10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from             to            

Commission file number 1-12725

Regis Corporation

(Exact name of registrant as specified in its charter)

Minnesota			41-0749934
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
3701 Wayzata Boulevard	Minneapolis	Minnesota	55416
(Address of principal executive offices)			(Zip Code)

 (952) 947-7777

(Registrant’s telephone number, including area code) 

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to be submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated filer  ☐
Non-accelerated filer (Do not check if a smaller reporting company) ☐
Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ☐ No ☒  

Title of each class	Trading symbol	Name of exchange
Common Stock, $0.05 par value	RGS	NYSE

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of June 12, 2020 : 35,624,174

REGIS CORPORATION

INDEX

Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited):
		Condensed Consolidated Balance Sheet as of March 31, 2020 and June 30, 2019	3
		Condensed Consolidated Statement of Operations for the three and nine months ended March 31, 2020 and 2019	4
		Condensed Consolidated Statement of Comprehensive Loss for the three and nine months ended March 31, 2020 and 2019	5
		Condensed Consolidated Statement of Shareholders' Equity for the three and nine months ended March 31, 2020 and 2019	6
		Condensed Consolidated Statement of Cash Flows for the nine months ended March 31, 2020 and 2019	8
		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
	Item 4.	Controls and Procedures	38
Part II.	Other Information		38
	Item 1.	Legal Proceedings	38
	Item 1A.	Risk Factors	38
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 5.	Other Information	42
	Item 6.	Exhibits	43
	Signatures		44

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(Dollars in thousands, except share data)

	March 31, 2020		June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	241,037	$	70,141
Receivables, net	27,602		30,143
Inventories	59,029		77,322
Other current assets	23,211		33,216
Total current assets	350,879		210,822
Property and equipment, net	65,880		78,090
Goodwill (Note 9)	226,666		345,718
Other intangibles, net (Note 9)	7,568		8,761
Right of use asset (Note 10)	861,569		—
Other assets	38,227		34,170
Non-current assets held for sale (Note 1)	—		5,276
Total assets	$	1,550,789	$	682,837
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	39,120	$	47,532
Accrued expenses	43,475		80,751
Short-term lease liability (Note 10)	149,482		—
Total current liabilities	232,077		128,283
Long-term debt, net	273,000		90,000
Long-term lease liability (Note 10)	727,245		—
Long-term financing liabilities	28,233		28,910
Other non-current liabilities	92,698		111,399
Total liabilities	1,353,253		358,592
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 35,566,206 and 36,869,249 common shares at March 31, 2020 and June 30, 2019, respectively	1,778		1,843
Additional paid-in capital	21,186		47,152
Accumulated other comprehensive income	6,998		9,342
Retained earnings	167,574		265,908
Total shareholders’ equity	197,536		324,245
Total liabilities and shareholders’ equity	$	1,550,789	$	682,837

_______________________________________________________________________________ 

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

3

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three and Nine Months Ended March 31, 2020 and 2019

(Dollars and shares in thousands, except per share data amounts)

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Revenues:
Service	$	78,387	$	181,809	$	322,133	$	580,076
Product	34,877		53,766		124,516		173,006
Royalties and fees	8,698		22,768		66,062		67,767
Franchise rental income (Note 10)	31,821		—		96,875		—
Total revenue	153,783		258,343		609,586		820,849
Operating expenses:
Cost of service	54,824		111,632		212,664		348,060
Cost of product	21,672		31,167		75,257		99,698
Site operating expenses	3,660		34,339		62,932		106,723
General and administrative	31,871		41,694		105,187		135,257
Rent	19,243		32,332		64,002		102,952
Franchise rent expense	31,821		—		96,875		—
Depreciation and amortization	10,359		8,630		27,486		27,732
TBG mall location restructuring (Note 3)	146		20,711		2,368		20,711
Goodwill impairment	44,529		—		44,529		—
Total operating expenses	218,125		280,505		691,300		841,133
Operating loss	(64,342)		(22,162)		(81,714)		(20,284)
Other (expense) income:
Interest expense	(1,712)		(1,354)		(4,615)		(3,432)
(Loss) gain from sale of salon assets to franchisees, net	(10,208)		11,489		(21,760)		10,394
Interest income and other, net	(1,329)		464		3,188		1,453
Loss from continuing operations before income taxes	(77,591)		(11,563)		(104,901)		(11,869)
Income tax benefit (expense)	2,253		(3,248)		5,904		(2,988)
Loss from continuing operations	(75,338)		(14,811)		(98,997)		(14,857)
Income from discontinued operations, net of taxes (Note 3)	301		178		753		6,027
Net loss	$	(75,037)	$	(14,633)	$	(98,244)	$	(8,830)
Net loss per share:
Basic and diluted:
Loss from continuing operations	$	(2.10)	$	(0.37)	$	(2.75)	$	(0.35)
Income from discontinued operations	0.01		0.00		0.02		0.14
Net loss per share, basic and diluted (1)	$	(2.10)	$	(0.36)	$	(2.73)	$	(0.21)
Weighted average common and common equivalent shares outstanding:
Basic and diluted	35,815		40,314		35,958		42,900

_______________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

 The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

4

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited)

For The Three and Nine Months Ended March 31, 2020 and 2019

(Dollars in thousands)

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Net loss	$	(75,037)	$	(14,633)	$	(98,244)	$	(8,830)
Foreign currency translation adjustments	(2,482)		905		(2,344)		(606)
Comprehensive loss	$	(77,519)	$	(13,728)	$	(100,588)	$	(9,436)

_______________________________________________________________________________ 

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

5

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three and Nine Months Ended March 31, 2020 and 2019

(Dollars in thousands)

	Three Months Ended March 31, 2020
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total
	Shares	Amount
Balance, December 31, 2019	35,563,611	$	1,778	$	21,230	$	9,480	$	242,573	$	275,061
Net loss	—	—		—		—		(75,037)		(75,037)
Foreign currency translation	—	—		—		(2,482)		—		(2,482)
Stock-based compensation	—	—		(25)		—		—		(25)
Net restricted stock activity	2,595	—		(19)		—		—		(19)
Minority interest	—	—		—		—		38		38
Balance, March 31, 2020	35,566,206	$	1,778	$	21,186	$	6,998	$	167,574	$	197,536

	Three Months Ended March 31, 2019
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total
	Shares	Amount
Balance, December 31, 2018	41,472,468	$	2,074	$	128,964	$	8,145	$	285,827	$	425,010
Net loss	—	—		—		—		(14,633)		(14,633)
Foreign currency translation	—	—		—		905		—		905
Stock repurchase program	(2,050,430)	(102)		(37,818)		—		—		(37,920)
Exercise of SARs	7,080	—		(101)		—		—		(101)
Stock-based compensation	—	—		2,512		—		—		2,512
Net restricted stock activity	4,006	—		(42)		—		—		(42)
Minority interest	—	—		—		—		79		79
Balance, March 31, 2019	39,433,124	$	1,972	$	93,515	$	9,050	$	271,273	$	375,810

6

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three and Nine Months Ended March 31, 2020 and 2019 (Continued)

(Dollars in thousands)

	Nine Months Ended March 31, 2020
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total
	Shares	Amount
Balance, June 30, 2019	36,869,249	$	1,843	$	47,152	$	9,342	$	265,908	$	324,245
Net loss	—	—		—		—		(98,244)		(98,244)
Foreign currency translation	—	—		—		(2,344)		—		(2,344)
Stock repurchase program	(1,504,000)	(75)		(26,281)		—		—		(26,356)
Exercise of SARs	1,776	—		28		—		—		28
Stock-based compensation	—	—		2,114		—		—		2,114
Net restricted stock activity	199,181	10		(1,827)		—		—		(1,817)
Minority interest	—	—		—		—		(90)		(90)
Balance, March 31, 2020	35,566,206	$	1,778	$	21,186	$	6,998	$	167,574	$	197,536

	Nine Months Ended March 31, 2019
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total
	Shares	Amount
Balance, June 30, 2018	45,258,571	$	2,263	$	194,436	$	9,656	$	280,083	$	486,438
Net loss	—	—		—		—		(8,830)		(8,830)
Foreign currency translation	—	—		—		(606)		—		(606)
Stock repurchase program	(6,023,523)	(301)		(105,951)		—		—		(106,252)
Exercise of SARs	15,412	1		(205)		—		—		(204)
Stock-based compensation	—	—		7,065		—		—		7,065
Net restricted stock activity	182,664	9		(1,830)		—		—		(1,821)
Minority interest	—	—		—		—		20		20
Balance, March 31, 2019	39,433,124	$	1,972	$	93,515	$	9,050	$	271,273	$	375,810

_______________________________________________________________________________ 

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

7

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For The Nine Months Ended March 31, 2020 and 2019

(Dollars in thousands)

	Nine Months Ended March 31,
	2020		2019
Cash flows from operating activities:
Net loss	$	(98,244)	$	(8,830)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Non-cash adjustments related to discontinued operations	(967)		(163)
Depreciation and amortization	23,635		24,727
Deferred income taxes	(6,590)		(6,034)
Gain from sale of company headquarters, net	(2,513)		—
Loss (gain) from sale of salon assets to franchisees, net	21,760		(10,394)
Non-cash TBG mall location restructuring charge	—		20,711
Goodwill impairment	44,529		—
Salon asset impairments	3,851		3,005
Stock-based compensation	2,114		7,065
Amortization of debt discount and financing costs	206		206
Other non-cash items affecting earnings	(442)		(492)
Changes in operating assets and liabilities, excluding the effects of asset sales (1)	(38,360)		(50,074)
Net cash used in operating activities	(51,021)		(20,273)
Cash flows from investing activities:
Capital expenditures	(32,331)		(23,160)
Proceeds from sale of assets to franchisees	87,916		54,619
Costs associated with sale of salon assets to franchisees	(1,887)		—
Proceeds from company-owned life insurance policies	—		24,617
Proceeds from sale of company headquarters	8,996		—
Net cash provided by investing activities	62,694		56,076
Cash flows from financing activities:
Borrowings on revolving credit facility	213,000		—
Repayments of revolving credit facility	(30,000)		—
Repurchase of common stock	(28,246)		(105,364)
Taxes paid for shares withheld	(1,968)		(2,447)
Net proceeds from distribution center sale and leaseback transaction	—		18,068
Distribution center lease payments	(677)		—
Net cash provided by (used in) financing activities	152,109		(89,743)
Effect of exchange rate changes on cash and cash equivalents	(379)		5
Increase (decrease) in cash, cash equivalents, and restricted cash	163,403		(53,935)
Cash, cash equivalents and restricted cash:
Beginning of period	92,379		148,774
End of period	$	255,782	$	94,839

_______________________________________________________________________________  

(1)Changes in operating assets and liabilities exclude assets and liabilities sold.

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

8

REGIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. 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 March 31, 2020 and for the three and nine months ended March 31, 2020 and 2019, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2020 and its consolidated results of operations, comprehensive loss, 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.

Impact of COVID-19 on Business Operations:

During the period ended March 31, 2020, the global coronavirus pandemic ("COVID-19") had an adverse impact on operations, including the closure of all company-owned salons and almost all franchise locations in March 2020 due to government mandates. Salons continued to be closed until April 23, 2020 when franchise salons began re-opening slowly, as government, state and local restrictions eased. As of June 15, 2020 approximately 76% of franchise salons were open. Company-owned salons were closed through May 21, 2020 and are gradually re-opening. As of June 15, 2020, approximately 45% of company-owned salons were open. As salons re-open, the Company is taking additional measures across its portfolio of franchise and company-owned salons to facilitate customer and employee safety. As a result, COVID-19 has and will continue to negatively affect revenue and profitability. To offset the loss of revenue, in April 2020, the Company implemented a furlough program for a substantial majority of the workforce across the corporate office, field support, and distribution centers; and reductions in the pay for executives and other working employees. Despite actions taken to resume business operations, COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could potentially prolong and intensify the impact of the global crisis on our business.

The economic disruption due to COVID-19 was determined to be a triggering event in the quarter and as a result, management assessed its long-term assets, including long-lived salon assets, right of use assets, goodwill and other intangibles for impairment. Impairments were recorded related to long-lived salon assets (Note 12) and goodwill (Notes 1 and 12). As the COVID-19 pandemic continues, management will reassess all long-term assets and further impairment may result.

Due to the COVID-19 pandemic, the Company is relying on the Securities and Exchange Commission's Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) to extend the filing of this Quarterly Report. The Company is relying on the Order due to the limited availability of key Company personnel required to complete the Form 10-Q due to the Company's employee furlough program, as well as suggested and mandated social quarantining and work from home orders. Additionally, the Company's management team was not able to initially devote the requisite time and attention to the Form 10-Q, as it had to address the emergent business and operational issues resulting from COVID-19.

9

Goodwill:

At the end of the period ended March 31, 2020, the Company determined a triggering event occurred, resulting in quantitative impairment tests performed over the goodwill. This determination was made considering the reduced sales and profitability projections for the reporting units, driven by the COVID-19 pandemic and related economic disruption.

The triggering events experienced in the third quarter impacted both reporting units of the business, Franchise and Company-owned. Due to the Company's emphasis on transitioning to a franchise platform, the Company engaged a third-party valuation specialist to perform an impairment analysis on the Franchise reporting unit of the business. Conversely, the Company-owned reporting unit is comprised of a portfolio of salons that the Company intends to sell to franchisees or close in the short-term as part of the transition to a fully-franchised model. As a result, the Company-owned reporting unit has a limited life which allows the Company to perform its own impairment analysis on the Company-owned reporting unit.

For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the Franchise reporting unit, and the discounted cash flows approach to evaluate the Company-owned reporting unit. The discounted cash flow models reflect management's assumptions regarding revenue growth rates, economic and market trends including deterioration from the current COVID-19 pandemic, cost structure, and other expectations about the anticipated short-term and long-term operating results of the reporting units. For the Franchise reporting unit, the discount rate of 13 percent and the terminal growth rate of 2.5 percent were also key assumptions utilized in the discounted cash flow. For the Company-owned reporting unit, proceeds from the sale of salons to franchisees and number of salon venditions were the other key assumptions utilized in its discounted cash flow. For the analysis performed as of March 31, 2020, management decreased the expected proceeds generated from the sale of salons to franchisees and increased the expected number of salon closures as compared to the analysis performed as of April 30, 2019. The decline in expected proceeds and increase in salon closings is due to the economic downturn resulting from the COVID-19 pandemic. The analysis also included substantially zero revenue in April and May 2020 and lower than previously expected revenue for the rest of calendar year 2020, which significantly reduced the expected cash flows.

As a result of the impairment testing, the Franchise reporting unit, which has goodwill of $226.7 million, was determined to have a fair value that exceeded carrying value by approximately 50 percent. The Company-owned reporting unit was determined to have a carrying value in excess of its fair value, resulting in a goodwill impairment charge of $44.5 million. Prior to the COVID-19 pandemic, the Company had been derecognizing Company-owned goodwill as part of the calculation of gain or loss on the sale of salons to franchisees. In the three and nine months ended March 31, 2020, the Company derecognized $19.8 and $72.6 million of goodwill, respectively. The Company-owned reporting unit has no remaining goodwill, so there will be no further derecognition of Company-owned goodwill.

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 $2.5 million, which was recorded in Interest income and other, net on the Condensed Consolidated Statement of Operations. In the three month period ended March 31, 2020, the Company recognized $1.5 million of incremental charges in Interest income and other, net which corrected and reduced the gain on sale of the Company’s former headquarters that was recorded in the second quarter of fiscal year 2020. The $2.5 million net gain on sale includes the adjustment. Management evaluated the effect of this out-of-period adjustment on the three and nine month periods ended March 31, 2020, as well as on the previous interim period in which it should have been recognized and concluded for both quantitative and qualitative reasons that the adjustment is not material to any of the periods affected.

10

Accounting Standards Recently Adopted by the Company:

Simplifying the Test for Goodwill Impairment

The Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350)" for the interim impairment test performed due to the triggering event noted above, as of March 31, 2020. Under this accounting standard, the Company performed its interim impairment test and will perform its annual impairment test by comparing the fair value of a reporting unit to its carrying amount. The Company then records an impairment charge for the amount that the carrying amount exceeds the fair value. This eliminates Step 2 from the goodwill impairment test to simplify the subsequent measure of goodwill.

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 March 31, 2020 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 $31.8 and $96.9 million during the three and nine months ended March 31, 2020, 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.

2. 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,

11

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 March 31, 2020				Three Months Ended March 31, 2019
	Franchise		Company-owned		Franchise		Company-owned
	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	78,387	$	—	$	181,809
Product	15,318		19,559		14,339		39,427
Total revenue recognized at a point in time	$	15,318	$	97,946	$	14,339	$	221,236
Revenue recognized over time:
Royalty and other franchise fees	$	16,487	$	—	$	14,339	$	—
Advertising fund (refunds) fees	(7,789)		—		8,429		—
Franchise rental income	31,821		—		—		—
Total revenue recognized over time	40,519		—		22,768		—
Total revenue	$	55,837	$	97,946	$	37,107	$	221,236

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	Nine Months Ended March 31, 2020				Nine Months Ended March 31, 2019
	Franchise		Company-owned		Franchise		Company-owned
	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	322,133	$	—	$	580,076
Product	45,287		79,229		47,786		125,220
Total revenue recognized at a point in time	$	45,287	$	401,362	$	47,786	$	705,296
Revenue recognized over time:
Royalty and other franchise fees	$	52,721	$	—	$	43,495	$	—
Advertising fund (refunds) fees	13,341		—		24,272		—
Franchise rental income	96,875		—		—		—
Total revenue recognized over time	162,937		—		67,767		—
Total revenue	$	208,224	$	401,362	$	115,553	$	705,296

Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows:

	March 31, 2020		June 30, 2019		Balance Sheet Classification
	(Dollars in thousands)
Receivables from contracts with customers, net	$	16,083	$	23,210	Accounts receivable, net
Broker fees	$	21,193	$	17,819	Other assets
Deferred revenue:
Current
Gift card liability	$	2,616	$	3,050	Accrued expenses
Deferred franchise fees unopened salons	44		193		Accrued expenses
Deferred franchise fees open salons	5,466		4,164		Accrued expenses
Total current deferred revenue	$	8,126	$	7,407
Non-current
Deferred franchise fees unopened salons	$	11,840	$	15,173	Other non-current liabilities
Deferred franchise fees open salons	33,821		24,194		Other non-current liabilities
Total non-current deferred revenue	$	45,661	$	39,367

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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 March 31, 2020 and June 30, 2019, the balance in the allowance for doubtful accounts was $2.6 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	5,499
Amortization	(2,092)
Write-offs	(33)
Balance as of March 31, 2020	$	21,193

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 March 31, 2020 and 2019 was $0.8 and $1.8 million, respectively, and for the nine months ended March 31, 2020 and 2019 was $2.3 and $4.0 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 March 31, 2020 and 2019 was $1.4 and $0.9 million, respectively, and for the nine months ended March 31, 2020 and 2019 was $3.8 and $2.6 million, respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2020 is as follows (in thousands):

Remainder of 2020	$	1,359
2021	5,348
2022	5,228
2023	5,051
2024	4,816
Thereafter	17,485
Total	$	39,287

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3. 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 nine months ended March 31, 2020 and 2019. 

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 included in the Condensed Consolidated Statement of Operations beginning in the third quarter. The assets acquired and liabilities assumed were not material to the Condensed Consolidated Balance Sheet. Professional fees and other restructuring related charges of $0.1 and $2.4 million in the three and nine months ended March 31, 2020, respectively, were recorded in the TBG restructuring line on the Condensed Consolidated Statement of Operations. As of March 31, 2020, prior to any mitigation efforts which may be available, the Company remains liable for up to approximately $26 million related to its mall-based salon lease commitments on the 190 salons that remain open, a $15 million reduction from June 30, 2019.

4. 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 nine months ended March 31, 2020, there were 663,636 and 1,145,053, respectively, and for the three and nine months ended March 31, 2019 there were 1,023,038 and 1,006,589 common stock equivalents of dilutive common stock excluded in the diluted earnings per share calculations due to the net loss from continuing operations.

