Cover Page
Cover Page - shares | 6 Months Ended | |
Dec. 31, 2019 | Jan. 29, 2020 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2019 | |
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 | 7201 Metro Boulevard | |
Entity Address, City or Town | Edina | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55439 | |
City Area Code | 952 | |
Local Phone Number | 947-7777 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, $.05 par value | |
Entity Common Stock, Shares Outstanding | 35,566,201 | |
Entity Central Index Key | 0000716643 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 49,783 | $ 70,141 |
Receivables, net | 27,756 | 30,143 |
Inventories | 68,413 | 77,322 |
Other current assets | 32,458 | 33,216 |
Total current assets | 178,410 | 210,822 |
Property and equipment, net | 68,917 | 78,090 |
Goodwill (Note 9) | 293,019 | 345,718 |
Other intangibles, net (Note 9) | 8,159 | 8,761 |
Right of use asset (Note 10) | 911,948 | |
Other assets | 38,144 | 34,170 |
Non-current assets held for sale (Note 1) | 0 | 5,276 |
Total assets | 1,498,597 | 682,837 |
Current liabilities: | ||
Accounts payable | 55,587 | 47,532 |
Accrued expenses | 59,707 | 80,751 |
Short-term lease liability (Note 10) | 156,154 | |
Total current liabilities | 271,448 | 128,283 |
Long-term debt, net | 60,000 | 90,000 |
Long-term lease liability (Note 10) | 767,624 | 0 |
Long-term financing liabilities | 28,485 | 28,910 |
Other noncurrent liabilities | 95,979 | 111,399 |
Total liabilities | 1,223,536 | 358,592 |
Commitments and contingencies (Note 7) | ||
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 35,563,611 and 36,869,249 common shares at December 31, 2019 and June 30, 2019 respectively | 1,778 | 1,843 |
Additional paid-in capital | 21,230 | 47,152 |
Accumulated other comprehensive income | 9,480 | 9,342 |
Retained earnings | 242,573 | 265,908 |
Total shareholders’ equity | 275,061 | 324,245 |
Total liabilities and shareholders’ equity | $ 1,498,597 | $ 682,837 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2019 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock issued (in shares) | 35,563,611 | 36,869,249 |
Common stock outstanding (in shares) | 35,563,611 | 36,869,249 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Revenues: | |||||
Franchise rental income | $ 33,630 | $ 65,054 | |||
Total revenues | 208,765 | $ 274,671 | 455,803 | $ 562,506 | |
Operating expenses: | |||||
Cost of service | 67,358 | 114,931 | 157,840 | 236,428 | |
Cost of product | 27,258 | 36,350 | 53,585 | 68,531 | |
Site operating expenses | 26,330 | 35,563 | 59,272 | 72,384 | |
General and administrative | 32,691 | 45,836 | 73,316 | 93,563 | |
Rent | 33,600 | 65,100 | |||
Depreciation and amortization | 7,747 | 8,900 | 17,127 | 19,102 | |
TBG mall location restructuring (Note 3) | 722 | 0 | 2,222 | 0 | |
Total operating expenses | 216,231 | 276,222 | 473,175 | 560,628 | |
Operating (loss) income | (7,466) | (1,551) | (17,372) | 1,878 | |
Other (expense) income: | |||||
Interest expense | (1,464) | (1,072) | (2,903) | (2,078) | |
(Loss) gain from sale of salon assets to franchisees, net | (5,692) | 2,865 | (11,552) | (1,095) | |
Interest income and other, net | 4,346 | 629 | 4,517 | 989 | |
(Loss) income from continuing operations before income taxes | (10,276) | 871 | (27,310) | (306) | |
Income tax benefit (expense) | 795 | (454) | 3,651 | 260 | |
(Loss) income from continuing operations | (9,481) | 417 | (23,659) | (46) | |
Income from discontinued operations, net of taxes (Note 3) | 79 | 6,113 | 452 | 5,849 | |
Net (loss) income | $ (9,402) | $ 6,530 | $ (23,207) | $ 5,803 | |
Basic: | |||||
(Loss) income from continuing operations (in dollars per shares) | $ (0.26) | $ 0.01 | $ (0.66) | $ 0 | |
Income from discontinued operations (in dollars per share) | 0 | 0.14 | 0.01 | 0.13 | |
Net (loss) income per share, basic (in dollars per share) | [1] | (0.26) | 0.15 | (0.64) | 0.13 |
Diluted: | |||||
(Loss) income from continuing operations (in dollars per share) | (0.26) | 0.01 | (0.66) | 0 | |
Income from discontinued operations (in dollars per share) | 0 | 0.14 | 0.01 | 0.13 | |
Net (loss) income per share, diluted (in dollars per share) | [1] | $ (0.26) | $ 0.15 | $ (0.64) | $ 0.13 |
Weighted average common and common equivalent shares outstanding: | |||||
Basic (in shares) | 35,798 | 43,619 | 36,028 | 44,175 | |
Diluted (in shares) | 35,798 | 44,479 | 36,028 | 44,175 | |
Non-Franchise Lease | |||||
Operating expenses: | |||||
Rent | $ 20,495 | $ 34,642 | $ 44,759 | $ 70,620 | |
Franchisor | |||||
Operating expenses: | |||||
Rent | 33,630 | 65,054 | |||
Service | |||||
Revenues: | |||||
Revenues | 101,805 | 190,419 | 243,746 | 398,267 | |
Product | |||||
Revenues: | |||||
Revenues | 43,983 | 61,649 | 89,639 | 119,240 | |
Royalties and fees | |||||
Revenues: | |||||
Revenues | $ 29,347 | $ 22,603 | $ 57,364 | $ 44,999 | |
[1] | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (9,402) | $ 6,530 | $ (23,207) | $ 5,803 |
Foreign currency translation adjustments | 541 | (2,592) | 138 | (1,511) |
Comprehensive (loss) income | $ (8,861) | $ 3,938 | $ (23,069) | $ 4,292 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings |
Balance (in shares) at Jun. 30, 2018 | 45,258,571 | ||||
Balance at Jun. 30, 2018 | $ 486,438 | $ 2,263 | $ 194,436 | $ 9,656 | $ 280,083 |
Net (loss) income | 5,803 | ||||
Foreign currency translation | (1,511) | (1,511) | |||
Stock repurchase program (in shares) | (3,973,093) | ||||
Stock repurchase program | (68,331) | $ (199) | (68,132) | ||
Exercise of SARs (in shares) | 8,332 | ||||
Exercise of SARs | (105) | (105) | |||
Stock-based compensation | 4,552 | 4,552 | |||
Net restricted stock activity (in shares) | 178,658 | ||||
Net restricted stock activity | (1,777) | $ 10 | (1,787) | ||
Minority interest | (59) | (59) | |||
Balance (in shares) at Dec. 31, 2018 | 41,472,468 | ||||
Balance at Dec. 31, 2018 | 425,010 | $ 2,074 | 128,964 | 8,145 | 285,827 |
Balance (in shares) at Sep. 30, 2018 | 44,328,127 | ||||
Balance at Sep. 30, 2018 | 468,357 | $ 2,217 | 175,983 | 10,737 | 279,420 |
Net (loss) income | 6,530 | 6,530 | |||
Foreign currency translation | (2,592) | (2,592) | |||
Stock repurchase program (in shares) | (2,879,414) | ||||
Stock repurchase program | (48,993) | $ (144) | (48,849) | ||
Exercise of SARs (in shares) | 4,531 | ||||
Exercise of SARs | (63) | (63) | |||
Stock-based compensation | 2,219 | 2,219 | |||
Net restricted stock activity (in shares) | 19,224 | ||||
Net restricted stock activity | (325) | $ 1 | (326) | ||
Minority interest | (123) | (123) | |||
Balance (in shares) at Dec. 31, 2018 | 41,472,468 | ||||
Balance at Dec. 31, 2018 | $ 425,010 | $ 2,074 | 128,964 | 8,145 | 285,827 |
Balance (in shares) at Jun. 30, 2019 | 36,869,249 | 36,869,249 | |||
Balance at Jun. 30, 2019 | $ 324,245 | $ 1,843 | 47,152 | 9,342 | 265,908 |
Net (loss) income | (23,207) | ||||
Foreign currency translation | $ 138 | 138 | |||
Stock repurchase program (in shares) | (1,500,000) | (1,504,000) | |||
Stock repurchase program | $ (26,356) | $ (75) | (26,281) | ||
Exercise of SARs (in shares) | 1,776 | ||||
Exercise of SARs | 28 | 28 | |||
Stock-based compensation | 2,139 | 2,139 | |||
Net restricted stock activity (in shares) | 196,586 | ||||
Net restricted stock activity | (1,798) | $ 10 | (1,808) | ||
Minority interest | $ (128) | (128) | |||
Balance (in shares) at Dec. 31, 2019 | 35,563,611 | 35,563,611 | |||
Balance at Dec. 31, 2019 | $ 275,061 | $ 1,778 | 21,230 | 9,480 | 242,573 |
Balance (in shares) at Sep. 30, 2019 | 35,548,036 | ||||
Balance at Sep. 30, 2019 | 283,739 | $ 1,777 | 20,880 | 8,939 | 252,143 |
Net (loss) income | (9,402) | (9,402) | |||
Foreign currency translation | 541 | 541 | |||
Exercise of SARs (in shares) | 1,500 | ||||
Exercise of SARs | 28 | 28 | |||
Stock-based compensation | 332 | 332 | |||
Net restricted stock activity (in shares) | 14,075 | ||||
Net restricted stock activity | (9) | $ 1 | (10) | ||
Minority interest | $ (168) | (168) | |||
Balance (in shares) at Dec. 31, 2019 | 35,563,611 | 35,563,611 | |||
Balance at Dec. 31, 2019 | $ 275,061 | $ 1,778 | $ 21,230 | $ 9,480 | $ 242,573 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Cash flows from operating activities: | |||
Net (loss) income | $ (23,207) | $ 5,803 | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||
Non-cash adjustments related to discontinued operations | (586) | 176 | |
Depreciation and amortization | 14,484 | 16,799 | |
Deferred income taxes | (5,227) | (7,915) | |
Gain from sale of company headquarters, net | (3,990) | 0 | |
Loss from sale of salon assets to franchisees, net | 11,552 | 1,095 | |
Salon asset impairments | 2,643 | 2,303 | |
Stock-based compensation | 2,139 | 4,552 | |
Amortization of debt discount and financing costs | 138 | 138 | |
Other non-cash items affecting earnings | (243) | (352) | |
Changes in operating assets and liabilities, excluding the effects of asset sales (1) | [1] | (17,032) | (33,223) |
Net cash used in operating activities | (19,329) | (10,624) | |
Cash flows from investing activities: | |||
Capital expenditures | (17,576) | (16,804) | |
Proceeds from sale of assets to franchisees | 69,414 | 24,050 | |
Costs associated with sale of salon assets to franchisees | (1,550) | 0 | |
Proceeds from company-owned life insurance policies | 0 | 24,617 | |
Proceeds from sale of company headquarters | 8,996 | 0 | |
Net cash provided by investing activities | 59,284 | 31,863 | |
Cash flows from financing activities: | |||
Repayment of long-term debt | (30,000) | 0 | |
Repurchase of common stock | (28,246) | (65,136) | |
Taxes paid for shares withheld | (1,809) | (2,305) | |
Net proceeds from sale and leaseback transaction | 18,068 | ||
Sale and leaseback payments | (480) | ||
Net cash used in financing activities | (60,535) | (49,373) | |
Effect of exchange rate changes on cash and cash equivalents | 122 | (174) | |
Decrease in cash, cash equivalents, and restricted cash | (20,458) | (28,308) | |
Cash, cash equivalents and restricted cash: | |||
Beginning of period | 71,921 | ||
End of period | $ 71,921 | $ 120,466 | |
[1] | Changes in operating assets and liabilities exclude assets and liabilities sold. |
BASIS OF PRESENTATION OF UNAUDI
