bebe stores (BEBE) 10-Q 14 Nov 17 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2017	Oct. 31, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	bebe stores, inc.
Trading Symbol	BEBE
Entity Central Index Key	1,059,272
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		8,115,754

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Jul. 01, 2017
Current assets:
Cash and equivalents	$ 11,138	$ 17,032
Receivables	8,111	5,222
Prepaid and other	1,369	1,599
Total current assets	29,391	50,467
Equity method investment	883	1,257
Other assets	598	797
Total assets	30,872	52,521
Current liabilities:
Accounts payable	10,346	15,265
Accrued liabilities	10,842	12,013
Bridge loan, net of issue discount	15,601	33,158
Liabilities of discontinued operations	1,420	1,955
Total current liabilities	38,210	62,391
Non-current note payable	914	1,142
Liability for uncertain tax positions	88	88
Total liabilities	39,212	63,621
Commitments and contingencies
Shareholders’ deficit:
Preferred stock-authorized 1,000,000 shares at $0.001 par value per share; no shares issued and outstanding		0
Common stock-authorized 14,000,000 shares at $0.001 par value per share; issued and outstanding 8,114,275 and 8,096,090 shares	8	8
Additional paid-in capital	147,111	146,999
Accumulated other comprehensive income	557	573
Accumulated deficit	(156,017)	(158,680)
Total shareholders’ deficit	(8,340)	(11,100)
Total liabilities and shareholders’ deficit	30,872	52,521
Held-for-sale
Current assets:
Assets of discontinued operations	8,613	25,796
Assets not held-for-sale
Current assets:
Assets of discontinued operations	$ 160	$ 818

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Jul. 01, 2017
Statement of Financial Position [Abstract]
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, shares authorized (in shares)	14,000,000	14,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares issued (in shares)	8,114,275	8,096,090
Common stock, shares outstanding (in shares)	8,114,275	8,096,090

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Income Statement [Abstract]
Net sales	$ 0	$ 0
Cost of sales, including production and occupancy	0	0
Gross margin	0	0
Selling, general and administrative expenses	2,259	9,463
Operating loss	(2,259)	(9,463)
Interest (expense) and other, net	(1,046)	14
Loss from continuing operations, before income taxes	(3,305)	(9,449)
Income tax provision	0	0
Earnings in equity method investment	1,026	450
Loss from continuing operations, net of tax	(2,280)	(8,999)
Income from discontinued operations, net of tax	4,942	1,221
Net income (loss)	$ 2,663	$ (7,778)
Basic per share amounts:
Net loss from continuing operations, net of tax (in dollars per share)	$ (0.28)	$ (1.12)
Net loss from discontinued operations, net of tax (in dollars per share)	0.61	0.15
Net income (loss) (in dollars per share)	0.33	(0.97)
Diluted per share amounts:
Net loss from continuing operations, net of tax (in dollars per share)	(0.28)	(1.12)
Net loss from discontinued operations, net of tax (in dollars per share)	0.61	0.15
Net income (loss) (in dollars per share)	$ 0.33	$ (0.97)
Basic weighted average shares outstanding (in shares)	8,101	8,007
Diluted weighted average shares outstanding (in shares)	8,101	8,007
Other comprehensive income (loss)
Foreign currency translation adjustments	$ (16)	$ 69
Other comprehensive income (loss)	(16)	69
Comprehensive income (loss)	$ 2,647	$ (7,709)

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Cash flows from operating activities:
Net income (loss)	$ 2,663	$ (7,778)
Adjustments to reconcile net loss to cash used by operating activities:
Gain on sale of assets of discontinued operations held for sale	(6,666)	0
Non-cash compensation expense	119	472
Depreciation and amortization	0	4,268
Non-cash charge for asset impairment	0	764
Earnings in equity method investment	(1,026)	(450)
Cash receipt from equity method investment	1,400	600
Other	0	(91)
Changes in operating assets and liabilities:
Receivables	365	(454)
Inventories	0	406
Prepaid expenses and other	437	(1,052)
Accounts payable	(7,429)	(312)
Deferred rent and other lease incentives	0	(1,047)
Accrued liabilities	(1,215)	(3,091)
Net cash used by operating activities	(11,351)	(7,765)
Cash flows from investing activities:
Purchase of property and equipment	(83)	(376)
Proceeds from the sale of assets of discontinued operations held for sale	23,687	0
Net cash provided (used) by investing activities	23,604	(376)
Cash flows from financing activities:
Proceeds from issuance of common stock	0	3
Repayment of bridge loan	(18,133)	0
Net cash (used) provided by financing activities	(18,133)	3
Net decrease in cash and equivalents	(5,880)	(8,138)
Effect of exchange rate changes on cash	(14)	(109)
Cash and equivalents:
Beginning of period	17,032	55,525
End of period	$ 11,138	$ 47,278