The computation of weighted average shares outstanding, assuming dilution, excluded 670,997 and 608,944 of stock-based awards during the three months ended March 31, 2020 and 2019, respectively, and 174,698 and 542,329 of stock-based awards during the nine months ended March 31, 2020 and 2019, respectively, as they were not dilutive under the treasury stock method.

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5. SHAREHOLDERS’ EQUITY:

Stock-Based Employee Compensation:

During the three and nine months ended March 31, 2020, 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 March 31, 2020	For the Nine Months Ended March 31, 2020
Restricted stock units	7,451	201,091
Performance-based restricted stock units	—	73,712

The RSUs granted to employees during the three and nine months ended March 31, 2020 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 $0.0 and $2.5 million for the three months ended March 31, 2020 and 2019, respectively, and $2.1 and $7.1 million for the nine months ended March 31, 2020 and 2019, respectively, was recorded within general and administrative expense on the Condensed Consolidated Statement of Operations. The expense recorded in the three months ended March 31, 2020 was offset by the reversal of expense related to the downward adjustment of a PSU factor.

Share Repurchases:

During the nine months ended March 31, 2020, the Company repurchased 1.5 million shares for $26.4 million under a previously approved stock repurchase program. At March 31, 2020, $54.6 million remains outstanding under the approved stock repurchase program.

6.  INCOME TAXES:

A summary of income tax benefit (expense) and corresponding effective tax rates is as follows:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2020			2019			2020			2019
	(Dollars in thousands)
Income tax benefit (expense)	$	2,253		$	(3,248)		$	5,904		$	(2,988)
Effective tax rate	2.9		%	(28.1		%)	5.6		%	(25.2)		%

The recorded tax provisions and effective tax rates for the three and nine months ended March 31, 2020 were different than normally expected primarily due to the impact of the deferred tax valuation allowance. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in response to the COVID-19 pandemic. The CARES Act included several significant business tax provisions that, among other items, eliminated the taxable income limit and granted businesses a five-year carryback for certain net operating losses ("NOLs"), accelerated refunds of previously generated corporate alternative minimum tax ("AMT") credits, temporarily loosened the business interest limitation under section 163(j) and corrected certain provisions in the Tax Cuts and Jobs Acts ("TCJA").

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One of the technical corrections made to the TCJA through the CARES Act provisions modified NOLs resulting from accounting periods which straddled December 31, 2017. Such NOLs were originally deemed to have no carryback but an indefinite carryforward. As a result of the correction, the NOLs currently have a 2-year carryback and a 20-year carryforward and are considered definite-lived NOLs. This technical correction modified the Company's NOLs generated during its fiscal year end 2018 from indefinite-lived to definite-lived. As the Company has continued to maintain a valuation allowance against its definite-lived NOLs, the Company established a valuation allowance against the NOLs generated during its fiscal year 2018 and recorded a net tax expense of $14.7 million in continuing operations during the period ended March 31, 2020.

Due to recent negative financial performance and cumulative losses incurred in recent years, the Company was no longer able to conclude that it was more likely than not that certain Canadian deferred tax assets would be fully realized, and therefore established a $0.4 million valuation allowance on the deferred tax assets during the period ended March 31, 2020.

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.

7.  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. Regis is a defendant in two wage and hour lawsuits in California. The first, a class action in US District Court, alleges various violations of the California Labor Code, including but not limited to failure to pay wages, failure to permit rest breaks, failure to pay all wages due on termination of employment, waiting time penalties, failure to provide accurate wage statements and violation of the business and professions code. This case has preliminarily settled, pending approval of the court and class, for $2.1 million. The second, a class action filed in California Superior Court, alleges various violations of the California Labor Code as well as PAGA penalties. Barring successful objection from plaintiffs’ attorneys to the first class action, the second case will be subsumed into the first case’s settlement. As of June 30, 2019 and March 31, 2020, $1.5 and $2.1 million, respectively, was included within accrued expenses on the Condensed Consolidated Balance Sheet related to these class action lawsuits.

8. 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:

	March 31, 2020		June 30, 2019
	(Dollars in thousands)
Cash and cash equivalents	$	241,037	$	70,141
Restricted cash, included in Other current assets (1)	14,745		22,238
Total cash, cash equivalents and restricted cash	$	255,782	$	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.

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9. 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	(1,262)		(660)		(1,922)
Derecognition related to sale of salon assets to franchisees (1)	—		(72,601)		(72,601)
Goodwill impairment	—		(44,529)		(44,529)
Goodwill, net at March 31, 2020	$	226,666	$	—	$	226,666

_______________________________________________________________________________

(1)Prior to the impairment charge, goodwill was derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized was 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 goodwill balance of the Company-owned reporting unit at the time of the sale.

The table below presents other intangible assets:

	March 31, 2020						June 30, 2019
	Cost (1)		Accumulated Amortization (1)		Net		Cost (1)		Accumulated Amortization (1)		Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	6,541	$	(3,632)	$	2,909	$	6,909	$	(3,659)	$	3,250
Franchise agreements	9,356		(7,944)		1,412		9,783		(8,057)		1,726
Lease intangibles	13,426		(10,516)		2,910		13,490		(10,065)		3,425
Other	865		(528)		337		883		(523)		360
Total	$	30,188	$	(22,620)	$	7,568	$	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.

10. 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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Minimum rent	$	14,970	$	26,325	$	51,468	85,099
Percentage rent based on sales	298		1,373		2,145		3,476
Real estate taxes and other expenses	3,975		4,634		10,389		14,377
Total	$	19,243	$	32,332	$	64,002	$	102,952

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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 nine months ended March 31, 2020, franchise rental income and franchise rent expense were $31.8 and $96.9 million, respectively.

For franchise and company-owned 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. Due to the COVID-19 triggering event, the Company assessed its ROU assets for impairment and determined that as of March 31, 2020, the ROU assets were not impaired. As the COVID-19 pandemic continues, the Company will continue to assess its ROU assets for impairment, which could have a material impact on the Company's results of operations.

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 6.86 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of March 31, 2020.

As of March 31, 2020, 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	$	31,959	$	14,484	$	150	$	46,593	$	(31,959)	$	14,634
2021	121,831		51,700		1,781		175,312		(121,831)		53,481
2022	111,239		42,916		1,410		155,565		(111,239)		44,326
2023	100,687		37,374		1,447		139,508		(100,687)		38,821
2024	90,582		33,096		1,484		125,162		(90,582)		34,580
Thereafter	257,841		92,091		9,339		359,271		(257,841)		101,430
Total future obligations	$	714,139	$	271,661	$	15,611	$	1,001,411	$	(714,139)	$	287,272
Less amounts representing interest	89,274		32,514		2,896		124,684
Present value of lease liabilities	$	624,865	$	239,147	$	12,715	$	876,727
Less current lease liabilities	102,310		46,171		1,001		149,482
Long-term lease liabilities	$	522,555	$	192,976	$	11,714	$	727,245

11. FINANCING ARRANGEMENTS:

The Company’s long-term debt consists of the following:

Revolving Credit Facility

	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.90%	$	273,000	$	90,000

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At March 31, 2020, cash, cash equivalents and marketable securities totaled $241.0 million. As of March 31, 2020, the Company has $273.0 million of outstanding borrowings under a $295.0 million revolving credit facility. At March 31, 2020, 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 $0.5 million as of March 31, 2020. The Company increased its outstanding borrowings from December 31, 2019 to March 31, 2020 by making a draw on the credit facility of $183.0 million in March of 2020. The $183.0 million draw was done to increase the Company's cash position and preserve financial flexibility as the Company experienced significant business interruption due to the COVID-19 pandemic. As of March 31, 2020, the Company had cash, cash equivalents and restricted cash of $255.8 million and current liabilities of $232.1 million.

In May of 2020, the Company amended its $295.0 million revolving credit facility that expires in March 2023. The amendment to the revolving credit facility provides relief for the maximum consolidated net leverage ratio covenant and the minimum fixed charge coverage ratio covenant. Without such amendment, the Company would have been in violation of the covenants as of March 31, 2020 which could have resulted in default. Under the new terms of the amendment, the Company is required to maintain a minimum liquidity of not less than $75.0 million, and provides the Company's lenders security in the Company's assets, adds additional guarantors and grants a first priority lien and security interest to the lenders in substantially all of the Company’s and the guarantors’ existing and future property. The amendment also increases the applicable interest rate margins and facility fees applicable to the loans and inserts a 1.25% LIBOR floor. The applicable margin for loans bearing interest at LIBOR ranges from 3.75%-4.25%, the applicable margin for loans bearing interest at the base rate ranges from 2.75%-3.25% and the facility fee ranges from 0.5%-0.75%, each depending on average utilization of the revolving line of credit. This amendment gives the Company flexibility throughout the uncertainty generated by the business disruption caused by the COVID-19 pandemic, as well as the Company's navigation through its strategic transformation. As of the filing date, the Company is in compliance with its amended debt covenants.

The Company was not in compliance with its previous debt covenants as of March 31, 2020, which could have resulted in a default. This coupled with the closure of most of our salons for a period of time are conditions and events that could have created substantial doubt about our ability to continue as a going concern. We amended our debt agreement, which removed and amended certain covenants and requirements and also remedied the non-compliance item, in addition to taking other actions that have alleviated the substantial doubt about our ability to continue as a going concern.

Sale and Leaseback Transaction

The Company’s long-term financing liabilities consists of the following:

	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Financial liability - Salt Lake City Distribution Center	2034	3.30%	$	16,914	$	17,354
Financial liability - Chattanooga Distribution Center	2034	3.70%	11,319		11,556
Long- term financing liability			$	28,233	$	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 March 31, 2020, 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 13.9 years and the weighted-average discount rate was 3.46% for financing leases as of March 31, 2020.

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As of March 31, 2020, future lease payments due are as follows:

Fiscal year	Salt Lake City Distribution Center		Chattanooga Distribution Center
	(Dollars in thousands)
Remainder of 2020	$	287	$	201
2021	1,157		817
2022	1,171		829
2023	1,186		842
2024	1,200		854
Thereafter	11,899		9,282
Total	$	16,900	$	12,825

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 $0.8 million for the three and nine months ended March 31, 2020.

12. 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 March 31, 2020 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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Goodwill	$	44,529	$	—	$	44,529	$	—
Long-lived salon assets	1,208		702		3,851		3,005

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13. 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:

	March 31, 2020		June 30, 2019
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,219		615
Supercuts	2,522		2,340
Signature Style	1,215		766
Total North American salons	4,956		3,721
Total International salons (1)	170		230
Total Franchise salons	5,126		3,951
as a percent of total Franchise and Company-owned salons	73.9	%	56.0	%
Total Franchisees	955		907
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	873		1,550
Supercuts	217		403
Signature Style	535		1,155
Mall-based (2)	190		—
Total Company-owned salons	1,815		3,108
as a percent of total Franchise and Company-owned salons	26.1	%	44.0	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	85		86
Grand Total, System-wide	7,026		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. They are included in continuing operations under the Company-owned operating segment from January 1, 2020.

As of March 31, 2020, the Franchise operating segment is comprised primarily of Supercuts^®, SmartStyle^®, Cost Cutters^®, First Choice Haircutters^®, Roosters^® and Magicuts^® concepts and the Company-owned operating segment is comprised primarily of SmartStyle^®, Supercuts^®, Cost Cutters^®, and other regional trade names.

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Financial information concerning the Company's reportable operating segments is shown in the following tables:

	For the Three Months Ended March 31, 2020
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	78,387	$	—	$	78,387
Product	15,318		19,559		—		34,877
Royalties and fees (1)	8,698		—		—		8,698
Franchise rental income	31,821		—		—		31,821
Total revenue	55,837		97,946		—		153,783
Operating expenses:
Cost of service	—		54,824		—		54,824
Cost of product	11,452		10,220		—		21,672
Site operating expenses (1)	(7,789)		11,449		—		3,660
General and administrative	8,657		4,566		18,648		31,871
Rent	176		18,163		904		19,243
Franchise rent expense	31,821		—		—		31,821
Depreciation and amortization	292		9,799		268		10,359
TBG restructuring	146		—		—		146
Goodwill impairment	—		44,529		—		44,529
Total operating expenses	44,755		153,550		19,820		218,125
Operating income (loss)	11,082		(55,604)		(19,820)		(64,342)
Other (expense) income:
Interest expense	—		—		(1,712)		(1,712)
Loss from sale of salon assets to franchisees, net	—		—		(10,208)		(10,208)
Interest income and other, net	—		—		(1,329)		(1,329)
Income (loss) from continuing operations before income taxes	$	11,082	$	(55,604)	$	(33,069)	$	(77,591)

(1) Includes the refund of $14.9 million of previously collected cooperative adverting fees, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss.

	For the Three Months Ended March 31, 2019
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	181,809	$	—	$	181,809
Product	14,339		39,427		—		53,766
Royalties and fees	22,768		—		—		22,768
Total revenue	37,107		221,236		—		258,343
Operating expenses:
Cost of service	—		111,632		—		111,632
Cost of product	11,175		19,992		—		31,167
Site operating expenses	8,445		25,894		—		34,339
General and administrative	7,526		14,505		19,663		41,694
Rent	190		31,964		178		32,332
Depreciation and amortization	240		6,519		1,871		8,630
TBG mall location restructuring	20,711		—		—		20,711
Total operating expenses	48,287		210,506		21,712		280,505
Operating (loss) income	(11,180)		10,730		(21,712)		(22,162)
Other (expense) income:
Interest expense	—		—		(1,354)		(1,354)
Gain from sale of salon assets to franchisees, net	—		—		11,489		11,489
Interest income and other, net	—		—		464		464
(Loss) income from continuing operations before income taxes	$	(11,180)	$	10,730	$	(11,113)	$	(11,563)

23

	For the Nine Months Ended March 31, 2020
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	322,133	$	—	$	322,133
Product	45,287		79,229		—		124,516
Royalties and fees (1)	66,062		—		—		66,062
Franchise rental income	96,875		—		—		96,875
Total revenue	208,224		401,362		—		609,586
Operating expenses:
Cost of service	—		212,664		—		212,664
Cost of product	34,804		40,453		—		75,257
Site operating expenses (1)	13,341		49,591		—		62,932
General and administrative	25,990		22,263		56,934		105,187
Rent	767		61,326		1,909		64,002
Franchise rent expense	96,875		—		—		96,875
Depreciation and amortization	662		21,844		4,980		27,486
TBG restructuring	2,368		—		—		2,368
Goodwill impairment	—		44,529		—		44,529
Total operating expenses	174,807		452,670		63,823		691,300
Operating income (loss)	33,417		(51,308)		(63,823)		(81,714)
Other (expense) income:
Interest expense	—		—		(4,615)		(4,615)
Loss from sale of salon assets to franchisees, net	—		—		(21,760)		(21,760)
Interest income and other, net	—		—		3,188		3,188
Income (loss) from continuing operations before income taxes	$	33,417	$	(51,308)	$	(87,010)	$	(104,901)

(1) Includes the refund of $14.9 million of previously collected cooperative adverting costs, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss.

	For the Nine Months Ended March 31, 2019
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	580,076	$	—	$	580,076
Product	47,786		125,220		—		173,006
Royalties and fees	67,767		—		—		67,767
Total revenue	115,553		705,296		—		820,849
Operating expenses:
Cost of service	—		348,060		—		348,060
Cost of product	38,037		61,661		—		99,698
Site operating expenses	24,288		82,435		—		106,723
General and administrative	24,656		45,084		65,517		135,257
Rent	468		101,908		576		102,952
Depreciation and amortization	613		21,304		5,815		27,732
TBG mall location restructuring	20,711		—		—		20,711
Total operating expenses	108,773		660,452		71,908		841,133
Operating income (loss)	6,780		44,844		(71,908)		(20,284)
Other (expense) income:
Interest expense	—		—		(3,432)		(3,432)
Loss from sale of salon assets to franchisees, net	—		—		10,394		10,394
Interest income and other, net	—		—		1,453		1,453
Income (loss) from continuing operations before income taxes	$	6,780	44,844		$	(63,493)	$	(11,869)

24

14. SUBSEQUENT EVENT:

In May of 2020, the Company amended its $295.0 million revolving credit facility that expires in March 2023 (See Note 11).

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our consolidated financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This MD&A should be read in conjunction with the MD&A included in our June 30, 2019 Annual Report on Form 10-K and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year.

MANAGEMENT’S OVERVIEW

Regis Corporation (RGS) franchises, owns, and operates beauty salons. As of March 31, 2020, the Company franchised, owned or held ownership interests in 7,026 worldwide locations. Our locations consisted of 6,941 system-wide North American and International salons, and in 85 locations we maintained a non-controlling ownership interest less than 100 percent. Each of the Company’s salon concepts generally offer similar salon products and services and serve the mass market. As of March 31, 2020, we had approximately 11,000 corporate employees worldwide.

Impact of COVID-19 on Business Operations

During the period ended March 31, 2020, COVID-19 had an adverse impact on operations, including the closure of all company-owned salons and almost all franchise locations in March 2020 due to government mandates. Salons continued to be closed until April 23, 2020 when franchise salons began re-opening slowly, as government, state and local restrictions eased. As of June 15, 2020 approximately 76% of Franchise salons were open. Company-owned salons were closed through May 21, 2020 and are gradually re-opening. As of June 15, 2020, approximately 45% of company-owned salons were open. As salons re-open, the Company is taking additional measures across its portfolio of franchise and company-owned salons to facilitate customer and employee safety. As a result, COVID-19 has and will continue to negatively affect revenue and profitability. To offset the loss of revenue, in April 2020, the Company implemented a furlough program for a substantial majority of the workforce across the corporate office, field support, and distribution centers; and reductions in the pay for executives and other working employees. Despite actions taken to resume business operations, COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could potentially prolong and intensify the impact of the global crisis on our business.

CRITICAL ACCOUNTING POLICIES

The interim unaudited Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the interim unaudited Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the interim unaudited Condensed Consolidated Financial Statements. We base these estimates on historical experience and other assumptions believed to be reasonable under the circumstances. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Changes in these estimates could have a material effect on our interim unaudited Condensed Consolidated Financial Statements.

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Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, 2019 Annual Report on Form 10-K, as well as Notes 1 and 2 to the unaudited Condensed Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. We believe the accounting policies related to the valuation of goodwill, the valuation and estimated useful lives of long-lived assets, estimates used in relation to tax liabilities and deferred taxes are most critical to aid in fully understanding and evaluating our reported financial condition and results of operations. Discussion of each of these policies is contained under “Critical Accounting Policies” in Part II, Item 7 of our June 30, 2019 Annual Report on Form 10-K. Our updated policies on the amended revenue recognition guidance, ASC Topic 606, can be found in Note 2 to the unaudited Condensed Consolidated Financial Statements.

Recent Accounting Pronouncements

The Company adopted the amended leasing guidance, Topic 842, on July 1, 2019 using the modified retrospective method which required the adjustment of only the current reporting period presented. Recent accounting pronouncements are discussed in detail in Notes 1 and 10 to the unaudited Condensed Consolidated Financial Statements.

The Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350)" for the interim impairment test performed as of March 31, 2020. Under this accounting standard, the Company performed its interim impairment test and will perform its annual impairment test by comparing the fair value of a reporting unit to its carrying amount. The Company then records an impairment charge for the amount that the carrying amount exceeds the fair value. This eliminates Step 2 from the goodwill impairment test to simplify the subsequent measure of goodwill.

26

RESULTS OF OPERATIONS

Impact of salons sold to franchisees on operations.

In the three and nine months ended March 31, 2020, the Company sold 375 and 1,363, respectively, company-owned salons to franchisees. The impact of these transactions are as follows:

	Three Months Ended March 31,				Increase (Decrease)		Nine Months Ended March 31,				Increase (Decrease)
	2020		2019				2020		2019
	(Dollars in thousands)
Salons sold to franchisees	375		245		130		1,363		502		861
Cash proceeds received	$	18,502	$	30,569	$	(12,067)	$	87,916	$	54,619	$	33,297
Gain on sale of venditions, excluding goodwill derecognition	$	9,628	$	27,421	$	(17,793)	$	50,841	$	43,922	$	6,919
Non-cash goodwill derecognition	(19,836)		(15,932)		3,904		(72,601)		(33,528)		39,073
(Loss) gain from sale of salon assets to franchisees, net	$	(10,208)	$	11,489	$	(21,697)	$	(21,760)	$	10,394	$	(32,154)

System-wide results

As we transition to an asset-light franchise platform, our results will be more impacted by our system-wide sales, which include sales by all points of distribution, whether owned by the Company or our franchisees. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe system-wide sales information aids in understanding how we derive royalty revenue and in evaluating performance.