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the "Company") as of December 31, 2019 and for the three and six months ended December 31, 2019 and 2018 , reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of December 31, 2019 and its consolidated results of operations, comprehensive (loss) income, changes in equity and cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year. The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2019 and other documents filed or furnished with the SEC during the current fiscal year. Goodwill: As of December 31, 2019 and June 30, 2019 , the Franchise reporting unit had $228.1 and $227.9 million of goodwill and the Company-owned reporting unit had $65.0 and $117.8 million of goodwill, respectively. See Note 9 to the unaudited interim Condensed Consolidated Financial Statements. The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, 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. An interim impairment analysis was not required in the six months ended December 31, 2019 . The Company performs its annual impairment assessment as of April 30. For the fiscal year 2019 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Franchise and Company-owned reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of the Company's reporting units exceeded their carrying value. The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 20% . The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis. The key assumptions used in determining fair value were the number and pace of salons sold to franchisees and proceeds from salon sales. Assumptions were based on historical financial performance and trends, historical salon sale proceeds and estimated future salon sale activities. The preparation of the fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. There are a number of uncertain factors or events that exist which may result in a future triggering event and require an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to the annual assessment. These internal and external factors include but are not limited to the following: • Changes in the company-owned salon strategy, • Salon closures or other restructuring, • Franchise expansion and sales opportunities, • Future market earnings multiples deterioration, • Financial performance falls short of projections due to internal operating factors, • Economic recession, • Reduced salon traffic, • Deterioration of industry trends, • Increased competition, • Inability to reduce general and administrative expenses as company-owned salon count potentially decreases, and • Other factors causing cash flow to deteriorate. If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 20% headroom, the Company may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill. Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, 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 of goodwill. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material. Non-Current Assets Held for Sale: In March 2019, the Company announced that it had entered into a ten-year lease for a new corporate headquarters and would be selling the land and buildings currently used for its headquarters. The non-current assets held for sale represent the net book value of the land of $1.7 million and buildings of $3.6 million , as of June 30, 2019 . The sale was completed in December 2019 for proceeds of $9.0 million , resulting in a net gain on sale of $4.0 million , which was recorded in Interest income and other, net on the Condensed Consolidated Statement of Operations. Accounting Standards Recently Adopted by the Company: Leases The Company adopted ASU 2016-02, "Leases (Topic 842)” and all subsequent ASUs that modified Topic 842 as of July 1, 2019 using the modified retrospective method and elected the option to not restate comparative periods in the year of adoption. The Company also elected the package of practical expedients that do not require reassessment of whether existing contracts are or contain leases, lease classifications or initial direct costs. The Company has also made an accounting policy election to keep leases with an initial term of 12 months or less off the Balance Sheet. Under adoption of Topic 842, the Company recorded a Right of Use Asset and Lease Liability of $980.8 and $993.7 million , respectively. The difference between the assets and liabilities are attributable to the reclassification of certain existing lease-related assets and liabilities as an adjustment to the right of use assets. The Lease Liability reflects the present value of the Company's estimated future minimum lease payments over the lease term, which includes one option period, as options are reasonably assured of being exercised, are discounted using a collateralized incremental borrowing rate. The decrease in the Right of Use Asset and Lease Liability from July 1, 2019 to December 31, 2019 was due to lease modifications and salon closures. The accounting guidance for lessors remained largely unchanged from previous guidance, with the exception of the presentation of rent payments that the Company passes through to franchisees (lessees). Historically, these costs have been recorded on a net basis in the unaudited Condensed Consolidated Statements of Operations, but are now presented on a gross basis upon adoption of the new guidance. The adoption of the new guidance resulted in the recognition of franchise rental income and rent expense of $33.6 and $65.1 million during the three and six months ended December 31, 2019 , respectively. See Note 10 for further information about our transition to Topic 842 and the newly required disclosures. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
REVENUE RECOGNITION_
REVENUE RECOGNITION: | 6 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION: | REVENUE RECOGNITION: Revenue Recognition and Deferred Revenue: Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided. Product revenues for company-owned salons are recognized when 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 customer. 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 by the Company to franchisees are included within product revenues in the unaudited Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 to 90 days of delivery. Revenue recognized over time Franchise revenues primarily include royalties, advertising fund cooperatives fees, franchise fees and other fees. 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 revenue is 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 unaudited Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating 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 opening and is then recognized over the term of the franchise agreement, typically ten years . Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into a sublease arrangement with the franchisee. The Company recognizes franchise rental income and expense when it is due to the landlord. The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows: Three Months Ended December 31, 2019 Three Months Ended December 31, 2018 Franchise Company-owned Franchise Company-owned (Dollars in thousands) Revenue recognized at a point in time: Service $ — $ 101,805 $ — $ 190,419 Product 16,864 27,119 17,818 43,831 Total revenue recognized at a point in time $ 16,864 $ 128,924 $ 17,818 $ 234,250 Revenue recognized over time: Royalty and other franchise fees $ 18,644 $ — $ 14,736 $ — Advertising fund fees 10,703 — 7,867 — Franchise rental income 33,630 — — — Total revenue recognized over time 62,977 — 22,603 — Total revenue $ 79,841 $ 128,924 $ 40,421 $ 234,250 Six Months Ended December 31, 2019 Six Months Ended December 31, 2018 Franchise Company-owned Franchise Company-owned (Dollars in thousands) Revenue recognized at a point in time: Service $ — $ 243,746 $ — $ 398,267 Product 29,969 59,670 33,447 85,793 Total revenue recognized at a point in time $ 29,969 $ 303,416 $ 33,447 $ 484,060 Revenue recognized over time: Royalty and other franchise fees $ 36,235 $ — $ 29,156 $ — Advertising fund fees 21,129 — 15,843 — Franchise rental income 65,054 — — — Total revenue recognized over time 122,418 — 44,999 — Total revenue $ 152,387 $ 303,416 $ 78,446 $ 484,060 Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows: December 31, June 30, Balance Sheet Classification (Dollars in thousands) Receivables from contracts with customers, net $ 22,512 $ 23,210 Accounts receivable, net Broker fees $ 20,384 $ 17,819 Other assets Deferred revenue: Current Gift card liability $ 3,461 $ 3,050 Accrued expenses Deferred franchise fees unopened salons 217 193 Accrued expenses Deferred franchise fees open salons 5,042 4,164 Accrued expenses Total current deferred revenue $ 8,720 $ 7,407 Non-current Deferred franchise fees unopened salons $ 12,860 $ 15,173 Other non-current liabilities Deferred franchise fees open salons 31,555 24,194 Other non-current liabilities Total non-current deferred revenue $ 44,415 $ 39,367 Receivables relate primarily to payments due for royalties, franchise fees, advertising fees, 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), primarily related to receivables from franchisees. As of December 31, 2019 and June 30, 2019 , the balance in the allowance for doubtful accounts was $1.9 and $2.0 million , respectively. 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 agreement. The following table is a rollforward of the broker fee balance for the periods indicated (in thousands): Balance as of June, 30, 2019 $ 17,819 Additions 3,938 Amortization (1,341 ) Write-offs (32 ) Balance as of December, 31, 2019 $ 20,384 Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons. Gift card revenue for the three months ended December 31, 2019 and 2018 was $0.7 and $1.1 million , respectively, and for the six months ended December 31, 2019 and 2018 was $1.5 and $2.2 million , respectively. 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 the three months ended December 31, 2019 and 2018 was $1.3 and $0.8 million , respectively, and for the six months ended December 31, 2019 and 2018 was $2.4 and $1.7 million , respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of December 31, 2019 is as follows (in thousands): Remainder of 2020 $ 2,364 2021 4,930 2022 4,810 2023 4,633 2024 4,398 Thereafter 15,462 Total $ 36,597 |
TBG RESTRUCTURING AND DISCONTIN
TBG RESTRUCTURING AND DISCONTINUED OPERATIONS: | 6 Months Ended |
Dec. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
TBG RESTRUCTURING AND DISCONTINUED OPERATIONS | TBG RESTRUCTURING AND DISCONTINUED OPERATIONS: In October 2017, the Company sold substantially all of its mall-based salon business in North America, representing 858 salons, to The Beautiful Group (TBG), who operated these locations as franchise locations until June 2019. In June 2019, the Company entered into a settlement agreement with TBG regarding the North America salons, which, among other things, substituted the master franchise agreement for a license agreement. The Company classified the results of its mall-based business as discontinued operations in the Condensed Consolidated Statement of Operations. Included in discontinued operations in the fiscal years presented are adjustments to actuarial assumptions related to the discontinued operations and income tax benefits associated with the wind-down and transfer of legal entities in fiscal year 2019. Other than the items presented in the Consolidated Statement of Cash Flows, there were no other significant non-cash operating activities or non-cash investing activities related to discontinued operations for the six months ended December 31, 2019 and 2018 . In the second quarter of fiscal year 2020, TBG transferred 207 of its North American mall-based salons to the Company. The 207 North American mall-based salons transferred were the salons that the Company was the guarantor of the lease obligation. The transfer of the 207 mall-based salons occurred on December 31, 2019 so the operational results of these mall-based salons are not included on the Condensed Consolidated Statement of Operations. Also, the assets acquired and liabilities assumed were not material to the Condensed Consolidated Balance Sheet. Professional fees and other restructuring related charges of $0.7 and $2.2 million in the three and six months ended December 31, 2019 , respectively,were recorded in the TBG restructuring line on the Condensed Consolidated Statement of Operations. As of December 31, 2019 , prior to any mitigation efforts which may be available, the Company remains liable for up to approximately $30.0 million related to its mall-based salon lease commitments, an $11 million reduction from June 30, 2019. |
EARNINGS PER SHARE_
EARNINGS PER SHARE: | 6 Months Ended |
Dec. 31, 2019 | |