INTERIM FINANCIAL STATEMENTS

INTERIM FINANCIAL STATEMENTS	3 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
INTERIM FINANCIAL STATEMENTS	INTERIM FINANCIAL STATEMENTS The accompanying condensed consolidated balance sheets of the Company as of September 30, 2017 and October 1, 2016 , the condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2017 and October 1, 2016 and the condensed consolidated statements of cash flows for the three months ended September 30, 2017 and October 1, 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position at the balance sheet dates and the results of operations for the periods presented have been included. The condensed consolidated balance sheet at July 1, 2017, presented herein, was derived from the audited balance sheet included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. Going Concern Uncertainty As of September 30, 2017 , the Company's current liabilities exceed its current assets by $8.8 million . The current liabilities include a bridge loan of $15.6 million used to pay lease termination expenses, which matures May 30, 2018. The Company has listed the LA studio for sale and believes it will eventually sell the building for proceeds sufficient to meet its current obligations and its cash flow needs. However, if the LA studio does not sell in the next twelve months and the bridge loan comes due, the Company will be unable to repay the bridge loan at its maturity (May 30, 2018). As a result, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for the next year. Corporate Restructure and Strategic Partnership During the fourth quarter of fiscal 2017, bebe stores, inc. ("bebe" or the “Company”) expanded upon its strategic joint venture arrangement entered into during fiscal 2016, and have closed all retail stores, sold its merchandise, inventory, furnishings, trade fixtures, equipment, improvements in real property, purchase orders related to its website and international wholesale business and is committed to selling its Los Angeles Design Studio. Under this partnership, during fiscal 2016 bebe contributed all of its trademarks, trademark license arrangements and related intellectual property, including domain names, social media accounts and agreements with certain of its international distributors to its joint venture BB Brand Holdings LLC (the “Joint Venture”). The Company's partner in the venture, Bluestar Alliance, LLC (“Bluestar”) continues to leverage its existing brand management organization and infrastructure to develop a wholesale domestic and international lifestyle licensing business for the Joint Venture and will manage its day-to-day operations. Going forward, the Joint Venture will aggressively pursue a licensing strategy designed to capitalize on the value of our brand in all categories and channels on a global scale. The Company expects the Joint Venture to generate long-term, committed royalties from prospective licensees of the bebe brand name. The decision to exit its retail operations was the result of continued operating losses. The Company has agreed to provide transition services to Global Brands Group ("GBG"), an unrelated third party on a short-term basis not expected to go beyond November 30, 2018 for which it will receive a service fee that is expected to cover the Company's costs of providing the services. GBG has entered into a license agreement with the Joint Venture and beginning May 2, 2017 began to operate the website www.bebe.com as well as the international business formerly operated by the Company. In connection with this arrangement, GBG purchased the remaining finished goods inventory of from the Company on May 2, 2017. Included in receivables is $2.6 million due from GBG for services received as of September 30, 2017. The summarized income statement for the three month period ended September 30. 2017 for the Joint Venture is as follows: Three Month Ended September 30, 2017 October 1, 2016 (in thousands) Revenue $ 2,894 $ 1,338 Gross Profit 2,894 1,338 Net income from continuing operations 2,051 899 Net Income $ 2,051 $ 899 The Company authorized the Joint Venture to administer payments to a former landlord pursuant to a note payable in connection with a store closure. The amount of each payment is deducted from the quarterly distribution made to bebe from the Joint Venture. For the three month period ended September 30, 2017, the amount so deducted by the Joint Venture was $228,429 .