System-wide same-store sales by concept are detailed in the table below:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
SmartStyle	(9.5)	%	0.6	%	(4.8)	%	1.2	%
Supercuts	(3.7)		(2.2)		(1.4)		(0.2)
Signature Style	(4.8)		(3.9)		(2.7)		(1.0)
Consolidated system-wide same store sales	(5.4)	%	(2.0)	%	(2.7)	%	(0.1)	%

_______________________________________________________________________________

(1)System-wide same-store sales are calculated as the total change in sales for system-wide franchise and company-owned locations for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2020 so by definition they are not included in system-wide same-store sales. TBG same-store sales are excluded from fiscal year 2019 same-store sales to be comparative to fiscal year 2020.

27

Condensed Consolidated Results of Operations (Unaudited)

The following table sets forth, for the periods indicated, certain information derived from our unaudited Condensed Consolidated Statement of Operations. The percentages are computed as a percent of total consolidated revenues, except as otherwise indicated.

	For the Three Months Ended March 31,									For the Nine Months Ended March 31,
	2020		2019		2020		2019		2020	2020		2019		2020		2019		2020
	($ in millions)				% of Total Revenues (1)				(Decrease) Increase	($ in millions)				% of Total Revenues (1)				(Decrease) Increase
Service revenues	$	78.4	$	181.8	51.0	%	70.4	%	(1,940)	$	322.1	$	580.1	52.8	%	70.6	%	(1,780)
Product revenues	34.9		53.8		22.7		20.8		190	124.5		173.0		20.4		21.1		(70)
Royalties and fees	8.7		22.8		5.7		8.8		(310)	66.1		67.8		10.8		8.3		250
Franchise rental income	31.8		—		20.7		—		N/A	96.9		—		15.9		—		N/A
Cost of service (2)	54.8		111.6		69.9		61.4		850	212.7		348.1		66.0		60.0		600
Cost of product (2)	21.7		31.2		62.2		58.0		420	75.3		99.7		60.5		57.6		290
Site operating expenses	3.7		34.3		2.4		13.3		(1,090)	62.9		106.7		10.3		13.0		(270)
General and administrative	31.9		41.7		20.7		16.1		460	105.2		135.3		17.3		16.5		80
Rent	19.2		32.3		12.5		12.5		—	64.0		103.0		10.5		12.5		(200)
Franchise rent expense	31.8		—		20.7		—		N/A	96.9		—		15.9		—		N/A
Depreciation and amortization	10.4		8.6		6.8		3.3		350	27.5		27.7		4.5		3.4		110
TBG restructuring	0.1		20.7		0.1		8.0		(790)	2.4		20.7		0.4		2.5		(210)
Goodwill impairment	44.5		—		28.9		—		N/A	44.5		—		7.3		—		N/A
Operating loss	(64.3)		(22.2)		(41.8)		(8.6)		(3,320)	(81.7)		(20.3)		(13.4)		(2.5)		(1,090)
Interest expense	(1.7)		(1.4)		(1.1)		(0.5)		(60)	(4.6)		(3.4)		(0.8)		(0.4)		(40)
(Loss) gain from sale of salon assets to franchisees, net	(10.2)		11.5		(6.6)		4.4		(1,100)	(21.8)		10.4		(3.6)		1.3		(490)
Interest income and other, net	(1.3)		0.5		(0.8)		0.2		(100)	3.2		1.5		0.5		0.2		30
Income tax benefit (expense) (3)	2.3		(3.2)		3.0		28.1		N/A	5.9		(3.0)		5.6		25.2		N/A
Income from discontinued operations, net of income taxes	0.3		0.2		0.2		0.1		10	0.8		6.0		0.1		0.7		(60)

_______________________________________________________________________________

(1)Cost of service is computed as a percent of service revenues. Cost of product is computed as a percent of product revenues.

(2)Excludes depreciation and amortization expense.

(3)Computed as a percent of loss from continuing operations before income taxes. The income taxes basis point change is noted as not applicable (N/A) as the discussion within MD&A is related to the effective income tax rate.

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Consolidated Revenues

Consolidated revenues primarily include revenues of company-owned salons, product and equipment sales to franchisees, franchise royalties and fees and franchise rental income. The following tables summarize revenues and same-store sales by concept, as well as the reasons for the percentage change:

	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
	(Dollars in thousands)
Franchise salons:
Product	$	15,318		$	14,339		$	45,287		$	47,786
Royalties and fees	8,698			22,768			66,062			67,767
Franchise rental income	31,821			—			96,875			—
Total, Franchise salons	$	55,837		$	37,107		$	208,224		$	115,553
Franchise salon same-store sales (decrease) increase (1)	(4.1)		%	(1.3)		%	(1.8)		%	0.4		%
Company-owned salons:
SmartStyle	$	46,277		$	96,139		$	197,912		$	286,465
Supercuts	11,743			48,552			53,063			174,687
Signature Style	39,926			76,545			150,387			244,144
Total, Company-owned salons	$	97,946		$	221,236		$	401,362		$	705,296
Company-owned salon same-store sales (decrease) increase (2)	(7.9)		%	(2.5)		%	(3.9)		%	(0.4)		%
Consolidated revenues	$	153,783		$	258,343		$	609,586		$	820,849
Percent change from prior year	(40.5)		%	(15.5)		%	(25.7)		%	(12.2)		%

_______________________________________________________________________________

(1)Franchise same-store sales are calculated as the total change in sales for salons that have been a franchise location for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2020 so by definition they are not included in franchise same-store sales. TBG same-store sales are excluded from fiscal year 2019 same-store sales to be comparative to fiscal year 2020.

(2)Company-owned same-store sales are calculated as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date company-owned same-store sales are the sum of the company-owned same-store sales computed on a daily basis. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Company-owned same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

29

Three and Nine Months Ended March 31, 2020 Compared with Three and Nine Months Ended March 31, 2019

Consolidated Revenues

Consolidated revenues are primarily comprised of service and product revenues, as well as franchise royalties and fees, advertising and rental income.

Consolidated revenue decreased $104.6 and $211.3 million for the three and nine months ended March 31, 2020, respectively. Service revenue and product revenue decreased $103.4 and $18.9 million, respectively, in the three months ended March 31, 2020 and decreased $258.0 million and $48.5 million, respectively, in the nine months ended March 31, 2020. The decline in service and product revenue is primarily the due to the Company's sale of salons to franchisees. During the twelve months ended March 31, 2020, 1,581 salons were sold to franchisees, net of buy backs and 524 and 76 system-wide salons were closed and constructed, respectively (2020 Net Salon Count Changes). For the three and nine months ended March 31, 2020, the impact to consolidated revenue due to the sale of salons to franchisees and closure of salons was $119.1 and $294.1 million, respectively. Additionally, the decline in revenue was a result of the temporary closure of all company-owned salons and all but an insignificant number of franchise salons in March due to the COVID-19 pandemic. In the three and nine months ended March 31, 2020, royalties and fees decreased $14.1 and $1.7 million due to the refunding of $14.9 million of previously collected contributions to the cooperative advertising funds. Additionally, as a result of the Company's adoption of Topic 842, the Company now records revenue related to franchise leases and this adoption resulted in a $31.8 and $96.9 million increase in franchise rental income for the three and nine months ended March 31, 2020.

Service Revenues

The decreases of $103.4 and $258.0 million in service revenues during the three and nine months ended March 31, 2020, respectively, were primarily due to the 2020 Net Salon Count Changes. For the three and nine months ended March 31, 2020, the impact to service revenue due to the sale of salons to franchisees and closure of salons was $101.3 and $252.9 million, respectively. Additionally, the temporary closure of salons in March 2020 and company-owned same-store service sales decreases also contributed to the decrease in service revenue. Company-owned same-store service sales decreases of 6.9% and 2.8% during the three and nine months ended March 31, 2020, respectively, were primarily due to a decrease of 10.3% and 6.3% in same-store guest transactions, partially offset by increases of 3.4% and 3.5% in average ticket price, respectively.

Product Revenues

The decreases of $18.9 and $48.5 million in product revenues during the three and nine months ended March 31, 2020 were primarily due to 2020 Net Salon Count Changes. For the three and nine months ended March 31, 2020, the impact to product revenue due to the sale of salons to franchisees and closure of salons was $17.8 and $41.1 million, respectively. Company-owned same-store product sales decreases of 11.9% and 8.3%, respectively and the temporary closure of salons in March 2020 also contributed to the decrease in product sales. For the three and nine months ended March 31, 2020, the decreases in company-owned same-store product sales were primarily the result of decreases in company-owned same-store transactions of 16.4% and 12.2%, respectively, partially offset by increases in average ticket price of 4.5% and 3.9%, respectively.

Royalties and Fees

The decreases of $14.1 and $1.7 million in royalties and fees for the three and nine months ended March 31, 2020, respectively, were primarily due to the refunding of $14.9 million of previously collected contributions to the cooperative advertising funds to provide temporary relief to our franchisees. The decrease in advertising fund revenue was partially offset by an increase in royalties due to an increase in franchise locations. Total franchised locations open at March 31, 2020 were 5,126 as compared to 4,375 at March 31, 2019.

Franchise Rental Income

The increases of $31.8 million and $96.9 million in franchise rental income for the three and nine months ended March 31, 2020, respectively, is due to the adoption of Topic 842 in fiscal year 2020. Prior to the adoption, the Company recorded franchise rental income and expense on a net basis.

30

Cost of Service

The 850 and 600 basis point increases in cost of service as a percent of service revenues during the three and nine months ended March 31, 2020, respectively, were primarily due to higher minimum wages and commissions and inefficient stylist hours in the lead up to salon closures due to COVID-19.

Cost of Product

The 420 and 290 basis point increases in cost of product as a percent of product revenues during the three and nine months ended March 31, 2020, respectively, were primarily due to the shift into lower margin wholesale product sales. Margins on retail product sales were 47.7% and 49.3% in the three months ended March 31, 2020 and 2019, respectively. Margins on wholesale product sales were 25.2% and 22.1% in the three months ended March 31, 2020 and 2019, respectively. Margins on retail product sales were 48.9% and 50.8% in the nine months ended March 31, 2020 and 2019, respectively. Margins on wholesale product sales were 23.1% and 20.4% in the nine months ended March 31, 2020 and 2019, respectively. Increases in wholesale product margins were primarily driven by lower sales to TBG in the current year.

Site Operating Expenses

The decreases of $30.6 and $43.8 million in site operating expenses during the three and nine months ended March 31, 2020, respectively, were due to a net reduction in salon counts and a decrease in cooperative advertising expense due to the refunding of $14.9 million in advertising fees. The Company records advertising expense as the contributions are received as it has an obligation to spend the funds to support the brands. Additionally, the decrease was due to the net reduction in company-owned salon counts associated with the Company's franchise strategy

General and Administrative

The decreases of $9.8 and $30.1 million in general and administrative (G&A) during the three and nine months ended March 31, 2020 were primarily due to lower administrative and field management salaries and bonuses and lower stock compensation expense associated with a change in performance awards assumptions.

Rent

The decreases of $13.1 and $39.0 million in rent expense during the three and nine months ended March 31, 2020, respectively, were primarily due to the net reduction in salon counts associated with the Company's franchise strategy, partially offset by rent inflation.

Franchise Rent Expense

The increase in franchise rent expense is due to the adoption of Topic 842 in fiscal year 2020. Prior to the adoption, the Company recorded franchise rental income and expense on a net basis.

Depreciation and Amortization

The increase of $1.8 million in depreciation and amortization during the three months ended March 31, 2020 was primarily due to accelerated depreciation related to the moving of the Company's headquarters and certain salon assets. The decrease of $0.2 million in depreciation and amortization during the nine months ended March 31, 2020 was primarily due to the reduced salon base, partially offset by the accelerated depreciation related to the moving of the Company's headquarters and certain salon assets.

TBG Restructuring

In the three and nine months ended March 31, 2020, the Company incurred professional fees associated with acquiring salons from TBG. In the three and nine months ended March 31, 2019, the Company recorded a reserve against a note receivable of $8.0 million and accounts receivables of $12.7 million due from TBG due primarily for inventory shipments.

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Goodwill Impairment

The Company recorded $44.5 million of goodwill impairment for the three and nine months ended March 31, 2020. Management concluded that the COVID-19 pandemic in March 2020 was a triggering event requiring an assessment of the Company’s goodwill. The Company concluded the carrying value of the Company-owned reporting unit exceeded its fair value resulting in a full impairment.

Interest Expense

The increases of $0.3 and $1.2 million in interest expense for the three and nine months ended March 31, 2020, respectively, were primarily due to interest charges associated with the long-term financing liabilities.

(Loss)/Gain from sale of salon assets to franchisees, net

In the three months ended March 31, 2020, the loss from sale of salon assets to franchisees was $10.2 million, including non-cash goodwill derecognition of $19.8 million. In the three months ended March 31, 2019, the gain from the sale of salon assets to franchisees was $11.5 million, including non-cash goodwill derecognition of $15.9 million. In the nine months ended March 31, 2020, the loss from the sale of salons assets to franchisees was $21.8 million, including $72.6 million of non-cash goodwill derecognition. In the nine months ended March 31, 2019, the gain from sale of salon assets to franchisees was $10.4 million, including non-cash goodwill derecognition of $33.5 million. The decrease year over year is due to lower proceeds per salon sold in fiscal year 2020 compared to fiscal year 2019 as the Company sold more Supercuts salons in fiscal year 2019, which typically vendition for greater proceeds than other concepts.

Interest Income and Other, net

The decrease of $1.8 million in interest income and other, net during the three months ended March 31, 2020 was primarily due to an adjustment to the accounting for the sale of the Company's headquarters. In the three month period ended March 31, 2020, the Company recognized $1.5 million of incremental charges to correct the gain on sale of the Company's former headquarters recorded in the second quarter of fiscal year 2020. Management evaluated the effect of this out-of-period adjustment on the three and nine months periods ended March 31, 2020, as well as on the previous interim period in which it should have been recognized, and concluded for both quantitative and qualitative reasons that the adjustment is not material to any of the period affected. The increase of $1.7 million in interest income and other, net during the nine months ended March 31, 2020 was primarily due to the gain on the sale of the Company's headquarters of $2.5 million, partially offset by a decline in interest income.

Income Taxes

During the three and nine months ended March 31, 2020, the Company recognized tax benefits of $2.3 and $5.9 million, respectively, with corresponding effective tax rates of 2.9% and 5.6% as compared to recognizing tax expenses of $3.2 and $3.0 million, with corresponding effective tax rates of (28.1%) and (25.2)% during the three and nine months ended March 31, 2019.

See Note 6 to the unaudited Condensed Consolidated Financial Statements.

Income from Discontinued Operations

Income from discontinued operations increased $0.1 million during the three months ended March 31, 2020 due to beneficial actuarial adjustments recognized in fiscal year 2020. For the nine months ended March 31, 2020, income from discontinued operations decreased $5.3 million due to lapping income tax benefits associated with the wind-down and transfer of legal entities related to discontinued operations recognized in the second quarter of fiscal year 2019.

Results of Operations by Segment

Based on our internal management structure, we report two segments: Franchise salons and Company-owned salons. See Note 13 to the Consolidated Financial Statements. Significant results of operations are discussed below with respect to each of these segments.

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Franchise Salons

	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2020			2019			Increase (Decrease)		2020			2019			Increase (Decrease)
	(Dollars in millions)								(Dollars in millions)
Revenue
Product	$	15.3		$	10.6		$	4.7	$	43.3		$	31.3		$	12.0
Product sold to TBG	—			3.7			(3.7)		2.0			16.5			(14.5)
Total product	15.3			14.3			1.0		45.3			47.8			(2.5)
Royalties and fees (1)	8.7			22.8			(14.1)		66.1			67.8			(1.7)
Franchise rental income	31.8			—			31.8		96.9			—			96.9
Total franchise salons revenue (2)	$	55.8		$	37.1		$	18.7	$	208.2		$	115.6		$	92.6
Franchise same-store sales (3)	(4.1)		%	(1.3)		%			(1.8)		%	0.4		%
Operating income	$	11.2		$	9.7		$	1.5	$	35.8		$	26.0		$	9.8
Operating loss from TBG restructuring	(0.1)			(20.9)			20.8		(2.4)			(19.2)			16.8
Total operating income (loss) (2)	$	11.1		$	(11.2)		$	22.3	$	33.4		$	6.8		$	26.6

_______________________________________________________________________________

(1)Fiscal year 2020 includes the refund of $14.9 million of previously collected cooperative adverting fees, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss. The nine months ended March 31, 2019 includes $1.7 million of royalties related to TBG. No TBG royalties were recorded in the three months ended March 2019.

(2)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

(3)Franchise same-store sales are calculated as the total change in sales for salons that have been a franchise location for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG salons were not a franchise location in fiscal year 2020 so by definition they are not included in franchise same-store sales. TBG same-store sales are excluded from fiscal year 2019 same-store sales to be comparative to fiscal year 2020.

Franchise same-store sales by concept are detailed in the table below:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
SmartStyle	(10.9)	%	(5.2)	%	(8.6)	%	(4.7)	%
Supercuts	(3.3)		(0.6)		(0.9)		0.8
Signature Style	(3.5)		(2.2)		(1.7)		0.1
Total	(4.1)	%	(1.3)	%	(1.8)	%	0.4	%

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Franchise Salon Revenues

Franchise salon revenues increased $18.7 and $92.6 million during the three and nine months ended March 31, 2020. Excluding franchise rental income recorded in fiscal year 2020 as a result of the adoption of Topic 842, franchise salon revenues decreased $13.1 and $4.2 million during the three and nine months ended March 31, 2020, respectively. The decreases were due to the refund of previously collected contributions to the cooperative advertising funds as well as decreases in franchise product sales to TBG, partially offset by the increases in royalties and fees due to higher franchise salon counts. During the twelve months ended March 31, 2020, franchisees constructed (net of relocations) and closed 55 and 316 Franchise-owned salons, respectively, and purchased (net of Company buybacks) 1,581 salons from the Company during the same period.

Franchise Salon Operating Income

During the three months ended March 31, 2020, Franchise salon operations generated operating income of $11.1 million, an increase of $22.3 million compared to the prior comparable period. The increase during the three months ended March 31, 2020 was primarily due to higher royalties, fees and product sales associated with the increase in salon count and a decline in costs associated with TBG. These increases were partially offset by decreased sales in the three months ended March 31, 2020 due to the closure of a majority of franchise salons in March 2020 due to the COVID-19 pandemic. During the nine months ended March 31, 2020, Franchise salon operations generated operating income of $33.4 million, an increase of $26.6 million compared to the prior comparable period. The increase during the nine months ended March 31, 2020 was primarily due to higher royalties, fees and product sales associated with the increase in salon count and a decline in costs associated with TBG. Franchise salon operating income for the nine months ended March 31, 2020 was also impacted by the closure of a majority of franchise salons in March 2020 due to the COVID-19 pandemic.

Company-owned Salons

	For the Three Months Ended March 31,								For the Nine Months Ended March 31,
	2020			2019			Increase (Decrease)		2020			2019			Increase (Decrease)
	(Dollars in millions)								(Dollars in millions)
Total revenue	$	97.9		$	221.2		$	(123.3)	$	401.4		$	705.3		$	(303.9)
Company-owned same-store sales	(7.9)		%	(2.5)		%			(3.9)		%	(0.4)		%
Operating (loss) income	$	(55.6)		$	10.7		$	(66.3)	$	(51.3)		$	44.8		$	(96.2)

Company-owned same-store sales by concept are detailed in the table below:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
SmartStyle	(9.0)	%	1.1	%	(3.8)	%	1.6	%
Supercuts	(6.7)		(5.6)		(4.9)		(2.1)
Signature Style	(6.5)		(4.7)		(3.5)		(1.5)
Total	(7.9)	%	(2.5)	%	(3.9)	%	(0.4)	%

Company-owned Salon Revenues

Company-owned salon revenues decreased $123.3 and $303.9 million during the three and nine months ended March 31, 2020, respectively, primarily due to the closure of a net 187 salons and the sale of 1,581 company-owned salons (net of buybacks) to franchisees during the twelve months ended March 31, 2020. The decreases were also due to company-owned same-store sale decreases of 7.9% and 3.9% during the three and nine months ended March 31, 2020, respectively. The company-owned same-store sales decreases were due to decreases of 10.5% and 6.7% in same-store guest transactions, which were negatively impacted by the COVID-19 pandemic. These decreases were partially offset by increases of 2.6% and 2.8% in average ticket prices during the three and nine months ended March 31, 2020, respectively.