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 restricted stock awards (RSAs), restricted stock units (RSUs) and stock-settled performance units (PSUs). The Company’s diluted earnings per share is calculated as net loss 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. For the three and six months ended December 31, 2019 , there were 1,322,308 and 1,338,634 , respectively, and for the six months ended December 31, 2018 there were 903,107 common stock equivalents of dilutive common stock excluded in the diluted earnings per share calculations due to the net loss from continuing operations. For the three months ended December 31, 2018 , there were 859,598 common stock equivalents of dilutive common stock included in the diluted earnings per share calculations due to the net income from continuing operations. The computation of weighted average shares outstanding, assuming dilution, excluded 66,151 and 734,526 of stock-based awards during the three months ended December 31, 2019 and 2018 , respectively, and 77,514 and 520,348 of stock-based awards during the six months ended December 31, 2019 and 2018 |
SHAREHOLDERS' EQUITY_
SHAREHOLDERS' EQUITY: | 6 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY: Stock-Based Employee Compensation: During the three and six months ended December 31, 2019 , the Company granted various equity awards including restricted stock units (RSUs) and performance-based restricted stock units (PSUs). A summary of equity awards granted is as follows: For the Three Months Ended December 31, 2019 For the Six Months Ended December 31, 2019 Restricted stock units 7,564 193,640 Performance-based restricted stock units 22,694 73,712 The RSUs granted to employees during the three and six months ended December 31, 2019 vest in equal amounts over a three -year period subsequent to the grant date, cliff vest after a three -year period or cliff vest after a five -year period subsequent to the grant date. The PSUs granted to employees have a three -year performance period ending June 30, 2022 linked to the Company's stock price reaching a specified volume weighted average closing price for a 50 day period that ends on June 30, 2022. The PSUs granted have a maximum vesting percentage of 200% based on the level of performance achieved for the respective award. Total compensation cost for stock-based payment arrangements totaling $0.3 and $2.2 million for the three months ended December 31, 2019 and 2018 , respectively, and $2.1 and $4.6 million for the six months ended December 31, 2019 and 2018 , respectively, was recorded within general and administrative expense on the Condensed Consolidated Statement of Operations. Share Repurchases: During the six months ended December 31, 2019 , the Company repurchased 1.5 million shares for $26.4 million under a previously approved stock repurchase program. At December 31, 2019 , $54.6 million remains outstanding under the approved stock repurchase program. |
INCOME TAXES_
INCOME TAXES: | 6 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: A summary of income tax benefit (expense) and corresponding effective tax rates is as follows: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Income tax benefit (expense) $ 795 $ (454 ) $ 3,651 $ 260 Effective tax rate 7.7 % 52.1 % 13.4 % 85.0 % The recorded tax provisions and effective tax rates for the three and six months ended December 31, 2019 were different than normally expected primarily due to the impact of the deferred tax valuation allowance and global intangible low-taxed income ("GILTI"). The recorded tax provision and effective tax rate for the three and six months ended December 31, 2018 were different than normally expected primarily due to the impact of the deferred tax valuation allowance. The Company is no longer subject to IRS examinations for years before 2013. Furthermore, with limited exceptions, the Company is no longer subject to state and international income tax examinations by tax authorities for years before 2012. |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: | 6 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future, incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period. |
CASH, CASH EQUIVALETS AND RESTR
CASH, CASH EQUIVALETS AND RESTRICTED CASH: | 6 Months Ended |
Dec. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | CASH, CASH EQUIVALENTS AND RESTRICTED CASH: The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows: December 31, June 30, (Dollars in thousands) Cash and cash equivalents $ 49,783 $ 70,141 Restricted cash, included in Other current assets (1) 22,138 22,238 Total cash, cash equivalents and restricted cash $ 71,921 $ 92,379 _______________________________________________________________________________ (1) 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. |
GOODWILL AND OTHER INTANGIBLES_
GOODWILL AND OTHER INTANGIBLES: | 6 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES: The table below contains details related to the Company's goodwill: Franchise Company-owned Consolidated (Dollars in thousands) Goodwill, net at June 30, 2019 $ 227,928 $ 117,790 $ 345,718 Translation rate adjustments 139 (73 ) 66 Derecognition related to sale of salon assets to franchisees (1) — (52,765 ) (52,765 ) Goodwill, net at December 31, 2019 $ 228,067 $ 64,952 $ 293,019 _______________________________________________________________________________ (1) Goodwill is derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized is determined by a fraction (the numerator of which is the trailing-twelve months EBITDA of the salon being sold and the denominator of which is the estimated annualized EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit. The table below presents other intangible assets: December 31, 2019 June 30, 2019 Cost (1) Accumulated Net Cost (1) Accumulated Net (Dollars in thousands) Amortized intangible assets: Brand assets and trade names $ 6,938 $ (3,786 ) $ 3,152 $ 6,909 $ (3,659 ) $ 3,250 Franchise agreements 9,817 (8,250 ) 1,567 9,783 (8,057 ) 1,726 Lease intangibles 13,495 (10,406 ) 3,089 13,490 (10,065 ) 3,425 Other 884 (533 ) 351 883 (523 ) 360 $ 31,134 $ (22,975 ) $ 8,159 $ 31,065 $ (22,304 ) $ 8,761 _______________________________________________________________________________ (1) The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency. |
RIGHT OF USE ASSET AND LEASE LI
RIGHT OF USE ASSET AND LEASE LIABILITIES | 6 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
RIGHT OF USE ASSET AND LEASE LIABILITIES | RIGHT OF USE ASSET AND LEASE LIABILITIES 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 1 to 20 years with many leases renewable for additional 5 to 10 year terms at the option of the Company. The Company also has variable lease payments that are based on sales levels. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent expense includes the following: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Minimum rent $ 16,937 $ 28,859 $ 36,498 58,774 Percentage rent based on sales 550 1,052 1,847 2,103 Real estate taxes and other expenses 3,008 4,731 6,414 9,743 $ 20,495 $ 34,642 $ 44,759 $ 70,620 The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. These leases, generally with terms of approximately 5 years , are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees. Upon adopting Topic 842, the Company now records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Condensed Consolidated Statement of Operations. For the three and six months ended December 31, 2019 , franchise rental income was $33.6 and $65.1 million , respectively, and franchise rent expense was $33.6 and $65.1 million , respectively. For company-owned and franchise salon operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. 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. Lease expense for lease payments is recognized on a straight-line basis over the lease term. 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 allocated to the lease liability. 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 original lease term. The weighted average remaining lease term was 6.82 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of December 31, 2019 . As of December 31, 2019 , future operating lease commitments to be paid and received by the Company were as follows: Fiscal Year Leases for Franchise Salons Leases for Company-owned Salons Corporate Leases Total Operating Lease Payments Sublease Income To Be Received From Franchisees Net Rent Commitments Remainder of 2020 $ 59,771 $ 36,809 $ 335 $ 96,915 $ (59,771 ) $ 37,144 2021 113,224 64,907 1,781 179,912 (113,224 ) 66,688 2022 103,599 55,214 1,410 160,223 (103,599 ) 56,624 2023 93,725 48,589 1,447 143,761 (93,725 ) 50,036 2024 84,384 43,417 1,484 129,285 (84,384 ) 44,901 Thereafter 224,482 111,327 9,339 345,148 (224,482 ) 120,666 Total future obligations $ 679,185 $ 360,263 $ 15,796 $ 1,055,244 $ (679,185 ) $ 376,059 Less amounts representing interest 84,680 43,723 3,063 131,466 Present value of lease liabilities $ 594,505 316,540 12,733 923,778 Less current lease liabilities 96,249 59,218 687 156,154 Long-term lease liabilities $ 498,256 $ 257,322 $ 12,046 $ 767,624 |
RIGHT OF USE ASSET AND LEASE LIABILITIES | RIGHT OF USE ASSET AND LEASE LIABILITIES 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 1 to 20 years with many leases renewable for additional 5 to 10 year terms at the option of the Company. The Company also has variable lease payments that are based on sales levels. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent expense includes the following: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Minimum rent $ 16,937 $ 28,859 $ 36,498 58,774 Percentage rent based on sales 550 1,052 1,847 2,103 Real estate taxes and other expenses 3,008 4,731 6,414 9,743 $ 20,495 $ 34,642 $ 44,759 $ 70,620 The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. These leases, generally with terms of approximately 5 years , are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees. Upon adopting Topic 842, the Company now records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Condensed Consolidated Statement of Operations. For the three and six months ended December 31, 2019 , franchise rental income was $33.6 and $65.1 million , respectively, and franchise rent expense was $33.6 and $65.1 million , respectively. For company-owned and franchise salon operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. 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. Lease expense for lease payments is recognized on a straight-line basis over the lease term. 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 allocated to the lease liability. 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 original lease term. The weighted average remaining lease term was 6.82 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of December 31, 2019 . As of December 31, 2019 , future operating lease commitments to be paid and received by the Company were as follows: Fiscal Year Leases for Franchise Salons Leases for Company-owned Salons Corporate Leases Total Operating Lease Payments Sublease Income To Be Received From Franchisees Net Rent Commitments Remainder of 2020 $ 59,771 $ 36,809 $ 335 $ 96,915 $ (59,771 ) $ 37,144 2021 113,224 64,907 1,781 179,912 (113,224 ) 66,688 2022 103,599 55,214 1,410 160,223 (103,599 ) 56,624 2023 93,725 48,589 1,447 143,761 (93,725 ) 50,036 2024 84,384 43,417 1,484 129,285 (84,384 ) 44,901 Thereafter 224,482 111,327 9,339 345,148 (224,482 ) 120,666 Total future obligations $ 679,185 $ 360,263 $ 15,796 $ 1,055,244 $ (679,185 ) $ 376,059 Less amounts representing interest 84,680 43,723 3,063 131,466 Present value of lease liabilities $ 594,505 316,540 12,733 923,778 Less current lease liabilities 96,249 59,218 687 156,154 Long-term lease liabilities $ 498,256 $ 257,322 $ 12,046 $ 767,624 |
