v3.26.1
LEASES
 12 Months Ended
Jun. 30, 2026
Leases [Abstract]  
LEASES LEASES
At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and its corporate facilities under operating leases. The original terms range from one to ten years with many leases renewable for an additional five to ten-year term at the option of the Company. In addition to the obligation to make fixed rental payments for the use of the salons, the Company 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 includes the following:
Fiscal Years
202620252024
(Dollars in thousands)
Office and warehouse rent (1)$2,765 $2,855 $3,075 
Lease termination expense (2)557 386 101 
Lease liability benefit (3)(219)(289)(326)
Franchise salon rent 222 856 596 
Company-owned salon rent (4)10,127 6,679 2,079 
Total$13,452 $10,487 $5,525 
_______________________________________________________________________________
(1)Rental income associated with the sublease of the corporate office space is recorded in other income and was $1.3 million and $1.2 million for the years ended June 30, 2026, and 2025, respectively.
(2)Costs incurred to exit salons before the lease end date in order to relieve the Company of future lease obligations.
(3)Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities which results in a net gain. In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired.
(4)Includes rent related to the salons acquired in the December 2024 Alline Acquisition. See Note 16 to the Consolidated Financial Statements.

The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to the franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. In fiscal years 2026, 2025, and 2024, franchise rental income and franchise rent expense were $62.9 million, $76.6 million, and $95.3 million, respectively. These leases generally have lease terms of approximately five years. The Company expects to renew the SmartStyle master lease and certain leases for locations subleased to our franchisees upon expiration of those leases. Other leases are expected to be renewed by the franchisee upon expiration.
All the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The ROU asset is initially and subsequently measured throughout the expected lease term at the carrying amount of the lease liability, plus initial direct costs, less accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable.
The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original expected lease term. The weighted average remaining lease term was 4.35 years and 4.68 years, and the weighted average discount rate was 6.82% and 6.45% for all salon operating leases as of June 30, 2026, and 2025, respectively.
As of June 30, 2026, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (Dollars in thousands):
Fiscal YearLeases for Franchise SalonsLeases for Company-Owned SalonsCorporate LeasesTotal Operating Lease CommitmentsSublease Income to be Received from FranchiseesNet Rent Commitments
2027$54,950 $6,990 $1,401 $63,341 $(54,950)$8,391 
202846,053 5,405 1,436 52,894 (46,053)6,841 
202935,608 3,622 1,472 40,702 (35,608)5,094 
203023,670 2,181 1,509 27,360 (23,670)3,690 
203111,392 960 — 12,352 (11,392)960 
Thereafter15,816 231 — 16,047 (15,816)231 
Total future obligations$187,489 $19,389 $5,818 $212,696 $(187,489)$25,207 
Less amounts representing interest25,901 2,051 455 28,407 
Present value of lease liabilities$161,588 $17,338 $5,363 $184,289 
Less current lease liabilities46,600 6,018 1,206 53,824 
Long-term lease liabilities$114,988 $11,320 $4,157 $130,465 
Supplemental operating cash flow information and non-cash activity related to our operating leases are as follows:
Fiscal Years
202620252024
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities (1)$44,946 $46,084 $48,747 
Right of use assets obtained in exchange for new lease liabilities— — 235 
_______________________________________________________________________________
(1)Cash paid for amounts included in the measurement of lease liabilities includes rent, common area maintenance, termination fees, settlements and legal fees, and commission payments. Other than leases with Walmart, franchisees pay landlords directly.
As a result of having assigned our interest in obligations under certain real estate leases directly to our franchisees, the Company is secondarily liable on such lease agreements as guarantor. These leases have varying terms, the latest of which expires in 2035. As of June 30, 2026, the maximum potential amount of future payments the Company could be required to make under these guarantees is approximately $4.6 million, and no liability has been recognized in the Consolidated Balance Sheets for these guarantees, as the probability of default is considered remote.
LEASES LEASES
At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and its corporate facilities under operating leases. The original terms range from one to ten years with many leases renewable for an additional five to ten-year term at the option of the Company. In addition to the obligation to make fixed rental payments for the use of the salons, the Company 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 includes the following:
Fiscal Years
202620252024
(Dollars in thousands)
Office and warehouse rent (1)$2,765 $2,855 $3,075 
Lease termination expense (2)557 386 101 
Lease liability benefit (3)(219)(289)(326)
Franchise salon rent 222 856 596 
Company-owned salon rent (4)10,127 6,679 2,079 
Total$13,452 $10,487 $5,525 
_______________________________________________________________________________
(1)Rental income associated with the sublease of the corporate office space is recorded in other income and was $1.3 million and $1.2 million for the years ended June 30, 2026, and 2025, respectively.
(2)Costs incurred to exit salons before the lease end date in order to relieve the Company of future lease obligations.
(3)Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities which results in a net gain. In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired.
(4)Includes rent related to the salons acquired in the December 2024 Alline Acquisition. See Note 16 to the Consolidated Financial Statements.

The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to the franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Consolidated Statements of Operations. In fiscal years 2026, 2025, and 2024, franchise rental income and franchise rent expense were $62.9 million, $76.6 million, and $95.3 million, respectively. These leases generally have lease terms of approximately five years. The Company expects to renew the SmartStyle master lease and certain leases for locations subleased to our franchisees upon expiration of those leases. Other leases are expected to be renewed by the franchisee upon expiration.
All the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The ROU asset is initially and subsequently measured throughout the expected lease term at the carrying amount of the lease liability, plus initial direct costs, less accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable.
The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original expected lease term. The weighted average remaining lease term was 4.35 years and 4.68 years, and the weighted average discount rate was 6.82% and 6.45% for all salon operating leases as of June 30, 2026, and 2025, respectively.
As of June 30, 2026, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (Dollars in thousands):
Fiscal YearLeases for Franchise SalonsLeases for Company-Owned SalonsCorporate LeasesTotal Operating Lease CommitmentsSublease Income to be Received from FranchiseesNet Rent Commitments
2027$54,950 $6,990 $1,401 $63,341 $(54,950)$8,391 
202846,053 5,405 1,436 52,894 (46,053)6,841 
202935,608 3,622 1,472 40,702 (35,608)5,094 
203023,670 2,181 1,509 27,360 (23,670)3,690 
203111,392 960 — 12,352 (11,392)960 
Thereafter15,816 231 — 16,047 (15,816)231 
Total future obligations$187,489 $19,389 $5,818 $212,696 $(187,489)$25,207 
Less amounts representing interest25,901 2,051 455 28,407 
Present value of lease liabilities$161,588 $17,338 $5,363 $184,289 
Less current lease liabilities46,600 6,018 1,206 53,824 
Long-term lease liabilities$114,988 $11,320 $4,157 $130,465 
Supplemental operating cash flow information and non-cash activity related to our operating leases are as follows:
Fiscal Years
202620252024
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities (1)$44,946 $46,084 $48,747 
Right of use assets obtained in exchange for new lease liabilities— — 235 
_______________________________________________________________________________
(1)Cash paid for amounts included in the measurement of lease liabilities includes rent, common area maintenance, termination fees, settlements and legal fees, and commission payments. Other than leases with Walmart, franchisees pay landlords directly.
As a result of having assigned our interest in obligations under certain real estate leases directly to our franchisees, the Company is secondarily liable on such lease agreements as guarantor. These leases have varying terms, the latest of which expires in 2035. As of June 30, 2026, the maximum potential amount of future payments the Company could be required to make under these guarantees is approximately $4.6 million, and no liability has been recognized in the Consolidated Balance Sheets for these guarantees, as the probability of default is considered remote.