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Company-owned Salon Operating (Loss) Income

During the three and nine months ended March 31, 2020, company-owned salon operations operating income decreased $66.3 and $96.2 million, respectively, compared to the prior comparable period. The decreases during the three and nine months ended March 31, 2020 were primarily due to the recording of a $44.5 million goodwill impairment charge due to the economic disruption of COVID-19, the net reduction in company-owned salons, the closure of company-owned salons due to the COVID-19 pandemic towards the end of March 2020, and same-store sales decline. These declines were partially offset by a $1.5 million benefit to marketing expense due to the refunding of the some of the company-owned salons' contributions to the cooperative advertising funds as well as an overall decline in general and administrative expense and marketing spend.

Corporate

Corporate Operating Loss

Corporate operating loss decreased $1.9 million during the three months ended March 31, 2020 primarily driven by lower stock compensation benefits associated with a change in performance awards assumptions during the quarter. Corporate operating loss decreased $8.1 million during the nine months ended March 31, 2020 primarily driven by lower general and administrative salaries and stock compensation benefits associated with a change in performance awards assumptions during the quarter, partially offset by the prior year's franchise convention cost, which was recorded as Corporate expenses in fiscal year 2020 compared to Franchise expense in fiscal year 2019.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents, proceeds from sale of salon assets to franchisees, and our borrowing agreements are our most significant sources of liquidity. 

As of March 31, 2020, cash and cash equivalents were $241.0 million, with $237.7 and $3.3 million within the United States and Canada, respectively.

The Company's borrowing arrangements include a $295.0 million five-year unsecured revolving credit facility that expires in March 2023, of which $0.5 million was available as of March 31, 2020. See Note 11 to the unaudited Condensed Consolidated Financial Statements.

Uses of Cash

The Company closely manages its liquidity and capital resources. In March 2020, the Company drew $183 million from its line of credit in order to increase its cash position and preserve financial flexibility in light of the uncertainty in the global economy due to the COVID-19 pandemic. The Company's liquidity requirements depend on key variables, including the level of investment needed to support its business strategies, the performance of the business, capital expenditures, credit facilities and borrowing arrangements and working capital management. Capital expenditures are a component of the Company's cash flow and capital management strategy which can be adjusted in response to economic and other changes to the Company's business environment. The Company has a disciplined approach to capital allocation, which focuses on investing in key priorities to support the Company's response to the COVID-19 pandemic as well as its multi-year strategic plan as discussed within Part I, Item 1 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

Cash Flows

Cash Flows from Operating Activities

During the nine months ended March 31, 2020, cash used in operating activities was $51.0 million, an increase of $30.7 million compared to the prior comparable period. Cash from operations declined due to lower revenues and margins and the refunding of the cooperative advertising funds to Franchisees as a direct result of the COVID-19 pandemic as well as lower same-store sales, partially offset by the elimination of certain general and administrative costs.

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Cash Flows from Investing Activities

During the nine months ended March 31, 2020, cash provided by investing activities of $62.7 million, an increase of $6.6 million compared to the prior comparable period, was primarily from proceeds from the sale of salon assets of $87.9 million and the sale of the company's headquarters of $9.0 million, partially offset by capital expenditures of $32.3 million.

Cash Flows from Financing Activities

During the nine months ended March 31, 2020, cash provided by financing activities was $152.1 million compared cash used in financing activities of $89.7 million in the prior comparable period. The Company drew $183 million from its line of credit in the nine months ended March 31, 2020 and used $28.2 million to purchase common stock.

Financing Arrangements

See Note 11 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and Note 7 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, for additional information regarding our financing arrangements.

Debt to Capitalization Ratio

Our debt to capitalization ratio, calculated as the principal amount of debt as a percentage of the principal amount of debt and shareholders’ equity at fiscal quarter end, was as follows:

As of	Debt to Capitalization (1)		Basis Point Increase (Decrease) (2)
March 31, 2020	60.4	%	3,360
June 30, 2019	26.8	%	1,120

_______________________________________________________________________________

(1)Debt includes long-term debt and financing liabilities. It excludes long-term lease liability as that liability is offset by

        the right of use asset and does not impact the Company's debt covenants.

(2)Represents the basis point change in debt to capitalization as compared to the prior fiscal year end (June 30, 2019 and

        June 30, 2018, respectively).

The 3,360 basis point increase in the debt to capitalization ratio as of March 31, 2020 as compared to June 30, 2019, was primarily due to the drawing of $183 million from the line of credit in March 2020 in response to the COVID-19 pandemic, partially offset by decreases in shareholders' equity resulting from the repurchase of 1.5 million of the Company's shares for $26.4 million.

Share Repurchase Program

In May 2000, the Company’s Board of Directors (Board) approved a stock repurchase program with no stated expiration date. Since that time and through March 31, 2020, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program. All repurchased shares become authorized, but unissued shares of the Company. The timing and amounts of any repurchases depend on many factors, including the market price of the common stock and overall market conditions. During the three months ended March 31, 2020, the Company did not repurchase any shares. During the nine months ended March 31, 2020, the Company repurchased 1.5 million shares for $26.4 million. As of March 31, 2020, 30.0 million shares have been cumulatively repurchased for $595.4 million, and $54.6 million remains outstanding under the approved stock repurchase program.

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SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include a potential material reduction in revenue from our company-owned and franchised salons as a result of the uncertain duration and severity of the COVID-19 pandemic, as well as the health of our stylists, customers and employees; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; our franchisee's ability to attract, train and retain talented stylists; financial performance of our franchisees; acceleration of sale of salons to franchisees; if our capital investments in technology do not achieve appropriate returns; our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, employees, vendors or Company information; the ability to operate or sell the salons transferred back from TBG; the outcome of the review by the administrator in TBG's insolvency proceedings in the United Kingdom; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic; changes in regulatory and statutory laws including increases in minimum wages; our ability to maintain and enhance the value of our brands; premature termination of agreements with our franchisees; reliance on information technology systems; reliance on external vendors; consumer shopping trends and changes in manufacturer distribution channels; competition within the personal hair care industry; changes in tax exposure; changes in healthcare; changes in interest rates and foreign currency exchange rates; failure to standardize operating processes across brands; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; compliance with debt covenants and access to existing revolving credit facility; changes in economic conditions; changes in consumer tastes and fashion trends; exposure to uninsured or unidentified risks; reliance on our management team and other key personnel or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. There has been no material change to the factors discussed within Part II, Item 7A in the Company’s June 30, 2019 Annual Report on Form 10-K.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Securities Exchange Act of 1934, as amended (the "Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

Management, with the participation of the CEO and CFO, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the period. Based on their evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2020.

Changes in Internal Controls over Financial Reporting

During the nine months ended March 31, 2020, we adopted new guidance for lease accounting. We implemented internal controls to ensure we adequately evaluated leasing arrangements and properly assessed the impact of the new guidance to facilitate the adoption. Additionally, we implemented new business processes, internal controls, and modified information technology systems to assist in the ongoing application of the new guidance. There were no other changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings

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.

Item 1A.  Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, except the first risk factor is replaced by the second risk factor below, the seventh risk factor is replaced by the third and fourth risk factors listed below and the twenty-third risk factor is replaced by the fifth risk factor listed below and we have added, as the first, a risk factor related to the COVID-19 pandemic below.

The impact of the COVID-19 pandemic and the measures implemented to contain the spread of the virus have had, and are expected to continue to have, a material adverse impact on our business and results of operations.

Our operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19) that has spread globally. COVID-19 is having, and will continue to have, an adverse impact on our operations, including the temporary closure of all of our company-owned salons and almost all of our franchise locations; implementation of a furlough program for a substantial majority of our workforce across our corporate office, field support and distribution centers; and reductions in the pay for executives and other working employees at different levels for approximately two months. The pandemic may affect the health and welfare of our stylist community, customers, franchise partners or headquarters personnel. As of the date of this filing, a majority of our company-owned and franchise stores have re-opened after having been temporarily closed for several weeks. Most of our company-owned and franchise stores are located in markets that have been impacted by COVID-19 and where the recovery may be particularly slow to occur.

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The unprecedented uncertainty surrounding COVID-19, including the rapidly changing governmental directives, public health challenges and progress, macroeconomic consequences and market reactions thereto, makes it more challenging for our management to estimate the future performance of our business and develop strategies to resume and/or continue operations or generate growth or achieve our initial or any revised objectives for 2020. In particular, the uncertainty around COVID-19 will likely delay and/or impair or our ability to convert to a fully franchised model by the end of calendar year 2020 as we had previously thought, and we may need to explore other transactions, such as closing or selling off certain salons.

In addition, as our stores are able to resume operations, our franchisees, many of whom were in the early stages of developing their businesses prior to the onset of the pandemic, may choose not to, or may not be able to, due to a variety of factors, resume operation of their salons or they may face challenges rehiring employees, reestablishing operations with their landlords and other vendors, and attracting customers back to their salons. As a result, our franchisees may request reductions to their royalty payments or other amounts due to us which may be critical to their ability to reestablishing operations, or they may simply be unable to make these payments and continue to operate or close the salon. The removal or reduction of these payments, including the added expense associated with closed locations where the Company may have residual lease liability, has and is expected to continue to adversely impact our revenues and cash flows. Customers may be cautious about returning to personal service providers, and we and our franchisees may incur substantial additional costs to ensure the safety of our employees and customers. While we may experience an initial increased demand for our services and products when businesses’ resume operation, there is no assurance that such immediate increase will be sustained. Furthermore, many of our customers have themselves experienced adverse financial impacts from the pandemic, including loss of disposable income, which may limit their spending on personal care, including sales of beauty products, or may have identified other means for hair care during the pandemic. In addition, efforts to lift restrictions on individuals’ daily activities and businesses’ normal operations may result in a resurgence of COVID-19 and potentially prolong and intensify the impact of the crisis, including additional workers compensation claims and customer claims associated with the pandemic. Further, the pandemic could impact workers at our headquarters or compromise the performance of our Fremont, CA technology center.

As a result, COVID-19 has and will continue to negatively affect our revenue, the cost of salon operations, increase investment in safety equipment and potentially reduce our profitability, including the profitability of our franchisees. In addition, we retain residual real estate lease liability for company-owned and nearly all franchise stores. The combination of the revenue reduction, obligations we owe to landlords, and other costs both related and unrelated to COVID-19 could significantly reduce or exhaust our available liquidity over time and limit our ability to access liquidity sources. While the economic impact of COVID-19 to our franchisees may be reduced by financial assistance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act or other similar COVID-19 related federal and state programs, such programs may not have a positive impact on our corporate financial results.

Among other things, while we have begun to call employees back to work, the temporary furlough of most of our employees has impacted various operational and risk management functions, including our audit and financial reporting function. These reductions could temporarily impair our ability to timely and accurately reporting information to regulators and our shareholders and impair our business risk management protocols.

We cannot reasonably estimate the length or severity of COVID-19 but we currently anticipate a material adverse impact on our financial position and results of operations. The disruption to the global economy and to our business, along with a sustained decline in our stock price, may lead to triggering events that may indicate that the carrying value of certain assets, including accounts receivables, long-lived assets, intangibles, and goodwill, may not be recoverable. 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. Prior to the COVID-19 pandemic, the Company had been derecognizing Company-owned goodwill as part of the calculation of gain or loss on the sale of salons to franchisees. Based on the results of items referenced above, the Company recognized a non-cash impairment charge to reduce the carrying value of goodwill related to our Company-owned reporting unit.

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, including government mandates, could also precipitate or aggravate the other risk factors that we identify in our 2019 Form 10-K and this Form 10-Q, which in turn could materially adversely affect our business, financial condition, liquidity, results of operations (including revenues and profitability) and/or stock price. Further, COVID-19 may also affect our operating and financial results or the value of our salon brands in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations.

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To date we have been successful in selling our company-owned salons to franchise owners and we are re-engineering our corporate and field infrastructure to support a fully-franchised portfolio, which involves risks to our financial condition and results of operations in both our company-owned and franchise portfolios.

We have been successful in selling our company-owned salons to franchise owners and, as a result, our inability to re-engineer the infrastructure and reduce our costs on timing and in amounts necessary to effectively support a fully-franchised salon portfolio may reduce the anticipated economic benefit of the transformation in the near term. Furthermore, our efforts to re-engineer and reduce the corporate and field infrastructure devoted to supporting company-owned stores may impair our ability to effectively support the remaining company-owned salons and diminish the value of those salons while we own them, which may challenge our ability to sell such salons to franchisees, including the timing of venditions or net cash proceeds we may generate from the sale process. In addition, as a result of the impacts of COVID-19 all corporate owned-stores were temporarily closed for several weeks, which may cause, among other things, a loss of stylists and customers, which could diminish the value and timing of the salons in any future transfer of the ownership of these salons to new ownership as part of our continued commitment to converting to a fully-franchised model.

We are now significantly dependent on franchise royalties and product sales and the overall success of our franchisees’ salons. It customarily takes new franchisees time to develop their salons and increase their sales. Further, a number of our historically successful and more experienced franchisees are onboarding new salon operations. This could adversely impact our revenue and profitability during this next stage of our transformation. Additionally, we expect that our franchisees will purchase products and services from us for their businesses, but there is no assurance that they will do so in quantities or at wholesale pricing levels consistent with our expectations. Further, in order to support and enhance our franchisees’ businesses, we may need to invest in certain unanticipated new capabilities and/or services, and we will need to determine the appropriate amount of investment to optimize the success of our franchisees, while ensuring that the level of investment supports our expected return on those investments. Investments made in company-owned technology including without exception the Company’s new, internally developed back office salon management system may not yield the profitable results that we anticipate. Further, the COVID-19 pandemic may impact our ability to successfully launch this new system on the timing and levels of profitability we had originally anticipated. In addition, a third party has challenged the development of certain parts of our technology systems. We have denied the allegations made by the third party and have asserted certain counterclaims against the third party. However, the dispute regarding our ownership and involvement of certain key personnel may be costly and distracting and the outcome is uncertain. If we are not able to identify the right level of support and effectively deliver those resources to our franchisees, our results of operations and business may be adversely affected. Furthermore, our transition to a fully-franchised model may expose us to additional legal, compliance and operational risks specific to this different business model including the business failure of unproven new salon owners.

We have made significant investments in company-owned technology, including a new back office salon management system that may not yield results on the timing or amounts we expect due to COVID-19 and pending litigation that has been filed by our existing POS supplier.

Investments made in company-owned technology, including the Company's new, internally developed back office salon management system, may not yield the profitable results that we anticipate. Further, the COVID-19 pandemic may impact our ability to successfully launch this new system on the timing and levels of profitability we had originally anticipated. In addition, our existing POS supplier has challenged the development of certain parts of our technology systems. We have denied the allegations made by this third-party supplier and have asserted certain counterclaims against the third party. However, the dispute regarding our ownership and involvement of certain key personnel may be costly and distracting, and the outcome is currently uncertain. If we are not able to identify the right level of support and effectively deliver those resources to our franchisees, our results of operations and business may be adversely affected. Furthermore, our transition to a fully-franchised model may expose us to additional legal, compliance and operational risks specific to this different business model, including the business failure of unproven new salon owners.

COVID-19 may impact the operations of the Company's key suppliers, including its merchandise, PPE and technology suppliers.

The Company depends upon the support of a small number of critical suppliers, including its merchandise, PPE and technology providers, including its third-party POS supplier. We cannot be certain that the operations of these suppliers will not be impaired by COVID-19, which could result in a material impact to our own operations.

40

We may face challenges operating the salons that TBG transferred back to us, and our inability to operate them successfully or transfer these salons to new ownership could adversely affect our business, financial condition, results of operations and cash flows.

On December 31, 2019, we acquired certain assets that were used in the operation of the mall-based salon business in the United States and Canada at which we have residual real estate lease liability from our original sale of the salons to TBG. The transfer was consummated in connection with an assignment for the benefit of creditors by TBG. The assets acquired in connection with the salon reacquisition are, in the aggregate, unprofitable, and the total lease liability related to the salons is approximately $26 million as of March 31, 2020. We are attempting to renegotiate these lease obligations; however, the outcome of those negotiations is currently uncertain. In addition to the salons, we assumed limited liabilities for certain employee benefit related payments. In connection with the reacquisition of the salons, we also terminated certain other agreements we had with TBG, although we had already recorded a full reserve against the promissory notes evidencing TBG’s obligations to us. As a result of our reacquisition of these salons in connection with TBG assignment for the benefit of creditors, there is a risk that a creditor of TBG could seek to void or otherwise challenge the transfer as a preference transaction. If a TBG creditor was successful in making such a claim, we could remain liable on the leases without the ability to operate the salons to generate revenue to fund the lease obligations.

While we believe the salons transferred back to us have been able to continue operations without any significant disruptions so far except for the impacts arising out of COVID-19, these salons have experienced significant changes in recent years and, as a result, there is a risk of increased levels of employee attrition, customer losses, and supplier interruption. A loss of key personnel or material erosion of the employee base, particularly our stylists, as well as fruition of other risks could adversely affect our results of operations and could diminish the value of the salons in any future transfer of the ownership of these salons to new ownership as part of our continued commitment to converting to a fully-franchised model. If we are not able to successfully operate these salons, we may not be able to generate sufficient revenue to cover the lease liabilities for these salons. As a result, we may be compelled to close certain salons or sell the assets at depressed values. In the meantime, we expect that our operation of these salons may adversely impact our results of operations. Our inability to successfully operate the salons or transfer them to new stable ownership, could adversely affect our business, financial condition, results of operations and cash flows.

TBG’s transfer of salons in the United Kingdom to the Bushell Investment Group, which became our franchisee, is subject to review by the administrator in TBG’s insolvency proceeding in the United Kingdom.

As previously announced, we entered into a franchise agreement with the Bushell Investment Group (“Bushell”), which acquired over 100 salons in the United Kingdom from TBG in December 2019. The transaction occurred in connection with TBG’s insolvency proceeding in the United Kingdom. While we do not have any financial obligations in connection with the salons transferred to Bushell, the administrator in TBG’s insolvency proceeding has a legal obligation to review our original and subsequent transactions with TBG in the United Kingdom. If the administrator were to challenge our original transaction with TBG, the administrator could seek remedies to effectively unwind the economics of the original transaction or impair the ability of Bushell to continue operating these salons as our franchisee. While we do not expect the administrator to identify any concerns with our original or any subsequent transaction, any allegations against the validity of these transactions could disrupt the operation of the salons by Bushell and we could face significant adverse financial impacts or management distraction.

If we fail to comply with any of the covenants in our existing financing arrangement, we may not be able to access our existing revolving credit facility, and we may face an accelerated obligation to repay our indebtedness.

If we fail to comply with our existing financing arrangements, it may cause a default under our financing arrangement, which could limit our ability to obtain new replacement financing or additional financing under our existing credit facility, require us to pay higher levels of interest or accelerate our obligation to repay our indebtedness. We believe that the amendment of our financing arrangement in May 2020 will allow us to remain in compliance with the revised covenants notwithstanding the impacts to our business of converting to a fully franchised model and other impacts arising out of COVID-19; however, significant and continued business disruptions could ultimately impair our ability to comply with the new liquidity covenant, which could preclude our ability to access our credit facility or our debt repayment obligation may be accelerated, which is now secured by a lien on substantially all of our assets.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

In May 2000, the Company’s Board of Directors (Board) approved a stock repurchase program with no stated expiration date. Since that time and through March 31, 2020, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program. All repurchased shares become authorized but unissued shares of the Company. The timing and amounts of any repurchases depend on many factors, including the market price of the common stock and overall market conditions. During the three and nine months ended March 31, 2020, the Company repurchased 1.5 million shares for $26.4 million. As of March 31, 2020, a total accumulated 30.0 million shares have been repurchased for $595.4 million. At March 31, 2020, $54.6 million remains outstanding under the approved stock repurchase program.