FINANCING ARRANGEMENTS_
FINANCING ARRANGEMENTS: | 6 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS: The Company’s long-term debt consists of the following: Revolving Credit Facility Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Revolving credit facility 2023 3.65% $ 60,000 $ 90,000 As of December 31, 2019 and June 30, 2019 , the Company has $60.0 and $90.0 million , respectively, of outstanding borrowings under a $295.0 million revolving credit facility. At December 31, 2019 and June 30, 2019 , the Company has outstanding standby letters of credit under the revolving credit facility of $21.5 million , primarily related to the Company's self-insurance program. The unused available credit under the facility was $213.5 and $183.5 million , as of December 31, 2019 and June 30, 2019 , respectively. Amounts outstanding under the revolving credit facility are due at maturity in March 2023. Sale and Leaseback Transaction The Company’s long-term financing liabilities consists of the following: Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Financial liability - Salt Lake City Distribution Center 2034 3.30% $ 17,055 $ 17,354 Financial liability - Chattanooga Distribution Center 2034 3.70% 11,430 11,556 Long- term financing liability $ 28,485 $ 28,910 In fiscal year 2019, the Company sold its Salt Lake City and Chattanooga Distribution Centers to an unrelated party. The Company is leasing the properties back for 15 years with the option to renew. As the Company plans to lease the property for more than 75% of its economic life, the sales proceeds received from the buyer-lessor are recognized as a financial liability. This financial liability is reduced based on the rental payments made under the lease that are allocated between principal and interest. As of December 31, 2019 , the current portion of the Company’s lease liability was $0.9 million which was recorded in accrued expenses on the unaudited Condensed Consolidated Balance Sheet. The weighted average remaining lease term was 14.1 years and the weighted-average discount rate was 3.46% for financing leases as of December 31, 2019 . As of December 31, 2019 , future lease payments due are as follows: Fiscal year Salt Lake City Distribution Center Chattanooga Distribution Center (Dollars in thousands) Remainder of 2020 $ 574 $ 403 2021 1,157 817 2022 1,171 829 2023 1,186 842 2024 1,200 854 Thereafter 11,899 9,282 Total $ 17,187 $ 13,027 The financing liability does not include interest. Future lease payments above are due per the lease agreement and include embedded interest. Therefore, the total payments do not equal the financing liability. Total interest expense for the financing lease was $ 0.3 and $ 0.5 million for the three and six months ended December 31, 2019. The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three and six months ended December 31, 2019 . |
FAIR VALUE MEASUREMENTS_
FAIR VALUE MEASUREMENTS: | 6 Months Ended |
Dec. 31, 2019 | |
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 December 31, 2019 and June 30, 2019 , the estimated fair value of the Company’s cash, cash equivalents, restricted cash, receivables, accounts payable, debt and long-term financial liabilities approximated their carrying values. The estimated fair values of the Company's debt and long-term financial liability are based on Level 2 inputs. 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 impairments were based on fair values using Level 3 inputs: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Long-lived assets $ 1,126 $ 472 $ 2,643 $ 2,303 |
SEGMENT INFORMATION_
SEGMENT INFORMATION: | 6 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION: Segment information is prepared on the same basis that the chief operating decision maker reviews financial information for operational decision-making purposes. The Company’s reportable operating segments consisted of the following salons: December 31, June 30, FRANCHISE SALONS: SmartStyle/Cost Cutters in Walmart Stores 969 615 Supercuts 2,493 2,340 Signature Style 1,156 766 Total North American salons 4,618 3,721 Total International salons (1) 172 230 Total Franchise salons 4,790 3,951 as a percent of total Company-owned and Franchise salons 67.8 % 56.0 % COMPANY-OWNED SALONS: SmartStyle/Cost Cutters in Walmart Stores 1,159 1,550 Supercuts 262 403 Signature Style 649 1,155 Mall-based (2) 207 — Total Company-owned salons 2,277 3,108 as a percent of total Company-owned and Franchise salons 32.2 % 44.0 % OWNERSHIP INTEREST LOCATIONS: Equity ownership interest locations 85 86 Grand Total, System-wide 7,152 7,145 ____________________________________ (1) Canadian and Puerto Rican salons are included in the North American salon totals. (2) The mall-based salons were acquired from TBG on December 31, 2019 resulting in no impact to the Statement of Operations for the three and six months ended December 31, 2019. As of December 31, 2019 , the Company-owned operating segment is comprised primarily of SmartStyle ® , Supercuts ® , Cost Cutters ® , and other regional trade names and the Franchise operating segment is comprised primarily of Supercuts ® , SmartStyle ® , Cost Cutters ® , First Choice Haircutters ® , Roosters ® and Magicuts ® concepts. Financial information concerning the Company's reportable operating segments is shown in the following table: For the Three Months Ended December 31, 2019 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 101,805 $ — $ 101,805 Product 16,864 27,119 — 43,983 Royalties and fees 29,347 — — 29,347 Franchise rental income 33,630 — — 33,630 Total revenue 79,841 128,924 — 208,765 Operating expenses: Cost of service — 67,358 — 67,358 Cost of product 13,072 14,186 — 27,258 Site operating expenses 10,704 15,626 — 26,330 General and administrative 8,976 7,547 16,168 32,691 Rent 401 19,374 720 20,495 Franchise rent expense 33,630 — — 33,630 Depreciation and amortization 210 5,938 1,599 7,747 TBG restructuring 722 — — 722 Total operating expenses 67,715 130,029 18,487 216,231 Operating income (loss) 12,126 (1,105 ) (18,487 ) (7,466 ) Other (expense) income: Interest expense — — (1,464 ) (1,464 ) Loss from sale of salon assets to franchisees, net — — (5,692 ) (5,692 ) Interest income and other, net — — 4,346 4,346 Income (loss) from continuing operations before income taxes $ 12,126 $ (1,105 ) $ (21,297 ) $ (10,276 ) For the Three Months Ended December 31, 2018 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 190,419 $ — $ 190,419 Product 17,818 43,831 — 61,649 Royalties and fees 22,603 — — 22,603 Total revenue 40,421 234,250 — 274,671 Operating expenses: Cost of service — 114,931 — 114,931 Cost of product 14,449 21,901 — 36,350 Site operating expenses 7,867 27,696 — 35,563 General and administrative 9,466 14,198 22,172 45,836 Rent 184 34,258 200 34,642 Depreciation and amortization 215 6,728 1,957 8,900 Total operating expenses 32,181 219,712 24,329 276,222 Operating income (loss) 8,240 14,538 (24,329 ) (1,551 ) Other (expense) income: Interest expense — — (1,072 ) (1,072 ) Gain from sale of salon assets to franchisees, net — — 2,865 2,865 Interest income and other, net — — 629 629 Income (loss) from continuing operations before income taxes $ 8,240 $ 14,538 $ (21,907 ) $ 871 For the Six Months Ended December 31, 2019 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 243,746 $ — $ 243,746 Product 29,969 59,670 — 89,639 Royalties and fees 57,364 — — 57,364 Franchise rental income 65,054 — — 65,054 Total revenue 152,387 303,416 — 455,803 Operating expenses: Cost of service — 157,840 — 157,840 Cost of product 23,352 30,233 — 53,585 Site operating expenses 21,130 38,142 — 59,272 General and administrative 17,333 17,697 38,286 73,316 Rent 591 43,163 1,005 44,759 Franchise rent expense 65,054 — — 65,054 Depreciation and amortization 370 12,045 4,712 17,127 TBG restructuring 2,222 — — 2,222 Total operating expenses 130,052 299,120 44,003 473,175 Operating income (loss) 22,335 4,296 (44,003 ) (17,372 ) Other (expense) income: Interest expense — — (2,903 ) (2,903 ) Loss from sale of salon assets to franchisees, net — — (11,552 ) (11,552 ) Interest income and other, net — — 4,517 4,517 Income (loss) from continuing operations before income taxes $ 22,335 $ 4,296 $ (53,941 ) $ (27,310 ) For the Six Months Ended December 31, 2018 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 398,267 $ — $ 398,267 Product 33,447 85,793 — 119,240 Royalties and fees 44,999 — — 44,999 Total revenue 78,446 484,060 — 562,506 Operating expenses: Cost of service — 236,428 — 236,428 Cost of product 26,862 41,669 — 68,531 Site operating expenses 15,843 56,541 — 72,384 General and administrative 17,130 30,579 45,854 93,563 Rent 278 69,944 398 70,620 Depreciation and amortization 373 14,785 3,944 19,102 Total operating expenses 60,486 449,946 50,196 560,628 Operating income (loss) 17,960 34,114 (50,196 ) 1,878 Other (expense) income: Interest expense — — (2,078 ) (2,078 ) Loss from sale of salon assets to franchisees, net — — (1,095 ) (1,095 ) Interest income and other, net — — 989 989 Income (loss) from continuing operations before income taxes $ 17,960 34,114 $ (52,380 ) $ (306 ) |
SUBSEQUENT EVENTS_
SUBSEQUENT EVENTS: | 6 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENT: In January 2020, the Company borrowed $30.0 million under its revolving credit facility. Additionally, the Company signed an agreement to sell its investment in Empire Education Group in January 2020. Upon the closure of the transaction, the Company expects to record an immaterial non-operating gain and an income tax benefit. |
BASIS OF PRESENTATION OF UNAU_2
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 6 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Goodwill | The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, 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. An interim impairment analysis was not required in the six months ended December 31, 2019 . The Company performs its annual impairment assessment as of April 30. For the fiscal year 2019 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Franchise and Company-owned reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of the Company's reporting units exceeded their carrying value. The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 20% . The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis. The key assumptions used in determining fair value were the number and pace of salons sold to franchisees and proceeds from salon sales. Assumptions were based on historical financial performance and trends, historical salon sale proceeds and estimated future salon sale activities. The preparation of the fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. There are a number of uncertain factors or events that exist which may result in a future triggering event and require an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to the annual assessment. These internal and external factors include but are not limited to the following: • Changes in the company-owned salon strategy, • Salon closures or other restructuring, • Franchise expansion and sales opportunities, • Future market earnings multiples deterioration, • Financial performance falls short of projections due to internal operating factors, • Economic recession, • Reduced salon traffic, • Deterioration of industry trends, • Increased competition, • Inability to reduce general and administrative expenses as company-owned salon count potentially decreases, and • Other factors causing cash flow to deteriorate. If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 20% headroom, the Company may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill. Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, 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 of goodwill. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material. |
