0 |
Outstanding Balance at June 30, 2022 (in dollars per share) | $ / shares | 6.45 |
Exercisable at the end of the period (in dollars per share) | $ / shares | 10.33 |
Unvested options, net of estimated forfeitures (in dollars per share) | $ / shares | $ 2.02 |
Weighted Average Remaining Contractual Life | |
Outstanding at the end of the period | 6 years 4 months 13 days |
Exercisable at the end of the period | 4 years 2 months 19 days |
Unvested options, net of estimated forfeitures | 8 years 9 months 25 days |
Aggregate Intrinsic Value (in thousands) | |
Outstanding balance at end of period | $ | $ (11,203) |
Exercisable | $ | (10,317) |
Unvested awards, net of estimated forfeitures | $ | $ (751) |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Shares/Units | ||
Options outstanding (in shares) | 2,991 | 1,495 |
Granted (in shares) | 1,644 | |
Forfeited/ Expired (in shares) | (148) | |
Exercised (in shares) | 0 | |
Exercisable at the end of the period (in shares) | 645 | |
Unvested awards, net of estimated forfeitures (in shares) | 1,958 | |
Weighted Average Exercise Price | ||
Outstanding balance at the beginning of the period (in dollars per share) | $ 1.61 | $ 1.81 |
Granted (in dollars per share) | 1.43 | |
Forfeited/ Expired (in dollars per share) | 1.59 | |
Exercised (in dollars per share) | 0 | |
Exercisable at the end of the period (in dollars per share) | 1.54 | |
Unvested options, net of estimated forfeitures (in dollars per share) | $ 1.63 | |
Weighted Average Remaining Contractual Life | ||
Outstanding at the end of the period | 8 years 11 months 23 days | |
Exercisable at the end of the period | 9 years 18 days | |
Unvested options, net of estimated forfeitures | 8 years 11 months 19 days | |
Aggregate Intrinsic Value (in thousands) | ||
Outstanding balance at end of period | $ 1,496 | |
Exercisable | 277 | |
Unvested awards, net of estimated forfeitures | $ 1,018 |
STOCK-BASED COMPENSATION - Acti
STOCK-BASED COMPENSATION - Activity of RSUs and PSUs (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
RSUs | |||
Shares/Units | |||
Outstanding at the beginning of the period (in shares) | 907,000 | ||
Granted (in shares) | 0 | ||
Forfeited (in shares) | (34,000) | ||
Vested (in shares) | (88,000) | ||
Outstanding at the end of the period (in shares) | 785,000 | 907,000 | |
Vested (in shares) | 543,000 | ||
Unvested awards, net of estimated forfeitures (in shares) | 162,000 | ||
Weighted Average Grant Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 6.27 | ||
Weighted average fair values per stock based compensation award granted (in dollars per share) | 0 | ||
Forfeited (in dollars per share) | 4.79 | ||
Vested (in dollars per share) | 6.13 | ||
Outstanding at the end of the period (in dollars per share) | 6.35 | $ 6.27 | |
Vested (in dollars per share) | 7.24 | ||
Unvested awards, net of estimated forfeitures (in dollars per share) | $ 5.58 | ||
Aggregate Intrinsic Value (in thousands) | |||
Nonvested at the end of the period | $ 871 | ||
Vested | 603 | ||
Unvested awards, net of estimated forfeitures | $ 180 | ||
PSUs | |||
Shares/Units | |||
Outstanding at the beginning of the period (in shares) | 74,000 | ||
Granted (in shares) | 0 | ||
Forfeited (in shares) | (74,000) | ||
Vested (in shares) | 0 | ||
Outstanding at the end of the period (in shares) | 0 | 74,000 | |
Vested (in shares) | 0 | ||
Unvested awards, net of estimated forfeitures (in shares) | 0 | ||
Weighted Average Grant Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 9.82 | ||
Weighted average fair values per stock based compensation award granted (in dollars per share) | 0 | $ 0 | $ 5.83 |
Forfeited (in dollars per share) | 9.82 | ||
Vested (in dollars per share) | 0 | ||
Outstanding at the end of the period (in dollars per share) | 0 | $ 9.82 | |
Vested (in dollars per share) | 0 | ||
Unvested awards, net of estimated forfeitures (in dollars per share) | $ 0 | ||
Aggregate Intrinsic Value (in thousands) | |||
Nonvested at the end of the period | $ 0 | ||
Vested | 0 | ||
Unvested awards, net of estimated forfeitures | $ 0 |
SHAREHOLDERS' DEFICIT - Additio