The following table shows the stock repurchase activity by the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act, by month for the three months ended March 31, 2020:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in thousands)
1/1/20 - 1/31/20	—	$	—	29,974,657	$	54,573
2/1/20 - 2/29/20	—	—		29,974,657	54,573
3/1/20 - 3/31/20	—	—		29,974,657	54,573
Total	—	$	—	29,974,657	$	54,573

Item 5.  Other Information

In May 2020, the Compensation Committee of the Board of Directors of the Company approved a senior executive severance policy where senior vice presidents and above without an employment agreement are entitled to receive the following severance benefits if the executive’s employment is terminated without cause: one year of base salary paid in installments over the period of twelve months; a pro-rata bonus for the fiscal year in which termination occurs based on actual performance, but not to exceed the target bonus amount; continuation of certain medical benefits for up to twelve months unless and until the executive is covered under the health and/or dental insurance policy of a new employer. The severance benefits are subject to the executive signing a release in favor of the Company and complying with one-year non-competition and non-solicitation restrictions.

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Item 6.  Exhibits

Exhibit 10.1	Senior Executive Severance Policy, dated May 18, 2020, Applicable to Senior Vice Presidents and Above Who Do Not Have an Employment Agreement.
Exhibit 31.1	President and Chief Executive Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Executive Vice President and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Chief Executive Officer and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101	The following financial information from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly and year-to-date periods ended March 31, 2020, formatted in Inline Xtensible Business Reporting Language (iXBRL) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.
Exhibit 104	The cover page from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly and year-to-date periods ended March 31, 2020, formatted in iXBRL (included as Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: June 18, 2020	By:	/s/ Kersten D. Zupfer
		Kersten D. Zupfer
		Executive Vice President and Chief Financial Officer
		(Principal Accounting Officer)

44

EX-10.1

Senior Executive Severance Policy

Release Date: May 18, 2020

Senior Executives (defined as SVPs and above) who do not have an Employment Agreement will receive severance pursuant to the following guidelines:

1.The Senior Executive is involuntarily terminated not for Cause (see below).

2.One year of their normal base salary, payable over the period of twelve months in substantially equal bi-monthly installments in accordance with the Company’s payroll practices.

3.An amount equal to the Pro-rata bonus for the fiscal year in which the Date of Termination occurs, determined by pro-rating the Bonus the Senior Executive would have received had the they been employed through the payment date of any such bonus (the pro-ration will be a fraction whose numerator is the number of days the Senior Executive was employed by the Corporation that fiscal year through the termination date and the denominator is 365), payable at the same time as bonuses are paid to other then-current officers of the Corporation under the then-applicable Short Term Plan for the fiscal year in which the Date of the Termination occurs. The maximum payout, prior to pro-ration, will be at Target.

4.One-year COBRA supplement (the Corporation will pay the employer portion of the Employee’s COBRA premiums for health, dental and vision insurance coverage under the Corporation’s group heal, dental and vision insurance plans). This amount, if any, is payable over a period of twelve months in substantially equal bi-monthly installments in accordance with the Company’s payroll practices.

5.Continuation of Group Executive Medical Expense Reimbursement Policy for one year past termination.

6.Notwithstanding the one-year time frame, the benefits in items 4 and 5 will cease once the Senior Executive is eligible to be covered under the health and/or dental insurance policy of a new employer and/or ceases to participate, for whatever reason, in the Corporation’s group insurance plans.

Both payments are subject to statutory deductions. Timing of any severance payment is subject to various laws, including but not limited to the Minnesota Human Rights Act, IRS and Treasury Regulations.

Severance under this policy is subject to the following conditions:

1.The Senior Executive is not terminated for cause. Cause means: (a) acts resulting in a felony conviction under any federal or state statutes which is materially detrimental to the financial interests of the company; (b) willful non-performance by the employee of the employee’s material employment duties (other than by reason of the employee’s physical and/or mental incapacity) after reasonable notice to the employee and reasonable opportunity (not less than 30 days) to cease such non-performance; or (c) willfully engaging in fraud or gross misconduct which is detrimental to the financial interests of the company.

2.The Senior Executive signing and not revoking a release of claims in a form prescribed by the Corporation and remaining in strict compliance with the terms of that Agreement, which will include a 12-month non-competition and non-solicitation period.

3.No severance will be paid in the event of voluntary termination, death or disability.

This policy is effective immediately upon release.

EX-31.1

Exhibit No. 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hugh E. Sawyer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors or persons performing the equivalent functions:

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

June 18, 2020

/s/ Hugh E. Sawyer

Hugh E. Sawyer, Chairman, President and Chief Executive Officer

EX-31.2

Exhibit No. 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kersten D. Zupfer, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors or persons performing the equivalent functions:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

June 18, 2020

/s/ Kersten D. Zupfer

Kersten D. Zupfer, Executive Vice President and Chief Financial Officer

EX-32

Exhibit No. 32

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regis Corporation (the Registrant) on Form 10-Q for the fiscal quarter ending March 31, 2020 filed with the Securities and Exchange Commission on the date hereof, Hugh E. Sawyer, Chairman, President and Chief Executive Officer of the Registrant, and Kersten D. Zupfer, Executive Vice President and Chief Financial Officer of the Registrant, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Quarter Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

June 18, 2020

/s/ Hugh E. Sawyer

Hugh E. Sawyer, President and Chief Executive Officer

June 18, 2020

/s/ Kersten D. Zupfer

Kersten D. Zupfer, Executive Vice President and Chief Financial Officer

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CASH, CASH EQUIVALENTS AND RESTRICTED CASH: (Tables)

9 Months Ended

Mar. 31, 2020

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:

	March 31, 2020		June 30, 2019
	(Dollars in thousands)
Cash and cash equivalents	$	241,037	$	70,141
Restricted cash, included in Other current assets (1)	14,745		22,238
Total cash, cash equivalents and restricted cash	$	255,782	$	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:

	March 31, 2020		June 30, 2019
	(Dollars in thousands)
Cash and cash equivalents	$	241,037	$	70,141
Restricted cash, included in Other current assets (1)	14,745		22,238
Total cash, cash equivalents and restricted cash	$	255,782	$	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.

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies)

9 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Accounting Standards Recently Adopted by the Company

Accounting Standards Recently Adopted by the Company:

Simplifying the Test for Goodwill Impairment

The Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350)" for the interim impairment test performed due to the triggering event noted above, as of March 31, 2020. Under this accounting standard, the Company performed its interim impairment test and will perform its annual impairment test by comparing the fair value of a reporting unit to its carrying amount. The Company then records an impairment charge for the amount that the carrying amount exceeds the fair value. This eliminates Step 2 from the goodwill impairment test to simplify the subsequent measure of goodwill.

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 March 31, 2020 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 $31.8 and $96.9 million during the three and nine months ended March 31, 2020, 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 March 31, 2020 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.

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SUBSEQUENT EVENTS: (Details)	Mar. 31, 2020 USD ($)
Revolving credit facility | Line of Credit | Revolving Credit Facility
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 295,000,000.0

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FINANCING ARRANGEMENTS: Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Salt Lake City Distribution Center
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract]
Remainder of 2020	$ 287
2021	1,157
2022	1,171
2023	1,186
2024	1,200
Thereafter	11,899
Total	16,900
Chattanooga Distribution Center
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract]
Remainder of 2020	201
2021	817
2022	829
2023	842
2024	854
Thereafter	9,282
Total	$ 12,825

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EARNINGS PER SHARE (Details) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock equivalents included in the diluted earnings per share calculation (in shares)		1,023,038		1,006,589
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)	663,636		1,145,053
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)	670,997	608,944	174,698	542,329

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INCOME TAXES: Summary of Income Tax Benefit (expense) and corresponding effective tax rates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income tax benefit (expense)	$ 2,253	$ (3,248)	$ 5,904	$ (2,988)
Effective tax rate	2.90%	(28.10%)	5.60%	(25.20%)

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FINANCING ARRANGEMENTS: Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Debt Instrument [Line Items]
Long-term debt	$ 273,000	$ 90,000
Line of Credit | Revolving Credit Facility | Revolving credit facility
Debt Instrument [Line Items]
Interest rate percentage	3.90%
Long-term debt	$ 273,000	$ 90,000

XML

GOODWILL AND OTHER INTANGIBLES: Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Amortized intangible assets:
Cost	$ 30,188	$ 31,065
Accumulated Amortization	(22,620)	(22,304)
Net	7,568	8,761
Brand assets and trade names
Amortized intangible assets:
Cost	6,541	6,909
Accumulated Amortization	(3,632)	(3,659)
Net	2,909	3,250
Franchise agreements
Amortized intangible assets:
Cost	9,356	9,783
Accumulated Amortization	(7,944)	(8,057)
Net	1,412	1,726
Lease intangibles
Amortized intangible assets:
Cost	13,426	13,490
Accumulated Amortization	(10,516)	(10,065)
Net	2,910	3,425
Other
Amortized intangible assets:
Cost	865	883
Accumulated Amortization	(528)	(523)
Net	$ 337	$ 360

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Goodwill (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill	$ 226,666,000		$ 226,666,000		$ 345,718,000
Goodwill impairment	44,529,000	$ 0	44,529,000	$ 0
Derecognition related to sale of salon assets to franchisees			72,601,000
Franchise
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill	226,700,000		$ 226,700,000
Franchise | Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill, measurement input			13.00%
Franchise | Terminal growth rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill, measurement input			2.50%
Company-owned
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill	0		$ 0
Derecognition related to sale of salon assets to franchisees	$ 19,800,000		$ 72,600,000

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REVENUE RECOGNITION: Disaggregation of Revenue by Timing (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Franchise rental income	$ 31,821		$ 96,875
Total revenues	153,783	$ 258,343	609,586	$ 820,849
Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Franchise rental income	31,821		96,875
Total revenues	55,837	37,107	208,224	115,553
Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Franchise rental income	0		0
Total revenues	97,946	221,236	401,362	705,296
Service
Disaggregation of Revenue [Line Items]
Revenues	78,387	181,809	322,133	580,076
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	78,387	181,809	322,133	580,076
Product
Disaggregation of Revenue [Line Items]
Revenues	34,877	53,766	124,516	173,006
Product | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Revenues	15,318	14,339	45,287	47,786
Product | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Revenues	19,559	39,427	79,229	125,220
Royalties and fees
Disaggregation of Revenue [Line Items]
Revenues	8,698	22,768	66,062	67,767
Royalties and fees | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Revenues	8,698	22,768	66,062	67,767
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	15,318	14,339	45,287	47,786
Revenue recognized at a point in time | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Revenues	97,946	221,236	401,362	705,296
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	78,387	181,809	322,133	580,076
Revenue recognized at a point in time | Product | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Revenues	15,318	14,339	45,287	47,786
Revenue recognized at a point in time | Product | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Revenues	19,559	39,427	79,229	125,220
Revenue recognized over time | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Franchise rental income	31,821		96,875
Total revenues	40,519	22,768	162,937	67,767
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	16,487	14,339	52,721	43,495
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	(7,789)	8,429	13,341	24,272
Revenue recognized over time | Advertising fund fees | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Revenues	$ 0	$ 0	$ 0	$ 0

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CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	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)	35,566,206	36,869,249
Common stock outstanding (in shares)	35,566,206	36,869,249

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands		9 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss		$ (98,244)	$ (8,830)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Non-cash adjustments related to discontinued operations		(967)	(163)
Depreciation and amortization		23,635	24,727
Deferred income taxes		(6,590)	(6,034)
Gain from sale of company headquarters, net		(2,513)	0
Loss (gain) from sale of salon assets to franchisees, net		21,760	(10,394)
Non-cash TBG mall location restructuring charge		0	20,711
Goodwill impairment		44,529	0
Salon asset impairments		3,851	3,005
Stock-based compensation		2,114	7,065
Amortization of debt discount and financing costs		206	206
Other non-cash items affecting earnings		(442)	(492)
Changes in operating assets and liabilities, excluding the effects of asset sales	[1]	(38,360)	(50,074)
Net cash used in operating activities		(51,021)	(20,273)
Cash flows from investing activities:
Capital expenditures		(32,331)	(23,160)
Proceeds from sale of assets to franchisees		87,916	54,619
Costs associated with sale of salon assets to franchisees		(1,887)	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		62,694	56,076
Cash flows from financing activities:
Borrowings on revolving credit facility		213,000	0
Repayments of revolving credit facility		(30,000)	0
Repurchase of common stock		(28,246)	(105,364)
Taxes paid for shares withheld		(1,968)	(2,447)
Net proceeds from distribution center sale and leaseback transaction			18,068
Distribution center lease payments		(677)
Net cash provided by (used in) financing activities		152,109	(89,743)
Effect of exchange rate changes on cash and cash equivalents		(379)	5
Increase (decrease) in cash, cash equivalents, and restricted cash		163,403	(53,935)
Cash, cash equivalents and restricted cash:
Beginning of period		92,379	148,774
End of period		$ 255,782	$ 94,839

[1] Changes in operating assets and liabilities exclude assets and liabilities sold.

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COMMITMENTS AND CONTINGENCIES:

9 Months Ended

Mar. 31, 2020

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. Regis is a defendant in two wage and hour lawsuits in California. The first, a class action in US District Court, alleges various violations of the California Labor Code, including but not limited to failure to pay wages, failure to permit rest breaks, failure to pay all wages due on termination of employment, waiting time penalties, failure to provide accurate wage statements and violation of the business and professions code. This case has preliminarily settled, pending approval of the court and class, for $2.1 million. The second, a class action filed in California Superior Court, alleges various violations of the California Labor Code as well as PAGA penalties. Barring successful objection from plaintiffs’ attorneys to the first class action, the second case will be subsumed into the first case’s settlement. As of June 30, 2019 and March 31, 2020, $1.5 and $2.1 million, respectively, was included within accrued expenses on the Condensed Consolidated Balance Sheet related to these class action lawsuits.

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TBG RESTRUCTURING AND DISCONTINUED OPERATIONS:

9 Months Ended

Mar. 31, 2020

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 nine months ended March 31, 2020 and 2019. 

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 included in the Condensed Consolidated Statement of Operations beginning in the third quarter. The assets acquired and liabilities assumed were not material to the Condensed Consolidated Balance Sheet. Professional fees and other restructuring related charges of $0.1 and $2.4 million in the three and nine months ended March 31, 2020, respectively, were recorded in the TBG restructuring line on the Condensed Consolidated Statement of Operations. As of March 31, 2020, prior to any mitigation efforts which may be available, the Company remains liable for up to approximately $26 million related to its mall-based salon lease commitments on the 190 salons that remain open, a $15 million reduction from June 30, 2019.

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FINANCING ARRANGEMENTS:

9 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS:

The Company’s long-term debt consists of the following:

Revolving Credit Facility

	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.90%	$	273,000	$	90,000

At March 31, 2020, cash, cash equivalents and marketable securities totaled $241.0 million. As of March 31, 2020, the Company has $273.0 million of outstanding borrowings under a $295.0 million revolving credit facility. At March 31, 2020, 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 $0.5 million as of March 31, 2020. The Company increased its outstanding borrowings from December 31, 2019 to March 31, 2020 by making a draw on the credit facility of $183.0 million in March of 2020. The $183.0 million draw was done to increase the Company's cash position and preserve financial flexibility as the Company experienced significant business interruption due to the COVID-19 pandemic. As of March 31, 2020, the Company had cash, cash equivalents and restricted cash of $255.8 million and current liabilities of $232.1 million.

In May of 2020, the Company amended its $295.0 million revolving credit facility that expires in March 2023. The amendment to the revolving credit facility provides relief for the maximum consolidated net leverage ratio covenant and the minimum fixed charge coverage ratio covenant. Without such amendment, the Company would have been in violation of the covenants as of March 31, 2020 which could have resulted in default. Under the new terms of the amendment, the Company is required to maintain a minimum liquidity of not less than $75.0 million, and provides the Company's lenders security in the Company's assets, adds additional guarantors and grants a first priority lien and security interest to the lenders in substantially all of the Company’s and the guarantors’ existing and future property. The amendment also increases the applicable interest rate margins and facility fees applicable to the loans and inserts a 1.25% LIBOR floor. The applicable margin for loans bearing interest at LIBOR ranges from 3.75%-4.25%, the applicable margin for loans bearing interest at the base rate ranges from 2.75%-3.25% and the facility fee ranges from 0.5%-0.75%, each depending on average utilization of the revolving line of credit. This amendment gives the Company flexibility throughout the uncertainty generated by the business disruption caused by the COVID-19 pandemic, as well as the Company's navigation through its strategic transformation. As of the filing date, the Company is in compliance with its amended debt covenants.

The Company was not in compliance with its previous debt covenants as of March 31, 2020, which could have resulted in a default. This coupled with the closure of most of our salons for a period of time are conditions and events that could have created substantial doubt about our ability to continue as a going concern. We amended our debt agreement, which removed and amended certain covenants and requirements and also remedied the non-compliance item, in addition to taking other actions that have alleviated the substantial doubt about our ability to continue as a going concern.

Sale and Leaseback Transaction

The Company’s long-term financing liabilities consists of the following:

	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Financial liability - Salt Lake City Distribution Center	2034	3.30%	$	16,914	$	17,354
Financial liability - Chattanooga Distribution Center	2034	3.70%	11,319		11,556
Long- term financing liability			$	28,233	$	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 March 31, 2020, 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 13.9 years and the weighted-average discount rate was 3.46% for financing leases as of March 31, 2020.

As of March 31, 2020, future lease payments due are as follows:

Fiscal year	Salt Lake City Distribution Center		Chattanooga Distribution Center
	(Dollars in thousands)
Remainder of 2020	$	287	$	201
2021	1,157		817
2022	1,171		829
2023	1,186		842
2024	1,200		854
Thereafter	11,899		9,282
Total	$	16,900	$	12,825

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 $0.8 million for the three and nine months ended March 31, 2020.