Accounting Standards Recently Adopted by the Company | Accounting Standards Recently Adopted by the Company: Leases The Company adopted ASU 2016-02, "Leases (Topic 842)” and all subsequent ASUs that modified Topic 842 as of July 1, 2019 using the modified retrospective method and elected the option to not restate comparative periods in the year of adoption. The Company also elected the package of practical expedients that do not require reassessment of whether existing contracts are or contain leases, lease classifications or initial direct costs. The Company has also made an accounting policy election to keep leases with an initial term of 12 months or less off the Balance Sheet. Under adoption of Topic 842, the Company recorded a Right of Use Asset and Lease Liability of $980.8 and $993.7 million , respectively. The difference between the assets and liabilities are attributable to the reclassification of certain existing lease-related assets and liabilities as an adjustment to the right of use assets. The Lease Liability reflects the present value of the Company's estimated future minimum lease payments over the lease term, which includes one option period, as options are reasonably assured of being exercised, are discounted using a collateralized incremental borrowing rate. The decrease in the Right of Use Asset and Lease Liability from July 1, 2019 to December 31, 2019 was due to lease modifications and salon closures. The accounting guidance for lessors remained largely unchanged from previous guidance, with the exception of the presentation of rent payments that the Company passes through to franchisees (lessees). Historically, these costs have been recorded on a net basis in the unaudited Condensed Consolidated Statements of Operations, but are now presented on a gross basis upon adoption of the new guidance. The adoption of the new guidance resulted in the recognition of franchise rental income and rent expense of $33.6 and $65.1 million during the three and six months ended December 31, 2019 , respectively. See Note 10 for further information about our transition to Topic 842 and the newly required disclosures. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (AOCI), which provides the option to reclassify to retained earnings the tax effects resulting from the Tax Act related to items in AOCI. The Company adopted this guidance on July 1, 2019 and did not elect to reclassify the income tax effects from the Tax Act from AOCI to retained earnings as the impact was not material. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue: Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided. Product revenues for company-owned salons are recognized when 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 customer. 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 by the Company to franchisees are included within product revenues in the unaudited Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 to 90 days of delivery. Revenue recognized over time Franchise revenues primarily include royalties, advertising fund cooperatives fees, franchise fees and other fees. 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 revenue is 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 unaudited Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating 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 opening and is then recognized over the term of the franchise agreement, typically ten years . Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into a sublease arrangement with the franchisee. The Company recognizes franchise rental income and expense when it is due to the landlord. |
Fair Value Measurements | Assets and Liabilities Measured at Fair Value on a Recurring Basis As of December 31, 2019 and June 30, 2019 , the estimated fair value of the Company’s cash, cash equivalents, restricted cash, receivables, accounts payable, debt and long-term financial liabilities approximated their carrying values. The estimated fair values of the Company's debt and long-term financial liability are based on Level 2 inputs. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis |
REVENUE RECOGNITION_ (Tables)
REVENUE RECOGNITION: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows: Three Months Ended December 31, 2019 Three Months Ended December 31, 2018 Franchise Company-owned Franchise Company-owned (Dollars in thousands) Revenue recognized at a point in time: Service $ — $ 101,805 $ — $ 190,419 Product 16,864 27,119 17,818 43,831 Total revenue recognized at a point in time $ 16,864 $ 128,924 $ 17,818 $ 234,250 Revenue recognized over time: Royalty and other franchise fees $ 18,644 $ — $ 14,736 $ — Advertising fund fees 10,703 — 7,867 — Franchise rental income 33,630 — — — Total revenue recognized over time 62,977 — 22,603 — Total revenue $ 79,841 $ 128,924 $ 40,421 $ 234,250 Six Months Ended December 31, 2019 Six Months Ended December 31, 2018 Franchise Company-owned Franchise Company-owned (Dollars in thousands) Revenue recognized at a point in time: Service $ — $ 243,746 $ — $ 398,267 Product 29,969 59,670 33,447 85,793 Total revenue recognized at a point in time $ 29,969 $ 303,416 $ 33,447 $ 484,060 Revenue recognized over time: Royalty and other franchise fees $ 36,235 $ — $ 29,156 $ — Advertising fund fees 21,129 — 15,843 — Franchise rental income 65,054 — — — Total revenue recognized over time 122,418 — 44,999 — Total revenue $ 152,387 $ 303,416 $ 78,446 $ 484,060 |
Schedule of receivables, broker fees and deferred revenue | Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows: December 31, June 30, Balance Sheet Classification (Dollars in thousands) Receivables from contracts with customers, net $ 22,512 $ 23,210 Accounts receivable, net Broker fees $ 20,384 $ 17,819 Other assets Deferred revenue: Current Gift card liability $ 3,461 $ 3,050 Accrued expenses Deferred franchise fees unopened salons 217 193 Accrued expenses Deferred franchise fees open salons 5,042 4,164 Accrued expenses Total current deferred revenue $ 8,720 $ 7,407 Non-current Deferred franchise fees unopened salons $ 12,860 $ 15,173 Other non-current liabilities Deferred franchise fees open salons 31,555 24,194 Other non-current liabilities Total non-current deferred revenue $ 44,415 $ 39,367 |
Broker fees | The following table is a rollforward of the broker fee balance for the periods indicated (in thousands): Balance as of June, 30, 2019 $ 17,819 Additions 3,938 Amortization (1,341 ) Write-offs (32 ) Balance as of December, 31, 2019 $ 20,384 |
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 December 31, 2019 is as follows (in thousands): Remainder of 2020 $ 2,364 2021 4,930 2022 4,810 2023 4,633 2024 4,398 Thereafter 15,462 Total $ 36,597 |
SHAREHOLDERS' EQUITY_ (Tables)
SHAREHOLDERS' EQUITY: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Share-based Equity Awards Granted | A summary of equity awards granted is as follows: For the Three Months Ended December 31, 2019 For the Six Months Ended December 31, 2019 Restricted stock units 7,564 193,640 Performance-based restricted stock units 22,694 73,712 |
INCOME TAXES_ (Tables)
INCOME TAXES: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of income tax (expense) benefit and corresponding effective tax rates | A summary of income tax benefit (expense) and corresponding effective tax rates is as follows: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Income tax benefit (expense) $ 795 $ (454 ) $ 3,651 $ 260 Effective tax rate 7.7 % 52.1 % 13.4 % 85.0 % |
CASH, CASH EQUIVALETS AND RES_2
CASH, CASH EQUIVALETS AND RESTRICTED CASH: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash and cash equivalents | The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows: December 31, June 30, (Dollars in thousands) Cash and cash equivalents $ 49,783 $ 70,141 Restricted cash, included in Other current assets (1) 22,138 22,238 Total cash, cash equivalents and restricted cash $ 71,921 $ 92,379 _______________________________________________________________________________ (1) 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. |
Schedule of restricted cash and cash equivalents | The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows: December 31, June 30, (Dollars in thousands) Cash and cash equivalents $ 49,783 $ 70,141 Restricted cash, included in Other current assets (1) 22,138 22,238 Total cash, cash equivalents and restricted cash $ 71,921 $ 92,379 _______________________________________________________________________________ (1) 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. |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of recorded goodwill | The table below contains details related to the Company's goodwill: Franchise Company-owned Consolidated (Dollars in thousands) Goodwill, net at June 30, 2019 $ 227,928 $ 117,790 $ 345,718 Translation rate adjustments 139 (73 ) 66 Derecognition related to sale of salon assets to franchisees (1) — (52,765 ) (52,765 ) Goodwill, net at December 31, 2019 $ 228,067 $ 64,952 $ 293,019 _______________________________________________________________________________ (1) Goodwill is derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized is determined by a fraction (the numerator of which is the trailing-twelve months EBITDA of the salon being sold and the denominator of which is the estimated annualized EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit. |
Schedule of other intangible assets | The table below presents other intangible assets: December 31, 2019 June 30, 2019 Cost (1) Accumulated Net Cost (1) Accumulated Net (Dollars in thousands) Amortized intangible assets: Brand assets and trade names $ 6,938 $ (3,786 ) $ 3,152 $ 6,909 $ (3,659 ) $ 3,250 Franchise agreements 9,817 (8,250 ) 1,567 9,783 (8,057 ) 1,726 Lease intangibles 13,495 (10,406 ) 3,089 13,490 (10,065 ) 3,425 Other 884 (533 ) 351 883 (523 ) 360 $ 31,134 $ (22,975 ) $ 8,159 $ 31,065 $ (22,304 ) $ 8,761 _______________________________________________________________________________ (1) The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency. |
RIGHT OF USE ASSET AND LEASE _2
RIGHT OF USE ASSET AND LEASE LIABILITIES (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Real Estate Taxes and Other Occupancy Expenses | For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent expense includes the following: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Minimum rent $ 16,937 $ 28,859 $ 36,498 58,774 Percentage rent based on sales 550 1,052 1,847 2,103 Real estate taxes and other expenses 3,008 4,731 6,414 9,743 $ 20,495 $ 34,642 $ 44,759 $ 70,620 |
Lessor, Future Operating Lease Commitments | As of December 31, 2019 , future operating lease commitments to be paid and received by the Company were as follows: Fiscal Year Leases for Franchise Salons Leases for Company-owned Salons Corporate Leases Total Operating Lease Payments Sublease Income To Be Received From Franchisees Net Rent Commitments Remainder of 2020 $ 59,771 $ 36,809 $ 335 $ 96,915 $ (59,771 ) $ 37,144 2021 113,224 64,907 1,781 179,912 (113,224 ) 66,688 2022 103,599 55,214 1,410 160,223 (103,599 ) 56,624 2023 93,725 48,589 1,447 143,761 (93,725 ) 50,036 2024 84,384 43,417 1,484 129,285 (84,384 ) 44,901 Thereafter 224,482 111,327 9,339 345,148 (224,482 ) 120,666 Total future obligations $ 679,185 $ 360,263 $ 15,796 $ 1,055,244 $ (679,185 ) $ 376,059 Less amounts representing interest 84,680 43,723 3,063 131,466 Present value of lease liabilities $ 594,505 316,540 12,733 923,778 Less current lease liabilities 96,249 59,218 687 156,154 Long-term lease liabilities $ 498,256 $ 257,322 $ 12,046 $ 767,624 |