FISCAL YEAR

FISCAL YEAR	3 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
FISCAL YEAR	FISCAL YEAR The Company’s fiscal year is a 52 or 53 week period, each period ending on the first Saturday on or after June 30. The three month periods ended September 30, 2017 and October 1, 2016 each include 13 weeks.

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	RECENT ACCOUNTING PRONOUNCEMENTS See note 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017.

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS	3 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
DISCONTINUED OPERATIONS	DISCONTINUED OPERATIONS In the fourth quarter of fiscal 2017, as a result of continued operating losses, the Company closed all of its stores and transferred its license to operate its online store and international operations to its equity method investment. The results of the Company's retail operations have been presented as discontinued operations in the accompanying consolidated statements of operations and comprehensive income (loss) for all periods presented and are as follows: Three Month Ended September 30, 2017 October 1, 2016 (in thousands) Net sales $ — $ 87,238 Cost of sales, including production and occupancy (10 ) (59,743 ) Gross margin (10 ) 27,495 Selling, general and administrative expenses (1,566 ) (26,257 ) Gain on Sale of Assets 6,666 — Income from discontinued operations, before income tax provision 5,090 1,238 Tax provision (148 ) (17 ) Income from discontinued operations, net of tax provision $ 4,942 $ 1,221 Costs associated with these exit activities are as follows: Lease Termination Severance Total (in thousands) Balance as of July 1, 2017 $ 2,024 $ 1,772 $ 3,796 Costs incurred in fiscal 2018 — 967 967 Cash payments made (252 ) (377 ) (629 ) Balance as of September 30, 2017 $ 1,772 $ 2,362 $ 4,134 The Company anticipates completing lease termination payments by July 1, 2019 and severance payments before December 31, 2018. ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE Assets of discontinued operations held for sale consist of the following, which are stated at the lower of cost or market: Description September 30, 2017 July 1, 2017 (in thousands) Distribution Center $ — $ 15,622 LA Studio 8,613 8,613 Condominiums — 1,561 Total $ 8,613 $ 25,796 The Company sold its Distribution center and condominiums for net proceeds totaling $23.7 million during the first quarter of fiscal 2018 and recorded a gain on sale totaling $6.7 million , which is included in income from discontinued operations, net of tax.