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FINANCING ARRANGEMENTS: Revolving Credit Facility (Details) - USD ($)	1 Months Ended
	May 31, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018
Debt Instrument [Line Items]
Cash, cash equivalents and marketable securities		$ 241,000,000.0
Long-term debt		273,000,000	$ 90,000,000
Cash, cash equivalents, and restricted cash		255,782,000	92,379,000	$ 94,839,000	$ 148,774,000
Current liabilities		232,077,000	128,283,000
Line of Credit | Revolving Credit Facility | Revolving credit facility
Debt Instrument [Line Items]
Long-term debt		273,000,000	$ 90,000,000
Maximum borrowing capacity		295,000,000.0
Unused borrowing capacity, amount		500,000
Draw on credit facility		183,000,000.0
Line of Credit | Revolving Credit Facility | Revolving credit facility | Subsequent Event
Debt Instrument [Line Items]
Minimum liquidity	$ 75,000,000.0
Line of Credit | Revolving Credit Facility | Revolving credit facility | Minimum | Subsequent Event
Debt Instrument [Line Items]
Facility fee	0.50%
Line of Credit | Revolving Credit Facility | Revolving credit facility | Maximum | Subsequent Event
Debt Instrument [Line Items]
Facility fee	0.75%
Line of Credit | Revolving Credit Facility | Revolving credit facility | LIBOR Floor | Subsequent Event
Debt Instrument [Line Items]
Variable fate	1.25%
Line of Credit | Revolving Credit Facility | Revolving credit facility | LIBOR | Minimum | Subsequent Event
Debt Instrument [Line Items]
Variable fate	3.75%
Line of Credit | Revolving Credit Facility | Revolving credit facility | LIBOR | Maximum | Subsequent Event
Debt Instrument [Line Items]
Variable fate	4.25%
Line of Credit | Revolving Credit Facility | Revolving credit facility | Base Rate | Minimum | Subsequent Event
Debt Instrument [Line Items]
Variable fate	2.75%
Line of Credit | Revolving Credit Facility | Revolving credit facility | Base Rate | Maximum | Subsequent Event
Debt Instrument [Line Items]
Variable fate	3.25%
Line of Credit | Letter of Credit | Revolving credit facility
Debt Instrument [Line Items]
Long-term line of credit		$ 21,500,000

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RIGHT OF USE ASSET AND LEASE LIABILITIES Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Lessor, Lease, Description [Line Items]
Lessee, term of contract			15 years	10 years
Lessor, term of contract	5 years	5 years
Franchise rental income	$ 31,821	$ 96,875
Rent expense	$ 31,800	$ 96,900
Weighted average remaining lease term	6 years 10 months 9 days	6 years 10 months 9 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

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CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 241,037	$ 70,141
Receivables, net	27,602	30,143
Inventories	59,029	77,322
Other current assets	23,211	33,216
Total current assets	350,879	210,822
Property and equipment, net	65,880	78,090
Goodwill (Note 9)	226,666	345,718
Other intangibles, net (Note 9)	7,568	8,761
Right of use asset (Note 10)	861,569
Other assets	38,227	34,170
Non-current assets held for sale (Note 1)	0	5,276
Total assets	1,550,789	682,837
Current liabilities:
Accounts payable	39,120	47,532
Accrued expenses	43,475	80,751
Short-term lease liability (Note 10)	149,482
Total current liabilities	232,077	128,283
Long-term debt, net	273,000	90,000
Long-term lease liability (Note 10)	727,245	0
Long-term financing liabilities	28,233	28,910
Other non-current liabilities	92,698	111,399
Total liabilities	1,353,253	358,592
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 35,566,206 and 36,869,249 common shares at March 31, 2020 and June 30, 2019, respectively	1,778	1,843
Additional paid-in capital	21,186	47,152
Accumulated other comprehensive income	6,998	9,342
Retained earnings	167,574	265,908
Total shareholders’ equity	197,536	324,245
Total liabilities and shareholders’ equity	$ 1,550,789	$ 682,837

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - 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	(8,830)				(8,830)
Foreign currency translation	(606)			(606)
Stock repurchase program (in shares)		(6,023,523)
Stock repurchase program	(106,252)	$ (301)	(105,951)
Exercise of SARs (in shares)		15,412
Exercise of SARs	(204)	$ 1	(205)
Stock-based compensation	7,065		7,065
Net restricted stock activity (in shares)		182,664
Net restricted stock activity	(1,821)	$ 9	(1,830)
Minority interest	20				20
Balance (in shares) at Mar. 31, 2019		39,433,124
Balance at Mar. 31, 2019	375,810	$ 1,972	93,515	9,050	271,273
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
Net loss	(14,633)				(14,633)
Foreign currency translation	905			905
Stock repurchase program (in shares)		(2,050,430)
Stock repurchase program	(37,920)	$ (102)	(37,818)
Exercise of SARs (in shares)		7,080
Exercise of SARs	(101)		(101)
Stock-based compensation	2,512		2,512
Net restricted stock activity (in shares)		4,006
Net restricted stock activity	(42)		(42)
Minority interest	79				79
Balance (in shares) at Mar. 31, 2019		39,433,124
Balance at Mar. 31, 2019	$ 375,810	$ 1,972	93,515	9,050	271,273
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	(98,244)				(98,244)
Foreign currency translation	$ (2,344)			(2,344)
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	2,114		2,114
Net restricted stock activity (in shares)		199,181
Net restricted stock activity	(1,817)	$ 10	(1,827)
Minority interest	$ (90)				(90)
Balance (in shares) at Mar. 31, 2020	35,566,206	35,566,206
Balance at Mar. 31, 2020	$ 197,536	$ 1,778	21,186	6,998	167,574
Balance (in shares) at Dec. 31, 2019		35,563,611
Balance at Dec. 31, 2019	275,061	$ 1,778	21,230	9,480	242,573
Net loss	(75,037)				(75,037)
Foreign currency translation	(2,482)			(2,482)
Stock-based compensation	(25)		(25)
Net restricted stock activity (in shares)		2,595
Net restricted stock activity	(19)		(19)
Minority interest	$ 38				38
Balance (in shares) at Mar. 31, 2020	35,566,206	35,566,206
Balance at Mar. 31, 2020	$ 197,536	$ 1,778	$ 21,186	$ 6,998	$ 167,574

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Impact of COVID-19 on Business Operations (Details) - Subsequent Event	Jun. 15, 2020
Franchise
Subsequent Event [Line Items]
Number of stores open	76.00%
Company-owned
Subsequent Event [Line Items]
Number of stores open	45.00%

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REVENUE RECOGNITION: Revenue Recognized (Details)	9 Months Ended
	Mar. 31, 2020
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

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FAIR VALUE MEASUREMENTS:

9 Months Ended

Mar. 31, 2020

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 March 31, 2020 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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Goodwill	$	44,529	$	—	$	44,529	$	—
Long-lived salon assets	1,208		702		3,851		3,005

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CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

9 Months Ended

Mar. 31, 2020

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:

	March 31, 2020		June 30, 2019
	(Dollars in thousands)
Cash and cash equivalents	$	241,037	$	70,141
Restricted cash, included in Other current assets (1)	14,745		22,238
Total cash, cash equivalents and restricted cash	$	255,782	$	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.

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EARNINGS PER SHARE

9 Months Ended

Mar. 31, 2020

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 nine months ended March 31, 2020, there were 663,636 and 1,145,053, respectively, and for the three and nine months ended March 31, 2019 there were 1,023,038 and 1,006,589 common stock equivalents of dilutive common stock excluded in the diluted earnings per share calculations due to the net loss from continuing operations.

The computation of weighted average shares outstanding, assuming dilution, excluded 670,997 and 608,944 of stock-based awards during the three months ended March 31, 2020 and 2019, respectively, and 174,698 and 542,329 of stock-based awards during the nine months ended March 31, 2020 and 2019, respectively, as they were not dilutive under the treasury stock method.

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GOODWILL AND OTHER INTANGIBLES: (Tables)

9 Months Ended

Mar. 31, 2020

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	(1,262)		(660)		(1,922)
Derecognition related to sale of salon assets to franchisees (1)	—		(72,601)		(72,601)
Goodwill impairment	—		(44,529)		(44,529)
Goodwill, net at March 31, 2020	$	226,666	$	—	$	226,666

_______________________________________________________________________________

(1)Prior to the impairment charge, goodwill was derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized was 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 goodwill balance of the Company-owned reporting unit at the time of the sale.

Schedule of other intangible assets

The table below presents other intangible assets:

	March 31, 2020						June 30, 2019
	Cost (1)		Accumulated Amortization (1)		Net		Cost (1)		Accumulated Amortization (1)		Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	6,541	$	(3,632)	$	2,909	$	6,909	$	(3,659)	$	3,250
Franchise agreements	9,356		(7,944)		1,412		9,783		(8,057)		1,726
Lease intangibles	13,426		(10,516)		2,910		13,490		(10,065)		3,425
Other	865		(528)		337		883		(523)		360
Total	$	30,188	$	(22,620)	$	7,568	$	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.

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REVENUE RECOGNITION: (Tables)

9 Months Ended

Mar. 31, 2020

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 March 31, 2020				Three Months Ended March 31, 2019
	Franchise		Company-owned		Franchise		Company-owned
	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	78,387	$	—	$	181,809
Product	15,318		19,559		14,339		39,427
Total revenue recognized at a point in time	$	15,318	$	97,946	$	14,339	$	221,236
Revenue recognized over time:
Royalty and other franchise fees	$	16,487	$	—	$	14,339	$	—
Advertising fund (refunds) fees	(7,789)		—		8,429		—
Franchise rental income	31,821		—		—		—
Total revenue recognized over time	40,519		—		22,768		—
Total revenue	$	55,837	$	97,946	$	37,107	$	221,236

	Nine Months Ended March 31, 2020				Nine Months Ended March 31, 2019
	Franchise		Company-owned		Franchise		Company-owned
	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	322,133	$	—	$	580,076
Product	45,287		79,229		47,786		125,220
Total revenue recognized at a point in time	$	45,287	$	401,362	$	47,786	$	705,296
Revenue recognized over time:
Royalty and other franchise fees	$	52,721	$	—	$	43,495	$	—
Advertising fund (refunds) fees	13,341		—		24,272		—
Franchise rental income	96,875		—		—		—
Total revenue recognized over time	162,937		—		67,767		—
Total revenue	$	208,224	$	401,362	$	115,553	$	705,296

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:

	March 31, 2020		June 30, 2019		Balance Sheet Classification
	(Dollars in thousands)
Receivables from contracts with customers, net	$	16,083	$	23,210	Accounts receivable, net
Broker fees	$	21,193	$	17,819	Other assets
Deferred revenue:
Current
Gift card liability	$	2,616	$	3,050	Accrued expenses
Deferred franchise fees unopened salons	44		193		Accrued expenses
Deferred franchise fees open salons	5,466		4,164		Accrued expenses
Total current deferred revenue	$	8,126	$	7,407
Non-current
Deferred franchise fees unopened salons	$	11,840	$	15,173	Other non-current liabilities
Deferred franchise fees open salons	33,821		24,194		Other non-current liabilities
Total non-current deferred revenue	$	45,661	$	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	5,499
Amortization	(2,092)
Write-offs	(33)
Balance as of March 31, 2020	$	21,193

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 March 31, 2020 is as follows (in thousands):

Remainder of 2020	$	1,359
2021	5,348
2022	5,228
2023	5,051
2024	4,816
Thereafter	17,485
Total	$	39,287

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FAIR VALUE MEASUREMENTS: Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Assets and liabilities measured at fair value on a nonrecurring basis
Goodwill impairment	$ 44,529	$ 0	$ 44,529	$ 0
Long-lived salon assets			3,851	3,005
Nonrecurring | Level 3
Assets and liabilities measured at fair value on a nonrecurring basis
Goodwill impairment	44,529	0	44,529	0
Long-lived salon assets	$ 1,208	$ 702	$ 3,851	$ 3,005

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TBG RESTRUCTURING AND DISCONTINUED OPERATIONS: Additional Information (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Mar. 31, 2020 USD ($) salon	Dec. 31, 2019 salon	Mar. 31, 2019 USD ($)	Mar. 31, 2020 USD ($) salon	Mar. 31, 2019 USD ($)	Jun. 30, 2019 salon	Oct. 31, 2017 salon
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of stores | salon	7,026			7,026		7,145
Number of stores transferred | salon		207
Restructuring charges	$ 146		$ 20,711	$ 2,368	$ 20,711
Salon lease commitments	26,000			26,000
Reduction in salon commitments				15,000
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	$ 100			$ 2,400

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SHAREHOLDERS' EQUITY: Share Repurchases (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Stockholders' Equity Note [Abstract]
Stock repurchased during period (in shares)		1.5
Stock repurchase program	$ 37,920	$ 26,356	$ 106,252
Remaining authorized repurchase amount		$ 54,600

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RIGHT OF USE ASSET AND LEASE LIABILITIES Future Operating Lease Commitments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Leases, Operating [Abstract]
Remainder of 2020	$ 46,593
2021	175,312
2022	155,565
2023	139,508
2024	125,162
Thereafter	359,271
Total future obligations	1,001,411
Less amounts representing interest	124,684
Present value of lease liabilities	876,727
Less current lease liabilities	149,482
Long-term lease liabilities	727,245	$ 0
Sublease Income To Be Received From Franchisees
Remainder of 2020	(31,959)
2021	(121,831)
2022	(111,239)
2023	(100,687)
2024	(90,582)
Thereafter	(257,841)
Total future obligations	(714,139)
Net Rent Commitments
Remainder of 2020	14,634
2021	53,481
2022	44,326
2023	38,821
2024	34,580
Thereafter	101,430
Total future obligations	287,272
Operating Segments | Franchise
Leases, Operating [Abstract]
Remainder of 2020	31,959
2021	121,831
2022	111,239
2023	100,687
2024	90,582
Thereafter	257,841
Total future obligations	714,139
Less amounts representing interest	89,274
Present value of lease liabilities	624,865
Less current lease liabilities	102,310
Long-term lease liabilities	522,555
Operating Segments | Company-owned
Leases, Operating [Abstract]
Remainder of 2020	14,484
2021	51,700
2022	42,916
2023	37,374
2024	33,096
Thereafter	92,091
Total future obligations	271,661
Less amounts representing interest	32,514
Present value of lease liabilities	239,147
Less current lease liabilities	46,171
Long-term lease liabilities	192,976
Unallocated Corporate
Leases, Operating [Abstract]
Remainder of 2020	150
2021	1,781
2022	1,410
2023	1,447
2024	1,484
Thereafter	9,339
Total future obligations	15,611
Less amounts representing interest	2,896
Present value of lease liabilities	12,715
Less current lease liabilities	1,001
Long-term lease liabilities	$ 11,714

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GOODWILL AND OTHER INTANGIBLES: Changes in Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Goodwill [Roll Forward]
Goodwill, net at June 30, 2019			$ 345,718
Translation rate adjustments			(1,922)
Derecognition related to sale of salon assets to franchisees			(72,601)
Goodwill impairment	$ (44,529)	$ 0	(44,529)	$ 0
Goodwill, net at March 31, 2020	226,666		226,666
Franchise
Goodwill [Roll Forward]
Goodwill, net at June 30, 2019			227,928
Translation rate adjustments			(1,262)
Derecognition related to sale of salon assets to franchisees			0
Goodwill impairment			0
Goodwill, net at March 31, 2020	226,666		226,666
Company-owned
Goodwill [Roll Forward]
Goodwill, net at June 30, 2019			117,790
Translation rate adjustments			(660)
Derecognition related to sale of salon assets to franchisees			(72,601)
Goodwill impairment			(44,529)
Goodwill, net at March 31, 2020	$ 0		$ 0

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FINANCING ARRANGEMENTS: Sale and Leaseback Transaction (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Debt Disclosure [Abstract]
Term of contract			15 years	10 years
Short-term financial liability	$ 0.9	$ 0.9
Weighted average lease term	13 years 10 months 24 days	13 years 10 months 24 days
Weighted average discount rate	3.46%	3.46%
Interest expense	$ 0.3	$ 0.8

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RIGHT OF USE ASSET AND LEASE LIABILITIES

9 Months Ended

Mar. 31, 2020

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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Minimum rent	$	14,970	$	26,325	$	51,468	85,099
Percentage rent based on sales	298		1,373		2,145		3,476
Real estate taxes and other expenses	3,975		4,634		10,389		14,377
Total	$	19,243	$	32,332	$	64,002	$	102,952

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 nine months ended March 31, 2020, franchise rental income and franchise rent expense were $31.8 and $96.9 million, respectively.

For franchise and company-owned 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. Due to the COVID-19 triggering event, the Company assessed its ROU assets for impairment and determined that as of March 31, 2020, the ROU assets were not impaired. As the COVID-19 pandemic continues, the Company will continue to assess its ROU assets for impairment, which could have a material impact on the Company's results of operations.

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 6.86 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of March 31, 2020.

As of March 31, 2020, 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	$	31,959	$	14,484	$	150	$	46,593	$	(31,959)	$	14,634
2021	121,831		51,700		1,781		175,312		(121,831)		53,481
2022	111,239		42,916		1,410		155,565		(111,239)		44,326
2023	100,687		37,374		1,447		139,508		(100,687)		38,821
2024	90,582		33,096		1,484		125,162		(90,582)		34,580
Thereafter	257,841		92,091		9,339		359,271		(257,841)		101,430
Total future obligations	$	714,139	$	271,661	$	15,611	$	1,001,411	$	(714,139)	$	287,272
Less amounts representing interest	89,274		32,514		2,896		124,684
Present value of lease liabilities	$	624,865	$	239,147	$	12,715	$	876,727
Less current lease liabilities	102,310		46,171		1,001		149,482
Long-term lease liabilities	$	522,555	$	192,976	$	11,714	$	727,245

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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Minimum rent	$	14,970	$	26,325	$	51,468	85,099
Percentage rent based on sales	298		1,373		2,145		3,476
Real estate taxes and other expenses	3,975		4,634		10,389		14,377
Total	$	19,243	$	32,332	$	64,002	$	102,952

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 nine months ended March 31, 2020, franchise rental income and franchise rent expense were $31.8 and $96.9 million, respectively.

For franchise and company-owned 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. Due to the COVID-19 triggering event, the Company assessed its ROU assets for impairment and determined that as of March 31, 2020, the ROU assets were not impaired. As the COVID-19 pandemic continues, the Company will continue to assess its ROU assets for impairment, which could have a material impact on the Company's results of operations.

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 6.86 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of March 31, 2020.

As of March 31, 2020, 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	$	31,959	$	14,484	$	150	$	46,593	$	(31,959)	$	14,634
2021	121,831		51,700		1,781		175,312		(121,831)		53,481
2022	111,239		42,916		1,410		155,565		(111,239)		44,326
2023	100,687		37,374		1,447		139,508		(100,687)		38,821
2024	90,582		33,096		1,484		125,162		(90,582)		34,580
Thereafter	257,841		92,091		9,339		359,271		(257,841)		101,430
Total future obligations	$	714,139	$	271,661	$	15,611	$	1,001,411	$	(714,139)	$	287,272
Less amounts representing interest	89,274		32,514		2,896		124,684
Present value of lease liabilities	$	624,865	$	239,147	$	12,715	$	876,727
Less current lease liabilities	102,310		46,171		1,001		149,482
Long-term lease liabilities	$	522,555	$	192,976	$	11,714	$	727,245

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INCOME TAXES:

9 Months Ended

Mar. 31, 2020

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 March 31,						For the Nine Months Ended March 31,
	2020			2019			2020			2019
	(Dollars in thousands)
Income tax benefit (expense)	$	2,253		$	(3,248)		$	5,904		$	(2,988)
Effective tax rate	2.9		%	(28.1		%)	5.6		%	(25.2)		%

The recorded tax provisions and effective tax rates for the three and nine months ended March 31, 2020 were different than normally expected primarily due to the impact of the deferred tax valuation allowance. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in response to the COVID-19 pandemic. The CARES Act included several significant business tax provisions that, among other items, eliminated the taxable income limit and granted businesses a five-year carryback for certain net operating losses ("NOLs"), accelerated refunds of previously generated corporate alternative minimum tax ("AMT") credits, temporarily loosened the business interest limitation under section 163(j) and corrected certain provisions in the Tax Cuts and Jobs Acts ("TCJA").

One of the technical corrections made to the TCJA through the CARES Act provisions modified NOLs resulting from accounting periods which straddled December 31, 2017. Such NOLs were originally deemed to have no carryback but an indefinite carryforward. As a result of the correction, the NOLs currently have a 2-year carryback and a 20-year carryforward and are considered definite-lived NOLs. This technical correction modified the Company's NOLs generated during its fiscal year end 2018 from indefinite-lived to definite-lived. As the Company has continued to maintain a valuation allowance against its definite-lived NOLs, the Company established a valuation allowance against the NOLs generated during its fiscal year 2018 and recorded a net tax expense of $14.7 million in continuing operations during the period ended March 31, 2020.

Due to recent negative financial performance and cumulative losses incurred in recent years, the Company was no longer able to conclude that it was more likely than not that certain Canadian deferred tax assets would be fully realized, and therefore established a $0.4 million valuation allowance on the deferred tax assets during the period ended March 31, 2020.

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.