SHAREHOLDERS' DEFICIT - Additional Information (Details) - $ / shares | Jun. 30, 2023 | Jun. 30, 2022 |
Authorized Shares and Designation of Preferred Class: | ||
Common stock authorized (in shares) | 100,000,000 | |
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
SHAREHOLDERS' DEFICIT - Shares
SHAREHOLDERS' DEFICIT - Shares Issuance Program (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | 29 Months Ended |
Feb. 28, 2021 | Jun. 30, 2023 | Jun. 30, 2023 | |
Shelf Registration | |||
Subsidiary, Sale of Stock [Line Items] | |||
Sale of stock, authorized | $ 150 | ||
Prospectus Supplement | |||
Subsidiary, Sale of Stock [Line Items] | |||
Sale of stock, authorized | 50 | ||
Shares issued (in shares) | 0 | 9,300,000 | |
Proceeds from issuance of stock | $ 38.4 | ||
Remaining value | $ 11.6 | ||
At-The-Market Offering | |||
Subsidiary, Sale of Stock [Line Items] | |||
Sale of stock, authorized | $ 50 |
SHAREHOLDERS' DEFICIT - Share R
SHAREHOLDERS' DEFICIT - Share Repurchases (Details) - USD ($) shares in Millions | Jun. 30, 2023 | Aug. 31, 2018 | Jan. 31, 2016 | Sep. 30, 2015 | Apr. 30, 2015 | Apr. 30, 2007 | May 31, 2005 | Aug. 31, 2003 | May 31, 2000 |
Stockholders' Equity Note [Abstract] | |||||||||
Authorized stock repurchase amount | $ 650,000,000 | $ 450,000,000 | $ 400,000,000 | $ 350,000,000 | $ 300,000,000 | $ 200,000,000 | $ 100,000,000 | $ 50,000,000 | |
Repurchases of common stock to date (in shares) | 30 | ||||||||
Repurchases of common stock to date | $ 595,400,000 | ||||||||
Remaining authorized repurchase amount | $ 54,600,000 |
SHAREHOLDERS' DEFICIT - Compone
SHAREHOLDERS' DEFICIT - Components of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Equity [Abstract] | ||
Foreign currency translation | $ 8,284 | $ 8,732 |
Unrealized gain on deferred compensation contracts | 739 | 723 |
Accumulated other comprehensive income | $ 9,023 | $ 9,455 |
SEGMENT INFORMATION - Additiona
SEGMENT INFORMATION - Additional Information (Details) - salon | Jun. 30, 2023 | Jun. 30, 2022 |
Franchise | ||
Segment Reporting Information [Line Items] | ||
Number of salons | 4,795 | 5,395 |
Company-owned | ||
Segment Reporting Information [Line Items] | ||
Number of salons | 68 | 105 |
SEGMENT INFORMATION - Financial
SEGMENT INFORMATION - Financial Information by Reportable Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues: | ||||
Revenues, Total | $ 233,326 | $ 275,967 | $ 411,651 | |
Operating expenses: | ||||
Unallocated (expenses) benefits | (3,050) | (9,843) | 16,215 | |
Depreciation and amortization | (7,716) | (6,224) | (21,749) | |
Long-lived asset impairment | (101) | (542) | (13,023) | |
Goodwill impairment | $ (16,000) | 0 | (16,000) | 0 |
Interest expense | (22,141) | (12,914) | (13,163) | |
Income tax benefit (expense) | 655 | (2,017) | 5,428 | |
Income (loss) from discontinued operations, net of tax | 3,958 | (39,398) | (10,125) | |
Net income | (7,385) | (85,857) | (113,331) | |
Continuing Operations | ||||
Operating expenses: | ||||
Goodwill impairment | 0 | (13,120) | 0 | |
Operating Segments | Franchise | ||||
Revenues: | ||||
Revenues, Total | 223,237 | 255,762 | 268,686 | |
Operating expenses: | ||||
EBITDA | 22,799 | 7,730 | (29,417) | |
Operating Segments | Company-owned | ||||
Revenues: | ||||
Revenues, Total | 10,089 | 20,205 | 142,965 | |
Operating expenses: | ||||
EBITDA | (1,789) | (9,529) | (47,497) | |
Operating Segments | Reportable Segments | ||||
Operating expenses: | ||||
EBITDA | $ 21,010 | $ (1,799) | $ (76,914) |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Revenues and Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Total revenues and long-lived assets associated with business operations | |||
Total Revenues | $ 233,326 | $ 275,967 | $ 411,651 |
Property and Equipment, Net | 6,422 | 12,835 | 16,906 |
U.S. | |||
Total revenues and long-lived assets associated with business operations | |||
Total Revenues | 211,429 | 249,285 | 380,506 |
Property and Equipment, Net | 6,410 | 12,808 | 16,807 |
Other countries | |||
Total revenues and long-lived assets associated with business operations | |||
Total Revenues | 21,897 | 26,682 | 31,145 |
Property and Equipment, Net | $ 12 | $ 27 | $ 99 |