ASSETS OF DISCONTINUED OPERATIO

ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE	3 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE	DISCONTINUED OPERATIONS In the fourth quarter of fiscal 2017, as a result of continued operating losses, the Company closed all of its stores and transferred its license to operate its online store and international operations to its equity method investment. The results of the Company's retail operations have been presented as discontinued operations in the accompanying consolidated statements of operations and comprehensive income (loss) for all periods presented and are as follows: Three Month Ended September 30, 2017 October 1, 2016 (in thousands) Net sales $ — $ 87,238 Cost of sales, including production and occupancy (10 ) (59,743 ) Gross margin (10 ) 27,495 Selling, general and administrative expenses (1,566 ) (26,257 ) Gain on Sale of Assets 6,666 — Income from discontinued operations, before income tax provision 5,090 1,238 Tax provision (148 ) (17 ) Income from discontinued operations, net of tax provision $ 4,942 $ 1,221 Costs associated with these exit activities are as follows: Lease Termination Severance Total (in thousands) Balance as of July 1, 2017 $ 2,024 $ 1,772 $ 3,796 Costs incurred in fiscal 2018 — 967 967 Cash payments made (252 ) (377 ) (629 ) Balance as of September 30, 2017 $ 1,772 $ 2,362 $ 4,134 The Company anticipates completing lease termination payments by July 1, 2019 and severance payments before December 31, 2018. ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE Assets of discontinued operations held for sale consist of the following, which are stated at the lower of cost or market: Description September 30, 2017 July 1, 2017 (in thousands) Distribution Center $ — $ 15,622 LA Studio 8,613 8,613 Condominiums — 1,561 Total $ 8,613 $ 25,796 The Company sold its Distribution center and condominiums for net proceeds totaling $23.7 million during the first quarter of fiscal 2018 and recorded a gain on sale totaling $6.7 million , which is included in income from discontinued operations, net of tax.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	FAIR VALUE MEASUREMENTS The Financial Accounting Standards Board has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2017 , the Company held no financial instruments that are measured at fair value on a recurring basis. The following items are measured at fair value on a recurring basis as of July 1, 2017: Description July 1, Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) Fair value measurements at reporting date (In thousands) Cash equivalents $ 236 $ 236 $ — $ — Total $ 236 $ 236 $ — $ — Non-Financial Assets: The Company measures certain non-financial assets and liabilities, including long-lived assets, at fair value on a non-recurring basis. During the three months ended September 30, 2017 and October 1, 2016 , the Company recorded impairment charges of approximately $0.0 million and $0.8 million , respectively, related to under-performing stores. The following table presents the Company’s considerations of at-risk assets for the three month period ended October 1, 2016 : Three Months Ended October 1, 2016 (dollar amounts in millions) Number of stores identified as at risk and evaluated for impairment 7 Number of stores identified as at risk, but not impaired (3 ) Number of stores identified as at risk with impairment 4 Total carrying amount of stores identified as at risk prior to any impairment charges taken $ 1.7 Total carrying amount of stores identified as at risk, but not impaired (0.9 ) Total carrying amount of stores identified for impairment 0.8 Impairment charges recorded during the period $ 0.8 The fair market value of these assets was determined using the income approach and Level 3 inputs, which require management to make significant estimates about future operating plans and projected cash flows. Management estimates the amount and timing of future cash flows based on its experience and knowledge of the retail market in which each store operates. The assumptions used in preparing the discounted cash flow model and the related sensitivity analysis around the discounted cash flow model include estimates for weighted average cost of capital 11.0% and annual revenue growth rates (range from 0.0% – 5.0% ). The stores not impaired had undiscounted cash flows that exceeded their net carrying amount at a weighted average of 126% for the three month period ended October 1, 2016 . The impairment charge is included in loss from discontinued operations, net of tax in the accompanying condensed consolidated statements of operations and comprehensive loss. The Company was not required to measure any other significant non-financial assets and liabilities at fair value.

INCOME TAXES

INCOME TAXES	3 Months Ended
	Sep. 30, 2017
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expenses. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In evaluating whether it is more likely than not that some or all of the Company’s deferred tax assets will not be realized, it considers all available positive and negative evidence, including recent year’s operational results which is objectively verifiable evidence. As a result of its evaluation of the realizability of its deferred tax assets as of September 30, 2017 , the Company continues to believe, based upon all available evidence, that it is more likely than not that the majority of its deferred tax assets will continue to not be realized. Accordingly, the tax benefit related to the current quarter losses is not recognized. The Company will continue to maintain a valuation allowance against its deferred tax assets until the Company believes it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance will be reversed accordingly in the period that such determination is made.

BRIDGE LOAN

BRIDGE LOAN	3 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
BRIDGE LOAN	BRIDGE LOAN The company has received a waiver from its lenders of the requirements of a loan agreement covenant requiring the company to maintain a required level of cash as of certain dates. The waiver is effective through December 31, 2017 as long as the Company maintains at least $10 million of cash and cash equivalents.