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Revenues:
Franchise rental income		$ 31,821		$ 96,875
Total revenues		153,783	$ 258,343	609,586	$ 820,849
Operating expenses:
Site operating expenses		3,660	34,339	62,932	106,723
General and administrative		31,871	41,694	105,187	135,257
Rent		31,800		96,900
Depreciation and amortization		10,359	8,630	27,486	27,732
TBG mall location restructuring (Note 3)		146	20,711	2,368	20,711
Goodwill impairment		44,529	0	44,529	0
Total operating expenses		218,125	280,505	691,300	841,133
Operating loss		(64,342)	(22,162)	(81,714)	(20,284)
Other (expense) income:
Interest expense		(1,712)	(1,354)	(4,615)	(3,432)
(Loss) gain from sale of salon assets to franchisees, net		(10,208)	11,489	(21,760)	10,394
Interest income and other, net		(1,329)	464	3,188	1,453
Loss from continuing operations before income taxes		(77,591)	(11,563)	(104,901)	(11,869)
Income tax benefit (expense)		2,253	(3,248)	5,904	(2,988)
Loss from continuing operations		(75,338)	(14,811)	(98,997)	(14,857)
Income from discontinued operations, net of taxes (Note 3)		301	178	753	6,027
Net loss		$ (75,037)	$ (14,633)	$ (98,244)	$ (8,830)
Basic and diluted:
Loss from continuing operations (in dollars per share)		$ (2.10)	$ (0.37)	$ (2.75)	$ (0.35)
Income from discontinued operations (in dollars per share)		0.01	0.00	0.02	0.14
Net loss per share, basic and diluted (in dollars per share)	[1]	$ (2.10)	$ (0.36)	$ (2.73)	$ (0.21)
Weighted average common and common equivalent shares outstanding:
Basic and diluted (in shares)		35,815	40,314	35,958	42,900
Non-Franchise Lease
Operating expenses:
Rent		$ 19,243	$ 32,332	$ 64,002	$ 102,952
Franchisor
Operating expenses:
Rent		31,821		96,875
Service
Revenues:
Revenues		78,387	181,809	322,133	580,076
Operating expenses:
Cost of services and products		54,824	111,632	212,664	348,060
Product
Revenues:
Revenues		34,877	53,766	124,516	173,006
Operating expenses:
Cost of services and products		21,672	31,167	75,257	99,698
Royalties and fees
Revenues:
Revenues		$ 8,698	$ 22,768	$ 66,062	$ 67,767

[1] Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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REVENUE RECOGNITION: Receivables, Broker Fees and Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019
Revenue from Contract with Customer [Abstract]
Receivables	$ 16,083	$ 23,210
Broker fees	21,193	17,819
Deferred revenue
Current	8,126	7,407
Non-current	45,661	39,367
Gift card liability
Deferred revenue
Current	2,616	3,050
Deferred franchise fees unopened salons
Deferred revenue
Current	44	193
Non-current	11,840	15,173
Deferred franchise fees open salons
Deferred revenue
Current	5,466	4,164
Non-current	$ 33,821	$ 24,194

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FAIR VALUE MEASUREMENTS: (Tables)

9 Months Ended

Mar. 31, 2020

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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Goodwill	$	44,529	$	—	$	44,529	$	—
Long-lived salon assets	1,208		702		3,851		3,005

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

9 Months Ended

Mar. 31, 2020

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 March 31, 2020 and for the three and nine months ended March 31, 2020 and 2019, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2020 and its consolidated results of operations, comprehensive loss, 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.

Impact of COVID-19 on Business Operations:

During the period ended March 31, 2020, the global coronavirus pandemic ("COVID-19") had an adverse impact on operations, including the closure of all company-owned salons and almost all franchise locations in March 2020 due to government mandates. Salons continued to be closed until April 23, 2020 when franchise salons began re-opening slowly, as government, state and local restrictions eased. As of June 15, 2020 approximately 76% of franchise salons were open. Company-owned salons were closed through May 21, 2020 and are gradually re-opening. As of June 15, 2020, approximately 45% of company-owned salons were open. As salons re-open, the Company is taking additional measures across its portfolio of franchise and company-owned salons to facilitate customer and employee safety. As a result, COVID-19 has and will continue to negatively affect revenue and profitability. To offset the loss of revenue, in April 2020, the Company implemented a furlough program for a substantial majority of the workforce across the corporate office, field support, and distribution centers; and reductions in the pay for executives and other working employees. Despite actions taken to resume business operations, COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, as well as reactions to future pandemics or resurgences of COVID-19, could potentially prolong and intensify the impact of the global crisis on our business.

The economic disruption due to COVID-19 was determined to be a triggering event in the quarter and as a result, management assessed its long-term assets, including long-lived salon assets, right of use assets, goodwill and other intangibles for impairment. Impairments were recorded related to long-lived salon assets (Note 12) and goodwill (Notes 1 and 12). As the COVID-19 pandemic continues, management will reassess all long-term assets and further impairment may result.

Due to the COVID-19 pandemic, the Company is relying on the Securities and Exchange Commission's Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) to extend the filing of this Quarterly Report. The Company is relying on the Order due to the limited availability of key Company personnel required to complete the Form 10-Q due to the Company's employee furlough program, as well as suggested and mandated social quarantining and work from home orders. Additionally, the Company's management team was not able to initially devote the requisite time and attention to the Form 10-Q, as it had to address the emergent business and operational issues resulting from COVID-19.

Goodwill:

At the end of the period ended March 31, 2020, the Company determined a triggering event occurred, resulting in quantitative impairment tests performed over the goodwill. This determination was made considering the reduced sales and profitability projections for the reporting units, driven by the COVID-19 pandemic and related economic disruption.

The triggering events experienced in the third quarter impacted both reporting units of the business, Franchise and Company-owned. Due to the Company's emphasis on transitioning to a franchise platform, the Company engaged a third-party valuation specialist to perform an impairment analysis on the Franchise reporting unit of the business. Conversely, the Company-owned reporting unit is comprised of a portfolio of salons that the Company intends to sell to franchisees or close in the short-term as part of the transition to a fully-franchised model. As a result, the Company-owned reporting unit has a limited life which allows the Company to perform its own impairment analysis on the Company-owned reporting unit.

For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the Franchise reporting unit, and the discounted cash flows approach to evaluate the Company-owned reporting unit. The discounted cash flow models reflect management's assumptions regarding revenue growth rates, economic and market trends including deterioration from the current COVID-19 pandemic, cost structure, and other expectations about the anticipated short-term and long-term operating results of the reporting units. For the Franchise reporting unit, the discount rate of 13 percent and the terminal growth rate of 2.5 percent were also key assumptions utilized in the discounted cash flow. For the Company-owned reporting unit, proceeds from the sale of salons to franchisees and number of salon venditions were the other key assumptions utilized in its discounted cash flow. For the analysis performed as of March 31, 2020, management decreased the expected proceeds generated from the sale of salons to franchisees and increased the expected number of salon closures as compared to the analysis performed as of April 30, 2019. The decline in expected proceeds and increase in salon closings is due to the economic downturn resulting from the COVID-19 pandemic. The analysis also included substantially zero revenue in April and May 2020 and lower than previously expected revenue for the rest of calendar year 2020, which significantly reduced the expected cash flows.

As a result of the impairment testing, the Franchise reporting unit, which has goodwill of $226.7 million, was determined to have a fair value that exceeded carrying value by approximately 50 percent. The Company-owned reporting unit was determined to have a carrying value in excess of its fair value, resulting in a goodwill impairment charge of $44.5 million. Prior to the COVID-19 pandemic, the Company had been derecognizing Company-owned goodwill as part of the calculation of gain or loss on the sale of salons to franchisees. In the three and nine months ended March 31, 2020, the Company derecognized $19.8 and $72.6 million of goodwill, respectively. The Company-owned reporting unit has no remaining goodwill, so there will be no further derecognition of Company-owned goodwill.

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 $2.5 million, which was recorded in Interest income and other, net on the Condensed Consolidated Statement of Operations. In the three month period ended March 31, 2020, the Company recognized $1.5 million of incremental charges in Interest income and other, net which corrected and reduced the gain on sale of the Company’s former headquarters that was recorded in the second quarter of fiscal year 2020. The $2.5 million net gain on sale includes the adjustment. Management evaluated the effect of this out-of-period adjustment on the three and nine month periods ended March 31, 2020, as well as on the previous interim period in which it should have been recognized and concluded for both quantitative and qualitative reasons that the adjustment is not material to any of the periods affected.

Accounting Standards Recently Adopted by the Company:

Simplifying the Test for Goodwill Impairment

The Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350)" for the interim impairment test performed due to the triggering event noted above, as of March 31, 2020. Under this accounting standard, the Company performed its interim impairment test and will perform its annual impairment test by comparing the fair value of a reporting unit to its carrying amount. The Company then records an impairment charge for the amount that the carrying amount exceeds the fair value. This eliminates Step 2 from the goodwill impairment test to simplify the subsequent measure of goodwill.

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 March 31, 2020 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 $31.8 and $96.9 million during the three and nine months ended March 31, 2020, 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.

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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	3 Months Ended	9 Months Ended
	Dec. 31, 2019	Mar. 31, 2020	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
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	$ 2,500		$ 2,513	$ 0
Incremental charges in Interest income and other, net		$ 1,500
Land
Long Lived Assets Held-for-sale [Line Items]
Other assets					1,700
Building
Long Lived Assets Held-for-sale [Line Items]
Other assets					$ 3,600

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INCOME TAXES: (Tables)

9 Months Ended

Mar. 31, 2020

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 March 31,						For the Nine Months Ended March 31,
	2020			2019			2020			2019
	(Dollars in thousands)
Income tax benefit (expense)	$	2,253		$	(3,248)		$	5,904		$	(2,988)
Effective tax rate	2.9		%	(28.1		%)	5.6		%	(25.2)		%

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SUBSEQUENT EVENTS:	9 Months Ended
	Mar. 31, 2020
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENT: In May of 2020, the Company amended its $295.0 million revolving credit facility that expires in March 2023 (See Note 11).

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FINANCING ARRANGEMENTS: (Tables)

9 Months Ended

Mar. 31, 2020

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	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.90%	$	273,000	$	90,000

Schedule of long-term financial liability

The Company’s long-term financing liabilities consists of the following:

	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Financial liability - Salt Lake City Distribution Center	2034	3.30%	$	16,914	$	17,354
Financial liability - Chattanooga Distribution Center	2034	3.70%	11,319		11,556
Long- term financing liability			$	28,233	$	28,910

Schedule of future lease payments due

As of March 31, 2020, future lease payments due are as follows:

Fiscal year	Salt Lake City Distribution Center		Chattanooga Distribution Center
	(Dollars in thousands)
Remainder of 2020	$	287	$	201
2021	1,157		817
2022	1,171		829
2023	1,186		842
2024	1,200		854
Thereafter	11,899		9,282
Total	$	16,900	$	12,825

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INCOME TAXES - Additional Information (Details) $ in Millions	9 Months Ended
	Mar. 31, 2020 USD ($)
Income Tax Disclosure [Abstract]
Income tax expense	$ 14.7
Valuation allowance	$ 0.4

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REVENUE RECOGNITION: Broker Fee Balance (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2020 USD ($)
Change In Deferred Costs [Roll Forward]
Balance as of June 30, 2019	$ 17,819
Additions	5,499
Amortization	(2,092)
Write-offs	(33)
Balance as of March 31, 2020	$ 21,193

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SHAREHOLDERS' EQUITY: Equity Awards Granted (Details) - shares	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted (in shares)	7,451	201,091
Performance-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted (in shares)	0	73,712

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SEGMENT INFORMATION: Operating Results (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Revenues:
Franchise rental income	$ 31,821		$ 96,875
Total revenues	153,783	$ 258,343	609,586	$ 820,849
Operating expenses:
Site operating expenses	3,660	34,339	62,932	106,723
General and administrative	31,871	41,694	105,187	135,257
Rent	31,800		96,900
Depreciation and amortization	10,359	8,630	27,486	27,732
TBG restructuring	146	20,711	2,368	20,711
Goodwill impairment	44,529	0	44,529	0
Total operating expenses	218,125	280,505	691,300	841,133
Operating loss	(64,342)	(22,162)	(81,714)	(20,284)
Other (expense) income:
Interest expense	(1,712)	(1,354)	(4,615)	(3,432)
(Loss) gain from sale of salon assets to franchisees, net	(10,208)	11,489	(21,760)	10,394
Interest income and other, net	(1,329)	464	3,188	1,453
Loss from continuing operations before income taxes	(77,591)	(11,563)	(104,901)	(11,869)
Cooperative advertising income	14,900		14,900
Cooperative advertising expense	14,900		14,900
Non-Franchise Lease
Operating expenses:
Rent	19,243	32,332	64,002	102,952
Franchisor
Operating expenses:
Rent	31,821		96,875
Franchise
Operating expenses:
Goodwill impairment			0
Company-owned
Operating expenses:
Goodwill impairment			44,529
Operating Segments | Franchise
Revenues:
Franchise rental income	31,821		96,875
Total revenues	55,837	37,107	208,224	115,553
Operating expenses:
Site operating expenses	(7,789)	8,445	13,341	24,288
General and administrative	8,657	7,526	25,990	24,656
Depreciation and amortization	292	240	662	613
TBG restructuring	146	20,711	2,368	20,711
Goodwill impairment	0		0
Total operating expenses	44,755	48,287	174,807	108,773
Operating loss	11,082	(11,180)	33,417	6,780
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 from continuing operations before income taxes	11,082	(11,180)	33,417	6,780
Operating Segments | Franchise | Non-Franchise Lease
Operating expenses:
Rent	176	190	767	468
Operating Segments | Franchise | Franchisor
Operating expenses:
Rent	31,821		96,875
Operating Segments | Company-owned
Revenues:
Franchise rental income	0		0
Total revenues	97,946	221,236	401,362	705,296
Operating expenses:
Site operating expenses	11,449	25,894	49,591	82,435
General and administrative	4,566	14,505	22,263	45,084
Depreciation and amortization	9,799	6,519	21,844	21,304
TBG restructuring	0	0	0	0
Goodwill impairment	44,529		44,529
Total operating expenses	153,550	210,506	452,670	660,452
Operating loss	(55,604)	10,730	(51,308)	44,844
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 from continuing operations before income taxes	(55,604)	10,730	(51,308)	44,844
Operating Segments | Company-owned | Non-Franchise Lease
Operating expenses:
Rent	18,163	31,964	61,326	101,908
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:
Site operating expenses	0	0	0	0
General and administrative	18,648	19,663	56,934	65,517
Depreciation and amortization	268	1,871	4,980	5,815
TBG restructuring	0	0	0	0
Goodwill impairment	0		0
Total operating expenses	19,820	21,712	63,823	71,908
Operating loss	(19,820)	(21,712)	(63,823)	(71,908)
Other (expense) income:
Interest expense	(1,712)	(1,354)	(4,615)	(3,432)
(Loss) gain from sale of salon assets to franchisees, net	(10,208)	11,489	(21,760)	10,394
Interest income and other, net	(1,329)	464	3,188	1,453
Loss from continuing operations before income taxes	(33,069)	(11,113)	(87,010)	(63,493)
Unallocated Corporate | Non-Franchise Lease
Operating expenses:
Rent	904	178	1,909	576
Unallocated Corporate | Franchisor
Operating expenses:
Rent	0		0
Service
Revenues:
Revenues	78,387	181,809	322,133	580,076
Operating expenses:
Cost of services and products	54,824	111,632	212,664	348,060
Service | Operating Segments | Franchise
Revenues:
Revenues	0	0	0	0
Operating expenses:
Cost of services and products	0	0	0	0
Service | Operating Segments | Company-owned
Revenues:
Revenues	78,387	181,809	322,133	580,076
Operating expenses:
Cost of services and products	54,824	111,632	212,664	348,060
Service | Unallocated Corporate
Revenues:
Revenues	0	0	0	0
Operating expenses:
Cost of services and products	0	0	0	0
Product
Revenues:
Revenues	34,877	53,766	124,516	173,006
Operating expenses:
Cost of services and products	21,672	31,167	75,257	99,698
Product | Operating Segments | Franchise
Revenues:
Revenues	15,318	14,339	45,287	47,786
Operating expenses:
Cost of services and products	11,452	11,175	34,804	38,037
Product | Operating Segments | Company-owned
Revenues:
Revenues	19,559	39,427	79,229	125,220
Operating expenses:
Cost of services and products	10,220	19,992	40,453	61,661
Product | Unallocated Corporate
Revenues:
Revenues	0	0	0	0
Operating expenses:
Cost of services and products	0	0	0	0
Royalties and fees
Revenues:
Revenues	8,698	22,768	66,062	67,767
Royalties and fees | Operating Segments | Franchise
Revenues:
Revenues	8,698	22,768	66,062	67,767
Royalties and fees | Operating Segments | Company-owned
Revenues:
Revenues	0	0	0	0
Royalties and fees | Unallocated Corporate
Revenues:
Revenues	$ 0	$ 0	$ 0	$ 0

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RIGHT OF USE ASSET AND LEASE LIABILITIES (Tables)

9 Months Ended

Mar. 31, 2020

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 March 31,				For the Nine Months Ended March 31,
	2020		2019		2020		2019
	(Dollars in thousands)
Minimum rent	$	14,970	$	26,325	$	51,468	85,099
Percentage rent based on sales	298		1,373		2,145		3,476
Real estate taxes and other expenses	3,975		4,634		10,389		14,377
Total	$	19,243	$	32,332	$	64,002	$	102,952

Lessor, Future Operating Lease Commitments

As of March 31, 2020, 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	$	31,959	$	14,484	$	150	$	46,593	$	(31,959)	$	14,634
2021	121,831		51,700		1,781		175,312		(121,831)		53,481
2022	111,239		42,916		1,410		155,565		(111,239)		44,326
2023	100,687		37,374		1,447		139,508		(100,687)		38,821
2024	90,582		33,096		1,484		125,162		(90,582)		34,580
Thereafter	257,841		92,091		9,339		359,271		(257,841)		101,430
Total future obligations	$	714,139	$	271,661	$	15,611	$	1,001,411	$	(714,139)	$	287,272
Less amounts representing interest	89,274		32,514		2,896		124,684
Present value of lease liabilities	$	624,865	$	239,147	$	12,715	$	876,727
Less current lease liabilities	102,310		46,171		1,001		149,482
Long-term lease liabilities	$	522,555	$	192,976	$	11,714	$	727,245

Lessee, Future Operating Lease Commitments

As of March 31, 2020, 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	$	31,959	$	14,484	$	150	$	46,593	$	(31,959)	$	14,634
2021	121,831		51,700		1,781		175,312		(121,831)		53,481
2022	111,239		42,916		1,410		155,565		(111,239)		44,326
2023	100,687		37,374		1,447		139,508		(100,687)		38,821
2024	90,582		33,096		1,484		125,162		(90,582)		34,580
Thereafter	257,841		92,091		9,339		359,271		(257,841)		101,430
Total future obligations	$	714,139	$	271,661	$	15,611	$	1,001,411	$	(714,139)	$	287,272
Less amounts representing interest	89,274		32,514		2,896		124,684
Present value of lease liabilities	$	624,865	$	239,147	$	12,715	$	876,727
Less current lease liabilities	102,310		46,171		1,001		149,482
Long-term lease liabilities	$	522,555	$	192,976	$	11,714	$	727,245

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SHAREHOLDERS' EQUITY: (Tables)

9 Months Ended

Mar. 31, 2020

Stockholders' Equity Note [Abstract]

Share-based Equity Awards Granted

A summary of equity awards granted is as follows:

	For the Three Months Ended March 31, 2020	For the Nine Months Ended March 31, 2020
Restricted stock units	7,451	201,091
Performance-based restricted stock units	—	73,712

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SEGMENT INFORMATION:

9 Months Ended

Mar. 31, 2020

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:

	March 31, 2020		June 30, 2019
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,219		615
Supercuts	2,522		2,340
Signature Style	1,215		766
Total North American salons	4,956		3,721
Total International salons (1)	170		230
Total Franchise salons	5,126		3,951
as a percent of total Franchise and Company-owned salons	73.9	%	56.0	%
Total Franchisees	955		907
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	873		1,550
Supercuts	217		403
Signature Style	535		1,155
Mall-based (2)	190		—
Total Company-owned salons	1,815		3,108
as a percent of total Franchise and Company-owned salons	26.1	%	44.0	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	85		86
Grand Total, System-wide	7,026		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. They are included in continuing operations under the Company-owned operating segment from January 1, 2020.

As of March 31, 2020, the Franchise operating segment is comprised primarily of Supercuts^®, SmartStyle^®, Cost Cutters^®, First Choice Haircutters^®, Roosters^® and Magicuts^® concepts and the Company-owned operating segment is comprised primarily of SmartStyle^®, Supercuts^®, Cost Cutters^®, and other regional trade names.