Lessee, Future Operating Lease Commitments | As of December 31, 2019 , future operating lease commitments to be paid and received by the Company were as follows: Fiscal Year Leases for Franchise Salons Leases for Company-owned Salons Corporate Leases Total Operating Lease Payments Sublease Income To Be Received From Franchisees Net Rent Commitments Remainder of 2020 $ 59,771 $ 36,809 $ 335 $ 96,915 $ (59,771 ) $ 37,144 2021 113,224 64,907 1,781 179,912 (113,224 ) 66,688 2022 103,599 55,214 1,410 160,223 (103,599 ) 56,624 2023 93,725 48,589 1,447 143,761 (93,725 ) 50,036 2024 84,384 43,417 1,484 129,285 (84,384 ) 44,901 Thereafter 224,482 111,327 9,339 345,148 (224,482 ) 120,666 Total future obligations $ 679,185 $ 360,263 $ 15,796 $ 1,055,244 $ (679,185 ) $ 376,059 Less amounts representing interest 84,680 43,723 3,063 131,466 Present value of lease liabilities $ 594,505 316,540 12,733 923,778 Less current lease liabilities 96,249 59,218 687 156,154 Long-term lease liabilities $ 498,256 $ 257,322 $ 12,046 $ 767,624 |
FINANCING ARRANGEMENTS_ (Tables
FINANCING ARRANGEMENTS: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company’s long-term debt consists of the following: Revolving Credit Facility Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Revolving credit facility 2023 3.65% $ 60,000 $ 90,000 |
Schedule of long-term financial liability | The Company’s long-term financing liabilities consists of the following: Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Financial liability - Salt Lake City Distribution Center 2034 3.30% $ 17,055 $ 17,354 Financial liability - Chattanooga Distribution Center 2034 3.70% 11,430 11,556 Long- term financing liability $ 28,485 $ 28,910 |
Schedule of future lease payments due | As of December 31, 2019 , future lease payments due are as follows: Fiscal year Salt Lake City Distribution Center Chattanooga Distribution Center (Dollars in thousands) Remainder of 2020 $ 574 $ 403 2021 1,157 817 2022 1,171 829 2023 1,186 842 2024 1,200 854 Thereafter 11,899 9,282 Total $ 17,187 $ 13,027 |
FAIR VALUE MEASUREMENTS_ (Table
FAIR VALUE MEASUREMENTS: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value impairments | The following impairments were based on fair values using Level 3 inputs: For the Three Months Ended December 31, For the Six Months Ended December 31, 2019 2018 2019 2018 (Dollars in thousands) Long-lived assets $ 1,126 $ 472 $ 2,643 $ 2,303 |
SEGMENT INFORMATION_ (Tables)
SEGMENT INFORMATION: (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of reportable operating segment salons | The Company’s reportable operating segments consisted of the following salons: December 31, June 30, FRANCHISE SALONS: SmartStyle/Cost Cutters in Walmart Stores 969 615 Supercuts 2,493 2,340 Signature Style 1,156 766 Total North American salons 4,618 3,721 Total International salons (1) 172 230 Total Franchise salons 4,790 3,951 as a percent of total Company-owned and Franchise salons 67.8 % 56.0 % COMPANY-OWNED SALONS: SmartStyle/Cost Cutters in Walmart Stores 1,159 1,550 Supercuts 262 403 Signature Style 649 1,155 Mall-based (2) 207 — Total Company-owned salons 2,277 3,108 as a percent of total Company-owned and Franchise salons 32.2 % 44.0 % OWNERSHIP INTEREST LOCATIONS: Equity ownership interest locations 85 86 Grand Total, System-wide 7,152 7,145 ____________________________________ (1) Canadian and Puerto Rican salons are included in the North American salon totals. (2) The mall-based salons were acquired from TBG on December 31, 2019 resulting in no impact to the Statement of Operations for the three and six months ended December 31, 2019. |
Schedule of summarized financial information of reportable operating segments | Financial information concerning the Company's reportable operating segments is shown in the following table: For the Three Months Ended December 31, 2019 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 101,805 $ — $ 101,805 Product 16,864 27,119 — 43,983 Royalties and fees 29,347 — — 29,347 Franchise rental income 33,630 — — 33,630 Total revenue 79,841 128,924 — 208,765 Operating expenses: Cost of service — 67,358 — 67,358 Cost of product 13,072 14,186 — 27,258 Site operating expenses 10,704 15,626 — 26,330 General and administrative 8,976 7,547 16,168 32,691 Rent 401 19,374 720 20,495 Franchise rent expense 33,630 — — 33,630 Depreciation and amortization 210 5,938 1,599 7,747 TBG restructuring 722 — — 722 Total operating expenses 67,715 130,029 18,487 216,231 Operating income (loss) 12,126 (1,105 ) (18,487 ) (7,466 ) Other (expense) income: Interest expense — — (1,464 ) (1,464 ) Loss from sale of salon assets to franchisees, net — — (5,692 ) (5,692 ) Interest income and other, net — — 4,346 4,346 Income (loss) from continuing operations before income taxes $ 12,126 $ (1,105 ) $ (21,297 ) $ (10,276 ) For the Three Months Ended December 31, 2018 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 190,419 $ — $ 190,419 Product 17,818 43,831 — 61,649 Royalties and fees 22,603 — — 22,603 Total revenue 40,421 234,250 — 274,671 Operating expenses: Cost of service — 114,931 — 114,931 Cost of product 14,449 21,901 — 36,350 Site operating expenses 7,867 27,696 — 35,563 General and administrative 9,466 14,198 22,172 45,836 Rent 184 34,258 200 34,642 Depreciation and amortization 215 6,728 1,957 8,900 Total operating expenses 32,181 219,712 24,329 276,222 Operating income (loss) 8,240 14,538 (24,329 ) (1,551 ) Other (expense) income: Interest expense — — (1,072 ) (1,072 ) Gain from sale of salon assets to franchisees, net — — 2,865 2,865 Interest income and other, net — — 629 629 Income (loss) from continuing operations before income taxes $ 8,240 $ 14,538 $ (21,907 ) $ 871 For the Six Months Ended December 31, 2019 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 243,746 $ — $ 243,746 Product 29,969 59,670 — 89,639 Royalties and fees 57,364 — — 57,364 Franchise rental income 65,054 — — 65,054 Total revenue 152,387 303,416 — 455,803 Operating expenses: Cost of service — 157,840 — 157,840 Cost of product 23,352 30,233 — 53,585 Site operating expenses 21,130 38,142 — 59,272 General and administrative 17,333 17,697 38,286 73,316 Rent 591 43,163 1,005 44,759 Franchise rent expense 65,054 — — 65,054 Depreciation and amortization 370 12,045 4,712 17,127 TBG restructuring 2,222 — — 2,222 Total operating expenses 130,052 299,120 44,003 473,175 Operating income (loss) 22,335 4,296 (44,003 ) (17,372 ) Other (expense) income: Interest expense — — (2,903 ) (2,903 ) Loss from sale of salon assets to franchisees, net — — (11,552 ) (11,552 ) Interest income and other, net — — 4,517 4,517 Income (loss) from continuing operations before income taxes $ 22,335 $ 4,296 $ (53,941 ) $ (27,310 ) For the Six Months Ended December 31, 2018 Franchise Company-owned Corporate Consolidated (Dollars in thousands) Revenues: Service $ — $ 398,267 $ — $ 398,267 Product 33,447 85,793 — 119,240 Royalties and fees 44,999 — — 44,999 Total revenue 78,446 484,060 — 562,506 Operating expenses: Cost of service — 236,428 — 236,428 Cost of product 26,862 41,669 — 68,531 Site operating expenses 15,843 56,541 — 72,384 General and administrative 17,130 30,579 45,854 93,563 Rent 278 69,944 398 70,620 Depreciation and amortization 373 14,785 3,944 19,102 Total operating expenses 60,486 449,946 50,196 560,628 Operating income (loss) 17,960 34,114 (50,196 ) 1,878 Other (expense) income: Interest expense — — (2,078 ) (2,078 ) Loss from sale of salon assets to franchisees, net — — (1,095 ) (1,095 ) Interest income and other, net — — 989 989 Income (loss) from continuing operations before income taxes $ 17,960 34,114 $ (52,380 ) $ (306 ) |
BASIS OF PRESENTATION OF UNAU_3
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Goodwill (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Dec. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Franchise rental income | $ 33,630 | $ 65,054 | |
Goodwill | $ 293,019 | $ 293,019 | $ 345,718 |
Headroom Percent | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.20 | 0.20 | |
Franchise | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Goodwill | $ 228,100 | $ 228,100 | 227,900 |
Company-owned | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Goodwill | $ 65,000 | $ 65,000 | $ 117,800 |
BASIS OF PRESENTATION OF UNAU_4
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Non-Current Assets Held for Sale (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | Mar. 31, 2019 | Nov. 30, 2018 | |
Long Lived Assets Held-for-sale [Line Items] | ||||||
Term of contract | 10 years | 15 years | ||||
Other assets | $ 0 | $ 0 | $ 5,276 | |||
Proceeds from sale of company headquarters | 9,000 | 8,996 | $ 0 | |||
Gain on sale of assets | 4,000 | 3,990 | $ 0 | |||
Land | ||||||
Long Lived Assets Held-for-sale [Line Items] | ||||||
Other assets | 1,700 | 1,700 | ||||
Building | ||||||
Long Lived Assets Held-for-sale [Line Items] | ||||||
Other assets | $ 3,600 | $ 3,600 |
BASIS OF PRESENTATION OF UNAU_5
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounting Standards Recently Adopted by the Company (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2019 | Jul. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right of use asset | $ 911,948 | $ 911,948 | |
Operating lease liability | 923,778 | 923,778 | |
Franchise rental income | 33,630 | 65,054 | |
Rent expense | $ 33,600 | $ 65,100 | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right of use asset | $ 980,800 | ||
Operating lease liability | $ 993,700 |
REVENUE RECOGNITION_ Revenue Re
REVENUE RECOGNITION: Revenue Recognized (Details) | 6 Months Ended |
Dec. 31, 2019 | |
Revenue recognized at a point in time | |
Disaggregation of Revenue [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 30 to 90 days |
Revenue recognized over time | |
Disaggregation of Revenue [Line Items] | |
Performance obligations expected to be satisfied, expected timing | ten years |
REVENUE RECOGNITION_ Disaggrega
REVENUE RECOGNITION: Disaggregation of Revenue by Timing (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Franchise rental income | $ 33,630 | $ 65,054 | ||
Total revenues | 208,765 | $ 274,671 | 455,803 | $ 562,506 |
Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Franchise rental income | 33,630 | 65,054 | ||
Total revenues | 79,841 | 40,421 | 152,387 | 78,446 |
Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Franchise rental income | 0 | 0 | ||
Total revenues | 128,924 | 234,250 | 303,416 | 484,060 |
Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 101,805 | 190,419 | 243,746 | 398,267 |
Service | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Service | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 101,805 | 190,419 | 243,746 | 398,267 |
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 43,983 | 61,649 | 89,639 | 119,240 |
Product | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,864 | 17,818 | 29,969 | 33,447 |
Product | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 27,119 | 43,831 | 59,670 | 85,793 |
Royalties and fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 29,347 | 22,603 | 57,364 | 44,999 |
Royalties and fees | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 29,347 | 22,603 | 57,364 | 44,999 |