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE	3 Months Ended
	Sep. 30, 2017
Earnings Per Share [Abstract]
EARNINGS (LOSS) PER SHARE	EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur from common shares issuable through the exercise of dilutive stock options. There is no difference between the number of shares used in the basic and diluted earnings per share computations. Excluded from the computation of the number of diluted weighted average shares outstanding were options to purchase 80,003 and 236,887 shares of common stock for the three months ended September 30, 2017 and October 1, 2016 , respectively, which would have been anti-dilutive.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS	3 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
LEGAL PROCEEDINGS	LEGAL PROCEEDINGS As of the date of this filing, the Company is involved in ongoing legal proceedings as described below. A former employee filed a complaint against the Company on November 2, 2010, in the Superior Court of California, San Bernardino County (Case No. CIVRS1011823) alleging failure to pay wages, failure to provide meal and rest periods, and other violations of the California Labor Code and Business & Professions Code §17200 et. seq . The plaintiff purported to bring the action on behalf of current and former California bebe stylists and sales associates who are similarly situated. The complaint sought damages, civil penalties, and injunctive relief among other remedies. In June 2016, the parties entered into a settlement agreement conditioned upon final Court approval. In August 2017, the Court preliminarily approved the class action settlement. The parties are in the process of the administration of the settlement with the class members. The Company believes the settlement amounts, accrued in Q4 of fiscal 2017, will not have a material adverse effect on our business, financial condition or results of operations. A customer served the Company with a complaint on January 31, 2014, in the United States District Court for the Northern District of California (Civil Action No. C14-267 DMR) alleging various violations of the Telephone Consumer Protection Act (47 U.S.C. §§227 et seq .) and violations of California’s unfair competition law (California Business and Professions Code §§ 17200, et seq .) stemming from an alleged failure to obtain customer consent prior to sending text messages. The plaintiff purported to bring the action on behalf of others similarly situated. The complaint sought damages and injunctive relief among other remedies. A companion proceeding, previously reported, in the United States District Court for the Northern District of California (Civil Action No. 3:14-CV-01968)) was consolidated with this action. In April 2016, the parties entered into a settlement agreement conditioned upon final Court approval. In July 2017, the Court preliminarily approved the class action settlement. The parties are in the process of the administration of the settlement with the class members. The Company believes the settlement amounts, accrued in fiscal 2017, will not have a material adverse effect on our business, financial condition or results of operations. The Company is subject to various other legal proceedings and claims arising in the ordinary course of business. Regarding all matters referenced herein, the Company intends to vigorously defend itself and has accrued estimated amounts of liability where required, appropriate and determinable. Any such estimates may be revised as further information becomes available. The results of any litigation are inherently uncertain and as such the Company cannot assure that it will be able to successfully defend itself in these proceedings or that any amounts accrued are sufficient.

INTERIM FINANCIAL STATEMENTS (P

INTERIM FINANCIAL STATEMENTS (Policies)	3 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Interim financial statements	The accompanying condensed consolidated balance sheets of the Company as of September 30, 2017 and October 1, 2016 , the condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2017 and October 1, 2016 and the condensed consolidated statements of cash flows for the three months ended September 30, 2017 and October 1, 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position at the balance sheet dates and the results of operations for the periods presented have been included. The condensed consolidated balance sheet at July 1, 2017, presented herein, was derived from the audited balance sheet included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017.
Fiscal year	The Company’s fiscal year is a 52 or 53 week period, each period ending on the first Saturday on or after June 30. The three month periods ended September 30, 2017 and October 1, 2016 each include 13 weeks.
Fair value measurements	The Financial Accounting Standards Board has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Fair value of financial instruments	The fair market value of these assets was determined using the income approach and Level 3 inputs, which require management to make significant estimates about future operating plans and projected cash flows. Management estimates the amount and timing of future cash flows based on its experience and knowledge of the retail market in which each store operates. The assumptions used in preparing the discounted cash flow model and the related sensitivity analysis around the discounted cash flow model include estimates for weighted average cost of capital 11.0% and annual revenue growth rates (range from 0.0% – 5.0% ).
Income taxes	Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expenses. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In evaluating whether it is more likely than not that some or all of the Company’s deferred tax assets will not be realized, it considers all available positive and negative evidence, including recent year’s operational results which is objectively verifiable evidence.
Earnings per share	Basic earnings (loss) per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur from common shares issuable through the exercise of dilutive stock options.

INTERIM FINANCIAL STATEMENTS (T

INTERIM FINANCIAL STATEMENTS (Tables)	3 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Summarized income statement for joint venture	The summarized income statement for the three month period ended September 30. 2017 for the Joint Venture is as follows: Three Month Ended September 30, 2017 October 1, 2016 (in thousands) Revenue $ 2,894 $ 1,338 Gross Profit 2,894 1,338 Net income from continuing operations 2,051 899 Net Income $ 2,051 $ 899