Financial information concerning the Company's reportable operating segments is shown in the following tables:

	For the Three Months Ended March 31, 2020
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	78,387	$	—	$	78,387
Product	15,318		19,559		—		34,877
Royalties and fees (1)	8,698		—		—		8,698
Franchise rental income	31,821		—		—		31,821
Total revenue	55,837		97,946		—		153,783
Operating expenses:
Cost of service	—		54,824		—		54,824
Cost of product	11,452		10,220		—		21,672
Site operating expenses (1)	(7,789)		11,449		—		3,660
General and administrative	8,657		4,566		18,648		31,871
Rent	176		18,163		904		19,243
Franchise rent expense	31,821		—		—		31,821
Depreciation and amortization	292		9,799		268		10,359
TBG restructuring	146		—		—		146
Goodwill impairment	—		44,529		—		44,529
Total operating expenses	44,755		153,550		19,820		218,125
Operating income (loss)	11,082		(55,604)		(19,820)		(64,342)
Other (expense) income:
Interest expense	—		—		(1,712)		(1,712)
Loss from sale of salon assets to franchisees, net	—		—		(10,208)		(10,208)
Interest income and other, net	—		—		(1,329)		(1,329)
Income (loss) from continuing operations before income taxes	$	11,082	$	(55,604)	$	(33,069)	$	(77,591)

(1) Includes the refund of $14.9 million of previously collected cooperative adverting fees, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss.

	For the Three Months Ended March 31, 2019
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	181,809	$	—	$	181,809
Product	14,339		39,427		—		53,766
Royalties and fees	22,768		—		—		22,768
Total revenue	37,107		221,236		—		258,343
Operating expenses:
Cost of service	—		111,632		—		111,632
Cost of product	11,175		19,992		—		31,167
Site operating expenses	8,445		25,894		—		34,339
General and administrative	7,526		14,505		19,663		41,694
Rent	190		31,964		178		32,332
Depreciation and amortization	240		6,519		1,871		8,630
TBG mall location restructuring	20,711		—		—		20,711
Total operating expenses	48,287		210,506		21,712		280,505
Operating (loss) income	(11,180)		10,730		(21,712)		(22,162)
Other (expense) income:
Interest expense	—		—		(1,354)		(1,354)
Gain from sale of salon assets to franchisees, net	—		—		11,489		11,489
Interest income and other, net	—		—		464		464
(Loss) income from continuing operations before income taxes	$	(11,180)	$	10,730	$	(11,113)	$	(11,563)

	For the Nine Months Ended March 31, 2020
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	322,133	$	—	$	322,133
Product	45,287		79,229		—		124,516
Royalties and fees (1)	66,062		—		—		66,062
Franchise rental income	96,875		—		—		96,875
Total revenue	208,224		401,362		—		609,586
Operating expenses:
Cost of service	—		212,664		—		212,664
Cost of product	34,804		40,453		—		75,257
Site operating expenses (1)	13,341		49,591		—		62,932
General and administrative	25,990		22,263		56,934		105,187
Rent	767		61,326		1,909		64,002
Franchise rent expense	96,875		—		—		96,875
Depreciation and amortization	662		21,844		4,980		27,486
TBG restructuring	2,368		—		—		2,368
Goodwill impairment	—		44,529		—		44,529
Total operating expenses	174,807		452,670		63,823		691,300
Operating income (loss)	33,417		(51,308)		(63,823)		(81,714)
Other (expense) income:
Interest expense	—		—		(4,615)		(4,615)
Loss from sale of salon assets to franchisees, net	—		—		(21,760)		(21,760)
Interest income and other, net	—		—		3,188		3,188
Income (loss) from continuing operations before income taxes	$	33,417	$	(51,308)	$	(87,010)	$	(104,901)

(1) Includes the refund of $14.9 million of previously collected cooperative adverting costs, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss.

	For the Nine Months Ended March 31, 2019
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	580,076	$	—	$	580,076
Product	47,786		125,220		—		173,006
Royalties and fees	67,767		—		—		67,767
Total revenue	115,553		705,296		—		820,849
Operating expenses:
Cost of service	—		348,060		—		348,060
Cost of product	38,037		61,661		—		99,698
Site operating expenses	24,288		82,435		—		106,723
General and administrative	24,656		45,084		65,517		135,257
Rent	468		101,908		576		102,952
Depreciation and amortization	613		21,304		5,815		27,732
TBG mall location restructuring	20,711		—		—		20,711
Total operating expenses	108,773		660,452		71,908		841,133
Operating income (loss)	6,780		44,844		(71,908)		(20,284)
Other (expense) income:
Interest expense	—		—		(3,432)		(3,432)
Loss from sale of salon assets to franchisees, net	—		—		10,394		10,394
Interest income and other, net	—		—		1,453		1,453
Income (loss) from continuing operations before income taxes	$	6,780	44,844		$	(63,493)	$	(11,869)

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REVENUE RECOGNITION: Future Estimated Expected Revenue (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 39,287
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 1,359
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	3 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	$ 5,348
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	$ 5,228
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	$ 5,051
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	$ 4,816
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	$ 17,485
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing

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SHAREHOLDERS' EQUITY: Stock-Based Employee Compensation, Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ (0.0)	$ 2.5	$ 2.1	$ 7.1
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%

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COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Millions	1 Months Ended
	Feb. 29, 2020	Mar. 31, 2020	Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Class action lawsuit settlement	$ 2.1
Loss contingency accrual		$ 2.1	$ 1.5

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SEGMENT INFORMATION: Reportable Operating Segment Salons (Details)	Mar. 31, 2020 salon franchisee	Jun. 30, 2019 salon franchisee
Franchisor Disclosure [Line Items]
Number of salons	7,026	7,145
Total Franchisees | franchisee	955	907
Equity ownership interest locations
Franchisor Disclosure [Line Items]
Number of salons	85	86
Franchise
Franchisor Disclosure [Line Items]
Number of salons	5,126	3,951
Salons as a percent of total Company-owned and Franchise salons	73.90%	56.00%
Franchise | International
Franchisor Disclosure [Line Items]
Number of salons	170	230
Franchise | Total North America salons | North American
Franchisor Disclosure [Line Items]
Number of salons	4,956	3,721
Franchise | SmartStyle/Cost Cutters in Walmart Stores
Franchisor Disclosure [Line Items]
Number of salons	1,219	615
Franchise | Supercuts
Franchisor Disclosure [Line Items]
Number of salons	2,522	2,340
Franchise | Signature Style
Franchisor Disclosure [Line Items]
Number of salons	1,215	766
Company-owned
Franchisor Disclosure [Line Items]
Number of salons	1,815	3,108
Salons as a percent of total Company-owned and Franchise salons	26.10%	44.00%
Company-owned | SmartStyle/Cost Cutters in Walmart Stores
Franchisor Disclosure [Line Items]
Number of salons	873	1,550
Company-owned | Supercuts
Franchisor Disclosure [Line Items]
Number of salons	217	403
Company-owned | Signature Style
Franchisor Disclosure [Line Items]
Number of salons	535	1,155
Company-owned | Mall-based
Franchisor Disclosure [Line Items]
Number of salons	190	0

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FINANCING ARRANGEMENTS: Schedule of Long-term Financial Liability (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2020	Jun. 30, 2019
Debt Instrument [Line Items]
Long- term financing liability	$ 28,233	$ 28,910
Salt Lake City Distribution Center
Debt Instrument [Line Items]
Interest rate	3.30%
Long- term financing liability	$ 16,914	17,354
Chattanooga Distribution Center
Debt Instrument [Line Items]
Interest rate	3.70%
Long- term financing liability	$ 11,319	$ 11,556

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RIGHT OF USE ASSET AND LEASE LIABILITIES Real Estate Taxes and Other Occupancy Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Lessee, Lease, Description [Line Items]
Rent	$ 31,800		$ 96,900
Non-Franchise Lease
Lessee, Lease, Description [Line Items]
Minimum rent	14,970		51,468
Percentage rent based on sales	298		2,145
Real estate taxes and other expenses	3,975		10,389
Rent	$ 19,243	$ 32,332	$ 64,002	$ 102,952
Minimum rent		26,325		85,099
Percentage rent based on sales		1,373		3,476
Real estate taxes and other expenses		4,634		14,377
Rent		$ 32,332		$ 102,952

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CASH, CASH EQUIVALENTS AND RESTRICTED CASH: (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	$ 241,037	$ 70,141
Restricted cash, included in Other current assets	14,745	22,238
Total cash, cash equivalents and restricted cash	$ 255,782	$ 92,379	$ 94,839	$ 148,774

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GOODWILL AND OTHER INTANGIBLES:

9 Months Ended

Mar. 31, 2020

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	(1,262)		(660)		(1,922)
Derecognition related to sale of salon assets to franchisees (1)	—		(72,601)		(72,601)
Goodwill impairment	—		(44,529)		(44,529)
Goodwill, net at March 31, 2020	$	226,666	$	—	$	226,666

_______________________________________________________________________________

(1)Prior to the impairment charge, goodwill was derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized was 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 goodwill balance of the Company-owned reporting unit at the time of the sale.

The table below presents other intangible assets:

	March 31, 2020						June 30, 2019
	Cost (1)		Accumulated Amortization (1)		Net		Cost (1)		Accumulated Amortization (1)		Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	6,541	$	(3,632)	$	2,909	$	6,909	$	(3,659)	$	3,250
Franchise agreements	9,356		(7,944)		1,412		9,783		(8,057)		1,726
Lease intangibles	13,426		(10,516)		2,910		13,490		(10,065)		3,425
Other	865		(528)		337		883		(523)		360
Total	$	30,188	$	(22,620)	$	7,568	$	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.

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SHAREHOLDERS' EQUITY

9 Months Ended

Mar. 31, 2020

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY:

Stock-Based Employee Compensation:

During the three and nine months ended March 31, 2020, 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 March 31, 2020	For the Nine Months Ended March 31, 2020
Restricted stock units	7,451	201,091
Performance-based restricted stock units	—	73,712

The RSUs granted to employees during the three and nine months ended March 31, 2020 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 $0.0 and $2.5 million for the three months ended March 31, 2020 and 2019, respectively, and $2.1 and $7.1 million for the nine months ended March 31, 2020 and 2019, respectively, was recorded within general and administrative expense on the Condensed Consolidated Statement of Operations. The expense recorded in the three months ended March 31, 2020 was offset by the reversal of expense related to the downward adjustment of a PSU factor.

Share Repurchases:

During the nine months ended March 31, 2020, the Company repurchased 1.5 million shares for $26.4 million under a previously approved stock repurchase program. At March 31, 2020, $54.6 million remains outstanding under the approved stock repurchase program.

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SEGMENT INFORMATION: (Tables)

9 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of reportable operating segment salons

The Company’s reportable operating segments consisted of the following salons:

	March 31, 2020		June 30, 2019
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,219		615
Supercuts	2,522		2,340
Signature Style	1,215		766
Total North American salons	4,956		3,721
Total International salons (1)	170		230
Total Franchise salons	5,126		3,951
as a percent of total Franchise and Company-owned salons	73.9	%	56.0	%
Total Franchisees	955		907
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	873		1,550
Supercuts	217		403
Signature Style	535		1,155
Mall-based (2)	190		—
Total Company-owned salons	1,815		3,108
as a percent of total Franchise and Company-owned salons	26.1	%	44.0	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	85		86
Grand Total, System-wide	7,026		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. They are included in continuing operations under the Company-owned operating segment from January 1, 2020.

Schedule of summarized financial information of reportable operating segments

Financial information concerning the Company's reportable operating segments is shown in the following tables:

	For the Three Months Ended March 31, 2020
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	78,387	$	—	$	78,387
Product	15,318		19,559		—		34,877
Royalties and fees (1)	8,698		—		—		8,698
Franchise rental income	31,821		—		—		31,821
Total revenue	55,837		97,946		—		153,783
Operating expenses:
Cost of service	—		54,824		—		54,824
Cost of product	11,452		10,220		—		21,672
Site operating expenses (1)	(7,789)		11,449		—		3,660
General and administrative	8,657		4,566		18,648		31,871
Rent	176		18,163		904		19,243
Franchise rent expense	31,821		—		—		31,821
Depreciation and amortization	292		9,799		268		10,359
TBG restructuring	146		—		—		146
Goodwill impairment	—		44,529		—		44,529
Total operating expenses	44,755		153,550		19,820		218,125
Operating income (loss)	11,082		(55,604)		(19,820)		(64,342)
Other (expense) income:
Interest expense	—		—		(1,712)		(1,712)
Loss from sale of salon assets to franchisees, net	—		—		(10,208)		(10,208)
Interest income and other, net	—		—		(1,329)		(1,329)
Income (loss) from continuing operations before income taxes	$	11,082	$	(55,604)	$	(33,069)	$	(77,591)

(1) Includes the refund of $14.9 million of previously collected cooperative adverting fees, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss.

	For the Three Months Ended March 31, 2019
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	181,809	$	—	$	181,809
Product	14,339		39,427		—		53,766
Royalties and fees	22,768		—		—		22,768
Total revenue	37,107		221,236		—		258,343
Operating expenses:
Cost of service	—		111,632		—		111,632
Cost of product	11,175		19,992		—		31,167
Site operating expenses	8,445		25,894		—		34,339
General and administrative	7,526		14,505		19,663		41,694
Rent	190		31,964		178		32,332
Depreciation and amortization	240		6,519		1,871		8,630
TBG mall location restructuring	20,711		—		—		20,711
Total operating expenses	48,287		210,506		21,712		280,505
Operating (loss) income	(11,180)		10,730		(21,712)		(22,162)
Other (expense) income:
Interest expense	—		—		(1,354)		(1,354)
Gain from sale of salon assets to franchisees, net	—		—		11,489		11,489
Interest income and other, net	—		—		464		464
(Loss) income from continuing operations before income taxes	$	(11,180)	$	10,730	$	(11,113)	$	(11,563)

	For the Nine Months Ended March 31, 2020
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	322,133	$	—	$	322,133
Product	45,287		79,229		—		124,516
Royalties and fees (1)	66,062		—		—		66,062
Franchise rental income	96,875		—		—		96,875
Total revenue	208,224		401,362		—		609,586
Operating expenses:
Cost of service	—		212,664		—		212,664
Cost of product	34,804		40,453		—		75,257
Site operating expenses (1)	13,341		49,591		—		62,932
General and administrative	25,990		22,263		56,934		105,187
Rent	767		61,326		1,909		64,002
Franchise rent expense	96,875		—		—		96,875
Depreciation and amortization	662		21,844		4,980		27,486
TBG restructuring	2,368		—		—		2,368
Goodwill impairment	—		44,529		—		44,529
Total operating expenses	174,807		452,670		63,823		691,300
Operating income (loss)	33,417		(51,308)		(63,823)		(81,714)
Other (expense) income:
Interest expense	—		—		(4,615)		(4,615)
Loss from sale of salon assets to franchisees, net	—		—		(21,760)		(21,760)
Interest income and other, net	—		—		3,188		3,188
Income (loss) from continuing operations before income taxes	$	33,417	$	(51,308)	$	(87,010)	$	(104,901)

(1) Includes the refund of $14.9 million of previously collected cooperative adverting costs, which reduced franchise royalties and fees and site operating expense and had no net impact on the operating loss.

	For the Nine Months Ended March 31, 2019
	Franchise		Company-owned		Corporate		Consolidated
	(Dollars in thousands)
Revenues:
Service	$	—	$	580,076	$	—	$	580,076
Product	47,786		125,220		—		173,006
Royalties and fees	67,767		—		—		67,767
Total revenue	115,553		705,296		—		820,849
Operating expenses:
Cost of service	—		348,060		—		348,060
Cost of product	38,037		61,661		—		99,698
Site operating expenses	24,288		82,435		—		106,723
General and administrative	24,656		45,084		65,517		135,257
Rent	468		101,908		576		102,952
Depreciation and amortization	613		21,304		5,815		27,732
TBG mall location restructuring	20,711		—		—		20,711
Total operating expenses	108,773		660,452		71,908		841,133
Operating income (loss)	6,780		44,844		(71,908)		(20,284)
Other (expense) income:
Interest expense	—		—		(3,432)		(3,432)
Loss from sale of salon assets to franchisees, net	—		—		10,394		10,394
Interest income and other, net	—		—		1,453		1,453
Income (loss) from continuing operations before income taxes	$	6,780	44,844		$	(63,493)	$	(11,869)

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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	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2020	Jul. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right of use asset	$ 861,569	$ 861,569
Operating lease liability	876,727	876,727
Franchise rental income	31,821	96,875
Rent expense	$ 31,800	$ 96,900
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

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REVENUE RECOGNITION:

9 Months Ended

Mar. 31, 2020

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 March 31, 2020				Three Months Ended March 31, 2019
	Franchise		Company-owned		Franchise		Company-owned
	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	78,387	$	—	$	181,809
Product	15,318		19,559		14,339		39,427
Total revenue recognized at a point in time	$	15,318	$	97,946	$	14,339	$	221,236
Revenue recognized over time:
Royalty and other franchise fees	$	16,487	$	—	$	14,339	$	—
Advertising fund (refunds) fees	(7,789)		—		8,429		—
Franchise rental income	31,821		—		—		—
Total revenue recognized over time	40,519		—		22,768		—
Total revenue	$	55,837	$	97,946	$	37,107	$	221,236

	Nine Months Ended March 31, 2020				Nine Months Ended March 31, 2019
	Franchise		Company-owned		Franchise		Company-owned
	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	322,133	$	—	$	580,076
Product	45,287		79,229		47,786		125,220
Total revenue recognized at a point in time	$	45,287	$	401,362	$	47,786	$	705,296
Revenue recognized over time:
Royalty and other franchise fees	$	52,721	$	—	$	43,495	$	—
Advertising fund (refunds) fees	13,341		—		24,272		—
Franchise rental income	96,875		—		—		—
Total revenue recognized over time	162,937		—		67,767		—
Total revenue	$	208,224	$	401,362	$	115,553	$	705,296

Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows:

	March 31, 2020		June 30, 2019		Balance Sheet Classification
	(Dollars in thousands)
Receivables from contracts with customers, net	$	16,083	$	23,210	Accounts receivable, net
Broker fees	$	21,193	$	17,819	Other assets
Deferred revenue:
Current
Gift card liability	$	2,616	$	3,050	Accrued expenses
Deferred franchise fees unopened salons	44		193		Accrued expenses
Deferred franchise fees open salons	5,466		4,164		Accrued expenses
Total current deferred revenue	$	8,126	$	7,407
Non-current
Deferred franchise fees unopened salons	$	11,840	$	15,173	Other non-current liabilities
Deferred franchise fees open salons	33,821		24,194		Other non-current liabilities
Total non-current deferred revenue	$	45,661	$	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 March 31, 2020 and June 30, 2019, the balance in the allowance for doubtful accounts was $2.6 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	5,499
Amortization	(2,092)
Write-offs	(33)
Balance as of March 31, 2020	$	21,193

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 March 31, 2020 and 2019 was $0.8 and $1.8 million, respectively, and for the nine months ended March 31, 2020 and 2019 was $2.3 and $4.0 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 March 31, 2020 and 2019 was $1.4 and $0.9 million, respectively, and for the nine months ended March 31, 2020 and 2019 was $3.8 and $2.6 million, respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2020 is as follows (in thousands):

Remainder of 2020	$	1,359
2021	5,348
2022	5,228
2023	5,051
2024	4,816
Thereafter	17,485
Total	$	39,287

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Cover Page - shares	9 Months Ended
	Mar. 31, 2020	Jun. 12, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	1-12725
Entity Registrant Name	Regis Corp
Entity Incorporation, State or Country Code	MN
Entity Tax Identification Number	41-0749934
Entity Address, Address Line One	3701 Wayzata Boulevard
Entity Address, City or Town	Minneapolis
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55416
City Area Code	952
Local Phone Number	947-7777
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, $0.05 par value
Trading Symbol	RGS
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		35,624,174
Entity Central Index Key	0000716643
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3

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REVENUE RECOGNITION: Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
Disaggregation of Revenue [Line Items]
Allowance for doubtful accounts	$ 2.6		$ 2.6		$ 2.0
Gift Cards
Disaggregation of Revenue [Line Items]
Revenues	0.8	$ 1.8	2.3	$ 4.0
Franchise Fees
Disaggregation of Revenue [Line Items]
Revenues	$ 1.4	$ 0.9	$ 3.8	$ 2.6

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (75,037)	$ (14,633)	$ (98,244)	$ (8,830)
Foreign currency translation adjustments	(2,482)	905	(2,344)	(606)
Comprehensive loss	$ (77,519)	$ (13,728)	$ (100,588)	$ (9,436)