Royalties and fees | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Revenue recognized at a point in time | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,864 | 17,818 | 29,969 | 33,447 |
Revenue recognized at a point in time | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 128,924 | 234,250 | 303,416 | 484,060 |
Revenue recognized at a point in time | Service | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Revenue recognized at a point in time | Service | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 101,805 | 190,419 | 243,746 | 398,267 |
Revenue recognized at a point in time | Product | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,864 | 17,818 | 29,969 | 33,447 |
Revenue recognized at a point in time | Product | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 27,119 | 43,831 | 59,670 | 85,793 |
Revenue recognized over time | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Franchise rental income | 33,630 | 65,054 | ||
Total revenues | 62,977 | 22,603 | 122,418 | 44,999 |
Revenue recognized over time | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Franchise rental income | 0 | 0 | ||
Total revenues | 0 | 0 | 0 | 0 |
Revenue recognized over time | Royalties and fees | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 18,644 | 14,736 | 36,235 | 29,156 |
Revenue recognized over time | Royalties and fees | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Revenue recognized over time | Advertising fund fees | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,703 | 7,867 | 21,129 | 15,843 |
Revenue recognized over time | Advertising fund fees | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
REVENUE RECOGNITION_ Receivable
REVENUE RECOGNITION: Receivables, Broker Fees and Deferred Revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 22,512 | $ 23,210 |
Broker fees | 20,384 | 17,819 |
Deferred revenue | ||
Current | 8,720 | 7,407 |
Non-current | 44,415 | 39,367 |
Gift card liability | ||
Deferred revenue | ||
Current | 3,461 | 3,050 |
Deferred franchise fees unopened salons | ||
Deferred revenue | ||
Current | 217 | 193 |
Non-current | 12,860 | 15,173 |
Deferred franchise fees open salons | ||
Deferred revenue | ||
Current | 5,042 | 4,164 |
Non-current | $ 31,555 | $ 24,194 |
REVENUE RECOGNITION_ Additional
REVENUE RECOGNITION: Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | |||||
Allowance for doubtful accounts | $ 1.9 | $ 1.9 | $ 2 | ||
Gift Cards | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0.7 | $ 1.1 | 1.5 | $ 2.2 | |
Franchise Fees | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 1.3 | $ 0.8 | $ 2.4 | $ 1.7 |
REVENUE RECOGNITION_ Broker Fee
REVENUE RECOGNITION: Broker Fee Balance (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2019USD ($) | |
Change In Deferred Costs [Roll Forward] | |
Balance as of June, 30, 2019 | $ 17,819 |
Additions | 3,938 |
Amortization | (1,341) |
Write-offs | (32) |
Balance as of December, 31, 2019 | $ 20,384 |
REVENUE RECOGNITION_ Future Est
REVENUE RECOGNITION: Future Estimated Expected Revenue (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 36,597 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 2,364 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 4,930 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 4,810 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 4,633 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 4,398 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
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 from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 15,462 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing |
TBG RESTRUCTURING AND DISCONT_2
TBG RESTRUCTURING AND DISCONTINUED OPERATIONS: Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2019USD ($)salon | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)salon | Dec. 31, 2018USD ($) | Jun. 30, 2019salon | Oct. 31, 2017salon | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of stores | salon | 7,152 | 7,152 | 7,145 | |||
Number of stores transferred | salon | 207 | |||||
Restructuring charges | $ 722 | $ 0 | $ 2,222 | $ 0 | ||
Salon lease commitments | 30,000 | 30,000 | ||||
Reduction in salon commitments | 11,000 | |||||
North America | Facility Closing | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of stores | salon | 858 | |||||
TBG Mall Restructuring | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Restructuring charges | $ 700 | $ 2,200 |
EARNINGS PER SHARE_ (Details)
EARNINGS PER SHARE: (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common stock equivalents included in the diluted earnings per share calculation (in shares) | 859,598 | 903,107 | ||
Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common stock equivalents included in the diluted earnings per share calculation (in shares) | 1,322,308 | 1,338,634 | ||
Equity Based Compensation Awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Awards excluded from diluted earnings per share computation (in shares) | 66,151 | 734,526 | 77,514 | 520,348 |
SHAREHOLDERS' EQUITY_ Equity Aw
SHAREHOLDERS' EQUITY: Equity Awards Granted (Details) - shares | 3 Months Ended | 6 Months Ended |
Dec. 31, 2019 | Dec. 31, 2019 | |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock granted (in shares) | 7,564 | 193,640 |
Performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock granted (in shares) | 22,694 | 73,712 |
SHAREHOLDERS' EQUITY_ Stock-Bas
SHAREHOLDERS' EQUITY: Stock-Based Employee Compensation, Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ 0.3 | $ 2.2 | $ 2.1 | $ 4.6 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Restricted stock units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Restricted stock units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Restricted stock units | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Restricted stock units | Tranche 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Restricted stock units | Tranche 3 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Threshold trading days | 50 days | |||
Performance-based restricted stock units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Performance-based restricted stock units | Tranche 1 | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 200.00% |
SHAREHOLDERS' EQUITY_ Share Rep
SHAREHOLDERS' EQUITY: Share Repurchases (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |||
Stock repurchased during period (in shares) | 1.5 | ||
Stock repurchase program | $ 48,993 | $ 26,356 | $ 68,331 |
Remaining authorized repurchase amount | $ 54,600 |
INCOME TAXES_ Summary of Income
INCOME TAXES: Summary of Income Tax Benefit (expense) and corresponding effective tax rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit (expense) | $ 795 | $ (454) | $ 3,651 | $ 260 |
Effective tax rate | 7.70% | 52.10% | 13.40% | 85.00% |
CASH, CASH EQUIVALETS AND RES_3
CASH, CASH EQUIVALETS AND RESTRICTED CASH: (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 |
Cash and Cash Equivalents [Abstract] | |||
Cash and cash equivalents | $ 49,783 | $ 70,141 | |
Restricted cash, included in Other current assets | 22,138 | 22,238 | |
Total cash, cash equivalents and restricted cash | $ 71,921 | $ 92,379 | $ 148,774 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES: Changes in Goodwill (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2019 | $ 345,718 |
Translation rate adjustments | 66 |
Derecognition related to sale of salon assets to franchisees | (52,765) |
Goodwill, net at December 31, 2019 | 293,019 |
Franchise | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2019 | 227,928 |
Translation rate adjustments | 139 |
Derecognition related to sale of salon assets to franchisees | 0 |
Goodwill, net at December 31, 2019 | 228,067 |
Company-owned | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2019 | 117,790 |
Translation rate adjustments | (73) |
Derecognition related to sale of salon assets to franchisees | (52,765) |
Goodwill, net at December 31, 2019 | $ 64,952 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLES: Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Amortized intangible assets: | ||
Cost | $ 31,134 | $ 31,065 |
Accumulated Amortization | (22,975) | (22,304) |
Net | 8,159 | 8,761 |
Brand assets and trade names | ||
Amortized intangible assets: | ||
Cost | 6,938 | 6,909 |
Accumulated Amortization | (3,786) | (3,659) |
Net | 3,152 | 3,250 |
Franchise agreements | ||
Amortized intangible assets: | ||
Cost | 9,817 | 9,783 |
Accumulated Amortization | (8,250) | (8,057) |
Net | 1,567 | 1,726 |
Lease intangibles | ||
Amortized intangible assets: | ||
Cost | 13,495 | 13,490 |
Accumulated Amortization | (10,406) | (10,065) |
Net | 3,089 | 3,425 |
Other | ||
Amortized intangible assets: | ||
Cost | 884 | 883 |
Accumulated Amortization | (533) | (523) |
Net | $ 351 | $ 360 |
RIGHT OF USE ASSET AND LEASE _3
RIGHT OF USE ASSET AND LEASE LIABILITIES Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2019 | Mar. 31, 2019 | Nov. 30, 2018 | |
Lessor, Lease, Description [Line Items] | ||||
Lessee, term of contract | 10 years | 15 years | ||
Lessor, term of contract | 5 years | 5 years | ||
Franchise rental income | $ 33,630 | $ 65,054 | ||
Rent expense | $ 33,600 | $ 65,100 | ||
Weighted average remaining lease term | 6 years 9 months 25 days | 6 years 9 months 25 days | ||
Weighted average discount rate | 3.95% | 3.95% | ||
Minimum | ||||
Lessor, Lease, Description [Line Items] | ||||
Lessee, term of contract | 1 year | 1 year | ||
Lessee, renewal term | 5 years | 5 years | ||
Maximum | ||||
Lessor, Lease, Description [Line Items] | ||||
Lessee, term of contract | 20 years | 20 years | ||
Lessee, renewal term | 10 years | 10 years | ||
Franchisor | ||||
Lessor, Lease, Description [Line Items] | ||||
Rent expense | $ 33,630 | $ 65,054 |
RIGHT OF USE ASSET AND LEASE _4
RIGHT OF USE ASSET AND LEASE LIABILITIES Real Estate Taxes and Other Occupancy Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | ||||
Rent | $ 33,600 | $ 65,100 | ||
Non-Franchise Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Minimum rent | 16,937 | 36,498 | ||
Percentage rent based on sales | 550 | 1,847 | ||
Real estate taxes and other expenses | 3,008 | 6,414 | ||
Rent | $ 20,495 | $ 34,642 | $ 44,759 | $ 70,620 |
Minimum rent | 28,859 | 58,774 | ||
Percentage rent based on sales | 1,052 | 2,103 | ||
Real estate taxes and other expenses | 4,731 | 9,743 | ||
Rent | $ 34,642 | $ 70,620 |
RIGHT OF USE ASSET AND LEASE _5
RIGHT OF USE ASSET AND LEASE LIABILITIES Future Operating Lease Commitments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Leases, Operating [Abstract] | ||
Remainder of 2020 | $ 96,915 | |
2021 | 179,912 | |
2022 | 160,223 | |
2023 | 143,761 | |
2024 | 129,285 | |
Thereafter | 345,148 | |
Total future obligations | 1,055,244 | |
Less amounts representing interest | 131,466 | |
Present value of lease liabilities | 923,778 | |
Less current lease liabilities | 156,154 | |
Long-term lease liabilities | 767,624 | $ 0 |
Sublease Income To Be Received From Franchisees | ||
Remainder of 2020 | (59,771) | |
2021 | (113,224) | |
2022 | (103,599) | |
2023 | (93,725) | |
2024 | (84,384) | |
Thereafter | (224,482) | |
Total future obligations | (679,185) | |
Net Rent Commitments | ||
Remainder of 2020 | 37,144 | |
2021 | 66,688 | |
2022 | 56,624 | |
2023 | 50,036 | |
2024 | 44,901 | |
Thereafter | 120,666 | |
Total future obligations | 376,059 | |
Operating Segments | Franchise | ||
Leases, Operating [Abstract] | ||
Remainder of 2020 | 59,771 | |