DISCONTINUED OPERATIONS (Tables

DISCONTINUED OPERATIONS (Tables)	3 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
Results of discontinued operations	The results of the Company's retail operations have been presented as discontinued operations in the accompanying consolidated statements of operations and comprehensive income (loss) for all periods presented and are as follows: Three Month Ended September 30, 2017 October 1, 2016 (in thousands) Net sales $ — $ 87,238 Cost of sales, including production and occupancy (10 ) (59,743 ) Gross margin (10 ) 27,495 Selling, general and administrative expenses (1,566 ) (26,257 ) Gain on Sale of Assets 6,666 — Income from discontinued operations, before income tax provision 5,090 1,238 Tax provision (148 ) (17 ) Income from discontinued operations, net of tax provision $ 4,942 $ 1,221 Assets of discontinued operations held for sale consist of the following, which are stated at the lower of cost or market: Description September 30, 2017 July 1, 2017 (in thousands) Distribution Center $ — $ 15,622 LA Studio 8,613 8,613 Condominiums — 1,561 Total $ 8,613 $ 25,796
Costs associated with exit activities	Costs associated with these exit activities are as follows: Lease Termination Severance Total (in thousands) Balance as of July 1, 2017 $ 2,024 $ 1,772 $ 3,796 Costs incurred in fiscal 2018 — 967 967 Cash payments made (252 ) (377 ) (629 ) Balance as of September 30, 2017 $ 1,772 $ 2,362 $ 4,134

ASSETS OF DISCONTINUED OPERAT19

ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE (Tables)	3 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
Schedule of discontinued operations	The results of the Company's retail operations have been presented as discontinued operations in the accompanying consolidated statements of operations and comprehensive income (loss) for all periods presented and are as follows: Three Month Ended September 30, 2017 October 1, 2016 (in thousands) Net sales $ — $ 87,238 Cost of sales, including production and occupancy (10 ) (59,743 ) Gross margin (10 ) 27,495 Selling, general and administrative expenses (1,566 ) (26,257 ) Gain on Sale of Assets 6,666 — Income from discontinued operations, before income tax provision 5,090 1,238 Tax provision (148 ) (17 ) Income from discontinued operations, net of tax provision $ 4,942 $ 1,221 Assets of discontinued operations held for sale consist of the following, which are stated at the lower of cost or market: Description September 30, 2017 July 1, 2017 (in thousands) Distribution Center $ — $ 15,622 LA Studio 8,613 8,613 Condominiums — 1,561 Total $ 8,613 $ 25,796

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
Summary of Items Measured at Fair Value on a Recurring Basis	The following items are measured at fair value on a recurring basis as of July 1, 2017: Description July 1, Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) Fair value measurements at reporting date (In thousands) Cash equivalents $ 236 $ 236 $ — $ — Total $ 236 $ 236 $ — $ —
Summary of Considerations of At-Risk Assets	The following table presents the Company’s considerations of at-risk assets for the three month period ended October 1, 2016 : Three Months Ended October 1, 2016 (dollar amounts in millions) Number of stores identified as at risk and evaluated for impairment 7 Number of stores identified as at risk, but not impaired (3 ) Number of stores identified as at risk with impairment 4 Total carrying amount of stores identified as at risk prior to any impairment charges taken $ 1.7 Total carrying amount of stores identified as at risk, but not impaired (0.9 ) Total carrying amount of stores identified for impairment 0.8 Impairment charges recorded during the period $ 0.8

INTERIM FINANCIAL STATEMENTS -

INTERIM FINANCIAL STATEMENTS - Narrative (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Jul. 01, 2017
Condensed Balance Sheet Statements, Captions [Line Items]
Liabilities in excess of assets	$ 8,800,000
Bridge loan, net of issue discount	15,601,000		$ 33,158,000
Receivables	8,111,000		$ 5,222,000
Payment made by Joint Venture	1,400,000	$ 600,000
Global Brands Group (GBG)
Condensed Balance Sheet Statements, Captions [Line Items]
Receivables	2,600,000
Notes payable payment | BB Brand Holdings LLC
Condensed Balance Sheet Statements, Captions [Line Items]
Payment made by Joint Venture	$ 228,429

INTERIM FINANCIAL STATEMENTS 22

INTERIM FINANCIAL STATEMENTS - Summarized Income Statement for Joint Venture (Details) - BB Brand Holdings LLC - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Schedule of Equity Method Investments [Line Items]
Revenue	$ 2,894	$ 1,338
Gross Profit	2,894	1,338
Net income from continuing operations	2,051	899
Net Income	$ 2,051	$ 899

