SEGMENT INFORMATION

9 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION:

Segment information is prepared on the same basis that the chief operating decision maker (CODM) reviews financial information for operational decision-making purposes. Beginning in fiscal year 2022, corporate costs are included within the Franchise segment to reflect how the CODM reviews the business. The Company re-assessed its CODM conclusion in the second quarter of fiscal year 2022 as part of the CEO transition. As of March 31, 2022, the Company concluded the Interim CEO was the chief operating decision maker.

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

	March 31, 2022		June 30, 2021
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,667		1,666
Supercuts	2,316		2,386
Portfolio Brands	1,378		1,357
Total North American salons	5,361		5,409
Total International salons (1)	143		154
Total Franchise salons	5,504		5,563
as a percent of total Franchise and Company-owned salons	97.9	%	95.3	%
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	52		91
Supercuts	19		35
Portfolio Brands	46		150
Total Company-owned salons	117		276
as a percent of total Franchise and Company-owned salons	2.1	%	4.7	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	76		78
Grand Total, System-wide	5,697		5,917

_______________________________________________________________________________

(1)Canadian and Puerto Rican salons are included in the North American salon totals.

As of March 31, 2022, the Franchise operating segment is comprised primarily of Supercuts®, SmartStyle®, Cost Cutters®, First Choice Haircutters®, Magicuts®, and Roosters® 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:

	Three Months Ended March 31, 2022
	Franchise		Company-owned		Consolidated (1)
	(Dollars in thousands)
Revenues:
Royalties	$	15,799	$	—	$	15,799
Fees	3,364		—		3,364
Product sales to franchisees	1,293		—		1,293
Advertising fund contributions	8,078		—		8,078
Franchise rental income	32,666		—		32,666
Company-owned salon revenue	—		3,549		3,549
Total revenue	61,200		3,549		64,749
Operating expenses:
Cost of product sales to franchisees	2,598		—		2,598
Inventory reserve (1)	—		—		6,420
General and administrative	14,934		635		15,569
Rent	327		919		1,246
Advertising fund expense	8,078		—		8,078
Franchise rent expense	32,666		—		32,666
Company-owned salon expense	—		5,292		5,292
Depreciation and amortization	1,592		405		1,997
Long-lived asset impairment	322		5		327
Goodwill impairment	16,000		—		16,000
Total operating expenses	76,517		7,256		90,193
Operating loss	$	(15,317)	$	(3,707)	$	(25,444)

_______________________________________________________________________________

(1)This charge, primarily related to reserving for personal protective equipment acquired as a result of the COVID-19 pandemic, relates to the wind down of our distribution centers and is reviewed separately from the segment results by the CODM. Consolidated results will not cross foot as the inventory reserve is not part of the Company's segments.

	Three Months Ended March 31, 2021
	Franchise		Company-owned		Consolidated
	(Dollars in thousands)
Revenues:
Royalties	$	12,835	$	—	$	12,835
Fees	5,120		—		5,120
Product sales to franchisees	13,079		—		13,079
Advertising fund contributions	5,580		—		5,580
Franchise rental income	31,317		—		31,317
Company-owned salon revenue	—		32,336		32,336
Total revenue	67,931		32,336		100,267
Operating expenses:
Cost of product sales to franchisees	11,168		—		11,168
General and administrative	23,057		1,525		24,582
Rent	772		7,229		8,001
Advertising fund expense	5,580		—		5,580
Franchise rent expense	31,317		—		31,317
Company-owned salon expense	—		33,707		33,707
Depreciation and amortization	1,933		1,687		3,620
Long-lived asset impairment	22		811		833
Total operating expenses	73,849		44,959		118,808
Operating loss	$	(5,918)	$	(12,623)	$	(18,541)

	Nine Months Ended March 31, 2022
	Franchise		Company-owned		Consolidated (1)
	(Dollars in thousands)
Revenues:
Royalties	$	48,526	$	—	$	48,526
Fees	11,496		—		11,496
Product sales to franchisees	11,729		—		11,729
Advertising fund contributions	24,213		—		24,213
Franchise rental income	100,200		—		100,200
Company-owned salon revenue	—		16,597		16,597
Total revenue	196,164		16,597		212,761
Operating expenses:
Cost of product sales to franchisees	14,129		—		14,129
Inventory reserve (1)	—		—		6,420
General and administrative	51,099		2,243		53,342
Rent	3,359		2,778		6,137
Advertising fund expense	24,213		—		24,213
Franchise rent expense	100,200		—		100,200
Company-owned salon expense	—		18,304		18,304
Depreciation and amortization	4,718		1,128		5,846
Long-lived asset impairment	450		92		542
Goodwill impairment	16,000		—		16,000
Total operating expenses	214,168		24,545		245,133
Operating loss	$	(18,004)	$	(7,948)	$	(32,372)

_______________________________________________________________________________

(1)This charge, primarily related to reserving for personal protective equipment acquired as a result of the COVID-19 pandemic, relates to the wind down of our distribution centers and is reviewed separately from the segment results by the CODM. Consolidated results will not cross foot as the inventory reserve is not part of the Company's segments.

	Nine Months Ended March 31, 2021
	Franchise		Company-owned		Consolidated
	(Dollars in thousands)
Revenues:
Royalties	$	36,989	$	—	$	36,989
Fees	9,600		—		9,600
Product sales to franchisees	41,057		—		41,057
Advertising fund contributions	14,804		—		14,804
Franchise rental income	95,885		—		95,885
Company-owned salon revenue	—		117,648		117,648
Total revenue	198,335		117,648		315,983
Operating expenses:
Cost of product sales to franchisees	33,171		—		33,171
General and administrative	70,483		6,936		77,419
Rent	3,109		31,019		34,128
Advertising fund expense	14,804		—		14,804
Franchise rent expense	95,885		—		95,885
Company-owned salon expense	—		110,261		110,261
Depreciation and amortization	6,304		11,080		17,384
Long-lived asset impairment	726		9,091		9,817
Total operating expenses	224,482		168,387		392,869
Operating loss	$	(26,147)	$	(50,739)	$	(76,886)