2021 | 113,224 | |
2022 | 103,599 | |
2023 | 93,725 | |
2024 | 84,384 | |
Thereafter | 224,482 | |
Total future obligations | 679,185 | |
Less amounts representing interest | 84,680 | |
Present value of lease liabilities | 594,505 | |
Less current lease liabilities | 96,249 | |
Long-term lease liabilities | 498,256 | |
Operating Segments | Company-owned | ||
Leases, Operating [Abstract] | ||
Remainder of 2020 | 36,809 | |
2021 | 64,907 | |
2022 | 55,214 | |
2023 | 48,589 | |
2024 | 43,417 | |
Thereafter | 111,327 | |
Total future obligations | 360,263 | |
Less amounts representing interest | 43,723 | |
Present value of lease liabilities | 316,540 | |
Less current lease liabilities | 59,218 | |
Long-term lease liabilities | 257,322 | |
Unallocated Corporate | ||
Leases, Operating [Abstract] | ||
Remainder of 2020 | 335 | |
2021 | 1,781 | |
2022 | 1,410 | |
2023 | 1,447 | |
2024 | 1,484 | |
Thereafter | 9,339 | |
Total future obligations | 15,796 | |
Less amounts representing interest | 3,063 | |
Present value of lease liabilities | 12,733 | |
Less current lease liabilities | 687 | |
Long-term lease liabilities | $ 12,046 |
FINANCING ARRANGEMENTS_ Schedul
FINANCING ARRANGEMENTS: Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 60,000 | $ 90,000 |
Line of Credit | Revolving Credit Facility | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Interest rate percentage | 3.65% | |
Long-term debt | $ 60,000 | $ 90,000 |
FINANCING ARRANGEMENTS_ Revolvi
FINANCING ARRANGEMENTS: Revolving Credit Facility (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 60,000,000 | $ 90,000,000 |
Line of Credit | Revolving Credit Facility | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 60,000,000 | 90,000,000 |
Maximum borrowing capacity | 295,000,000 | |
Unused borrowing capacity, amount | $ 213,500,000 | 183,500,000 |
Line of Credit | Letter of Credit | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term line of credit | $ 21,500,000 |
FINANCING ARRANGEMENTS_ Sched_2
FINANCING ARRANGEMENTS: Schedule of Long-term Financial Liability (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2019 | |
Debt Instrument [Line Items] | ||
Long- term financing liability | $ 28,485 | $ 28,910 |
Salt Lake City Distribution Center | ||
Debt Instrument [Line Items] | ||
Interest rate | 3.30% | |
Long- term financing liability | $ 17,055 | 17,354 |
Chattanooga Distribution Center | ||
Debt Instrument [Line Items] | ||
Interest rate | 3.70% | |
Long- term financing liability | $ 11,430 | $ 11,556 |
FINANCING ARRANGEMENTS_ Sale an
FINANCING ARRANGEMENTS: Sale and Leaseback Transaction (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2019 | Mar. 31, 2019 | Nov. 30, 2018 | |
Debt Disclosure [Abstract] | ||||
Term of contract | 10 years | 15 years | ||
Short-term financial liability | $ 0.9 | $ 0.9 | ||
Weighted average lease term | 14 years 1 month 6 days | 14 years 1 month 6 days | ||
Weighted average discount rate | 3.46% | 3.46% | ||
Interest expense | $ 0.3 | $ 0.5 |
FINANCING ARRANGEMENTS_ Sched_3
FINANCING ARRANGEMENTS: Schedule of Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Salt Lake City Distribution Center | |
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | $ 574 |
2021 | 1,157 |
2022 | 1,171 |
2023 | 1,186 |
2024 | 1,200 |
Thereafter | 11,899 |
Total | 17,187 |
Chattanooga Distribution Center | |
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | 403 |
2021 | 817 |
2022 | 829 |
2023 | 842 |
2024 | 854 |
Thereafter | 9,282 |
Total | $ 13,027 |
FAIR VALUE MEASUREMENTS_ Narrat
FAIR VALUE MEASUREMENTS: Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Assets and liabilities measured at fair value on a nonrecurring basis | ||||
Long-lived assets | $ 2,643 | $ 2,303 | ||
Nonrecurring | Level 3 | ||||
Assets and liabilities measured at fair value on a nonrecurring basis | ||||
Long-lived assets | $ 1,126 | $ 472 | $ 2,643 | $ 2,303 |
SEGMENT INFORMATION_ Reportable
SEGMENT INFORMATION: Reportable Operating Segment Salons (Details) - salon | Dec. 31, 2019 | Jun. 30, 2019 |
Franchisor Disclosure [Line Items] | ||
Number of salons | 7,152 | 7,145 |
Equity ownership interest locations | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 85 | 86 |
Franchise | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 4,790 | 3,951 |
Salons as a percent of total Company-owned and Franchise salons | 67.80% | 56.00% |
Franchise | International | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 172 | 230 |
Franchise | Total North America TBG mall locations | North American | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 4,618 | 3,721 |
Franchise | SmartStyle/Cost Cutters in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 969 | 615 |
Franchise | Supercuts | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 2,493 | 2,340 |
Franchise | Signature Style | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,156 | 766 |
Company-owned | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 2,277 | 3,108 |
Salons as a percent of total Company-owned and Franchise salons | 32.20% | 44.00% |
Company-owned | SmartStyle/Cost Cutters in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,159 | 1,550 |
Company-owned | Supercuts | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 262 | 403 |
Company-owned | Signature Style | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 649 | 1,155 |
Company-owned | Mall-based | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 0 |
SEGMENT INFORMATION_ Operating
SEGMENT INFORMATION: Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | ||||
Franchise rental income | $ 33,630 | $ 65,054 | ||
Total revenues | 208,765 | $ 274,671 | 455,803 | $ 562,506 |
Operating expenses: | ||||
Cost of service | 67,358 | 114,931 | 157,840 | 236,428 |
Cost of product | 27,258 | 36,350 | 53,585 | 68,531 |
Site operating expenses | 26,330 | 35,563 | 59,272 | 72,384 |
General and administrative | 32,691 | 45,836 | 73,316 | 93,563 |
Rent | 33,600 | 65,100 | ||
Depreciation and amortization | 7,747 | 8,900 | 17,127 | 19,102 |
TBG restructuring | 722 | 0 | 2,222 | 0 |
Total operating expenses | 216,231 | 276,222 | 473,175 | 560,628 |
Operating (loss) income | (7,466) | (1,551) | (17,372) | 1,878 |
Other (expense) income: | ||||
Interest expense | (1,464) | (1,072) | (2,903) | (2,078) |
(Loss) gain from sale of salon assets to franchisees, net | (5,692) | 2,865 | (11,552) | (1,095) |
Interest income and other, net | 4,346 | 629 | 4,517 | 989 |
(Loss) income from continuing operations before income taxes | (10,276) | 871 | (27,310) | (306) |
Non-Franchise Lease | ||||
Operating expenses: | ||||
Rent | 20,495 | 34,642 | 44,759 | 70,620 |
Franchisor | ||||
Operating expenses: | ||||
Rent | 33,630 | 65,054 | ||
Operating Segments | Franchise | ||||
Revenues: | ||||
Franchise rental income | 33,630 | 65,054 | ||
Total revenues | 79,841 | 40,421 | 152,387 | 78,446 |
Operating expenses: | ||||
Cost of service | 0 | 0 | 0 | 0 |
Cost of product | 13,072 | 14,449 | 23,352 | 26,862 |
Site operating expenses | 10,704 | 7,867 | 21,130 | 15,843 |
General and administrative | 8,976 | 9,466 | 17,333 | 17,130 |
Depreciation and amortization | 210 | 215 | 370 | 373 |
TBG restructuring | 722 | 2,222 | ||
Total operating expenses | 67,715 | 32,181 | 130,052 | 60,486 |
Operating (loss) income | 12,126 | 8,240 | 22,335 | 17,960 |
Other (expense) income: | ||||
Interest expense | 0 | 0 | 0 | 0 |
(Loss) gain from sale of salon assets to franchisees, net | 0 | 0 | 0 | 0 |
Interest income and other, net | 0 | 0 | 0 | 0 |
(Loss) income from continuing operations before income taxes | 12,126 | 8,240 | 22,335 | 17,960 |
Operating Segments | Franchise | Non-Franchise Lease | ||||
Operating expenses: | ||||
Rent | 401 | 184 | 591 | 278 |
Operating Segments | Franchise | Franchisor | ||||
Operating expenses: | ||||
Rent | 33,630 | 65,054 | ||
Operating Segments | Company-owned | ||||
Revenues: | ||||
Franchise rental income | 0 | 0 | ||
Total revenues | 128,924 | 234,250 | 303,416 | 484,060 |
Operating expenses: | ||||
Cost of service | 67,358 | 114,931 | 157,840 | 236,428 |
Cost of product | 14,186 | 21,901 | 30,233 | 41,669 |
Site operating expenses | 15,626 | 27,696 | 38,142 | 56,541 |
General and administrative | 7,547 | 14,198 | 17,697 | 30,579 |
Depreciation and amortization | 5,938 | 6,728 | 12,045 | 14,785 |
TBG restructuring | 0 | 0 | ||
Total operating expenses | 130,029 | 219,712 | 299,120 | 449,946 |
Operating (loss) income | (1,105) | 14,538 | 4,296 | 34,114 |
Other (expense) income: | ||||
Interest expense | 0 | 0 | 0 | 0 |
(Loss) gain from sale of salon assets to franchisees, net | 0 | 0 | 0 | 0 |
Interest income and other, net | 0 | 0 | 0 | 0 |
(Loss) income from continuing operations before income taxes | (1,105) | 14,538 | 4,296 | 34,114 |
Operating Segments | Company-owned | Non-Franchise Lease | ||||
Operating expenses: | ||||
Rent | 19,374 | 34,258 | 43,163 | 69,944 |
Operating Segments | Company-owned | Franchisor | ||||
Operating expenses: | ||||
Rent | 0 | 0 | ||
Unallocated Corporate | ||||
Revenues: | ||||
Franchise rental income | 0 | 0 | ||
Total revenues | 0 | 0 | 0 | 0 |
Operating expenses: | ||||
Cost of service | 0 | 0 | 0 | 0 |
Cost of product | 0 | 0 | 0 | 0 |
Site operating expenses | 0 | 0 | 0 | 0 |
General and administrative | 16,168 | 22,172 | 38,286 | 45,854 |
Depreciation and amortization | 1,599 | 1,957 | 4,712 | 3,944 |
TBG restructuring | 0 | 0 | ||
Total operating expenses | 18,487 | 24,329 | 44,003 | 50,196 |
Operating (loss) income | (18,487) | (24,329) | (44,003) | (50,196) |
Other (expense) income: | ||||
Interest expense | (1,464) | (1,072) | (2,903) | (2,078) |
(Loss) gain from sale of salon assets to franchisees, net | (5,692) | 2,865 | (11,552) | (1,095) |
Interest income and other, net | 4,346 | 629 | 4,517 | 989 |
(Loss) income from continuing operations before income taxes | (21,297) | (21,907) | (53,941) | (52,380) |
Unallocated Corporate | Non-Franchise Lease | ||||
Operating expenses: | ||||
Rent | 720 | 200 | 1,005 | 398 |
Unallocated Corporate | Franchisor | ||||
Operating expenses: | ||||
Rent | 0 | 0 | ||
Service | ||||
Revenues: | ||||
Revenues | 101,805 | 190,419 | 243,746 | 398,267 |
Service | Operating Segments | Franchise | ||||
Revenues: | ||||
Revenues | 0 | 0 | 0 | 0 |
Service | Operating Segments | Company-owned | ||||
Revenues: | ||||
Revenues | 101,805 | 190,419 | 243,746 | 398,267 |
Service | Unallocated Corporate | ||||
Revenues: | ||||
Revenues | 0 | 0 | 0 | 0 |
Product | ||||
Revenues: | ||||
Revenues | 43,983 | 61,649 | 89,639 | 119,240 |
Product | Operating Segments | Franchise | ||||
Revenues: | ||||
Revenues | 16,864 | 17,818 | 29,969 | 33,447 |
Product | Operating Segments | Company-owned | ||||
Revenues: | ||||
Revenues | 27,119 | 43,831 | 59,670 | 85,793 |
Product | Unallocated Corporate | ||||
Revenues: | ||||
Revenues | 0 | 0 | 0 | 0 |
Royalties and fees | ||||
Revenues: | ||||
Revenues | 29,347 | 22,603 | 57,364 | 44,999 |
Royalties and fees | Operating Segments | Franchise | ||||
Revenues: | ||||
Revenues | 29,347 | 22,603 | 57,364 | 44,999 |
Royalties and fees | Operating Segments | Company-owned | ||||
Revenues: | ||||
Revenues | 0 | 0 | 0 | 0 |
Royalties and fees | Unallocated Corporate | ||||
Revenues: | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
SUBSEQUENT EVENTS_ (Details)
SUBSEQUENT EVENTS: (Details) $ in Millions | 1 Months Ended |
Jan. 31, 2020USD ($) | |
Revolving credit facility | Line of Credit | Revolving Credit Facility | Subsequent Event | |
Subsequent Event [Line Items] | |
Borrowing under revolving credit facility | $ 30 |