DISCONTINUED OPERATIONS - Resul

DISCONTINUED OPERATIONS - Results of Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of assets	$ 6,666	$ 0
Income from discontinued operations, net of tax provision	4,942	1,221
Retail stores closing and license transfer | Discontinued operations, disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	0	87,238
Cost of sales, including production and occupancy	(10)	(59,743)
Gross margin	(10)	27,495
Selling, general and administrative expenses	(1,566)	(26,257)
Gain on sale of assets	6,666	0
Income from discontinued operations, before income tax provision	5,090	1,238
Tax provision	(148)	(17)
Income from discontinued operations, net of tax provision	$ 4,942	$ 1,221

DISCONTINUED OPERATIONS - Costs

DISCONTINUED OPERATIONS - Costs Associated with Exit Activities (Details) - Discontinued operations $ in Thousands	3 Months Ended
	Sep. 30, 2017USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Balance as of July 1, 2017	$ 3,796
Costs incurred in fiscal 2018	967
Cash payments made	(629)
Balance as of September 30, 2017	4,134
Lease Termination
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Balance as of July 1, 2017	2,024
Costs incurred in fiscal 2018	0
Cash payments made	(252)
Balance as of September 30, 2017	1,772
Severance
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Balance as of July 1, 2017	1,772
Costs incurred in fiscal 2018	967
Cash payments made	(377)
Balance as of September 30, 2017	$ 2,362

ASSETS OF DISCONTINUED OPERAT25

ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE - Assets Held-for-sale (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016	Jul. 01, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from the sale of assets of discontinued operations held for sale	$ 23,687	$ 0
Gain on sale of assets held-for-sale	6,666	$ 0
Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets for discontinued operations	8,613		$ 25,796
Distribution center and condominium
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from the sale of assets of discontinued operations held for sale	23,700
Gain on sale of assets held-for-sale	6,700
Distribution center | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets for discontinued operations	0		15,622
Condominium | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets for discontinued operations	0		1,561
Studio | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets for discontinued operations	$ 8,613		$ 8,613

FAIR VALUE MEASUREMENTS - Narra

FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-cash charge for asset impairment	$ 0	$ 764
Weighted average cost of capital		11.00%
Percentage of undiscounted cash flows exceeded net carrying value		126.00%
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Annual revenue growth rates		0.00%
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Annual revenue growth rates		5.00%
Retail site
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-cash charge for asset impairment	$ 0	$ 800

FAIR VALUE MEASUREMENTS - Summa

FAIR VALUE MEASUREMENTS - Summary of Items Measured at Fair Value on a Recurring Basis (Details) - Fair value, measurements, recurring $ in Thousands	Jul. 01, 2017USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 236
Total	236
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	236
Total	236
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Total	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Total	$ 0

FAIR VALUE MEASUREMENTS - Sum28

FAIR VALUE MEASUREMENTS - Summary of Considerations of At-Risk Assets (Details) $ in Millions	3 Months Ended
	Oct. 01, 2016USD ($)store
Fair Value Disclosures [Abstract]
Number of stores identified as at risk and evaluated for impairment | store	7
Number of stores identified as at risk, but not impaired | store	(3)
Number of stores identified as at risk with impairment | store	4
Total carrying amount of stores identified as at risk prior to any impairment charges taken	$ 1.7
Total carrying amount of stores identified as at risk, but not impaired	(0.9)
Total carrying amount of stores identified for impairment	0.8
Impairment charges recorded during the period	$ 0.8

BRIDGE LOAN - Narrative (Detail

BRIDGE LOAN - Narrative (Details) $ in Millions	Nov. 13, 2017USD ($)
Subsequent Event | Bridge Loan
Short-term Debt [Line Items]
Debt covenant, minimum required cash balance	$ 10

EARNINGS (LOSS) PER SHARE - Nar

EARNINGS (LOSS) PER SHARE - Narrative (Details) - shares	3 Months Ended
	Sep. 30, 2017	Oct. 01, 2016
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Diluted weighted average shares outstanding (in shares)	8,101,000	8,007,000
Common stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Diluted weighted average shares outstanding (in shares)	80,003	236,887