v3.25.4
LEASES
 6 Months Ended
Dec. 31, 2025
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 11 years with many leases renewable for an additional five to 10-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:
Three Months Ended December 31,Six Months Ended December 31,
2025202420252024
(Dollars in thousands)
Office rent (1)$679 $700 $1,433 $1,426 
Lease termination expense (2)82 27 206 79 
Lease liability benefit (3)(56)(65)(111)(128)
Franchise salon rent 292 881 48 952 
Company-owned salon rent (4)2,601 606 5,245 884 
Total$3,598 $2,149 $6,821 $3,213 
_______________________________________________________________________________
(1)Rental income associated with the sublease of the corporate office space is recorded in other income and was $0.3 million for both three month periods ended December 31, 2025, and 2024, and $0.6 million for both six month periods ended December 31, 2025, and 2024.
(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 13.

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 Condensed Consolidated Statements of Operations. For the three and six months ended December 31, 2025, and 2024, franchise rental income and franchise rent expense were $17.2 million and $20.0 million, and $34.6 million and $41.7 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 4.71 and 4.68 years, and the weighted average discount rate was 6.73% and 6.45% for all salon operating leases as of December 31, 2025, and June 30, 2025, respectively.
As of December 31, 2025, 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 PaymentsSublease Income to be Received from FranchiseesNet Rent Commitments
Remainder of 2026$33,178 $3,752 $689 $37,619 $(33,178)$4,441 
202760,317 6,143 1,401 67,861 (60,317)7,544 
202850,787 4,372 1,436 56,595 (50,787)5,808 
202939,914 2,633 1,472 44,019 (39,914)4,105 
203026,998 1,402 1,509 29,909 (26,998)2,911 
Thereafter32,574 362 — 32,936 (32,574)362 
Total future obligations$243,768 $18,664 $6,507 $268,939 $(243,768)$25,171 
Less amounts representing interest35,752 1,876 571 38,199 
Present value of lease liability$208,016 $16,788 $5,936 $230,740 
Less short-term lease liability52,639 6,155 1,164 59,958 
Long-term lease liability$155,377 $10,633 $4,772 $170,782 
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 11 years with many leases renewable for an additional five to 10-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:
Three Months Ended December 31,Six Months Ended December 31,
2025202420252024
(Dollars in thousands)
Office rent (1)$679 $700 $1,433 $1,426 
Lease termination expense (2)82 27 206 79 
Lease liability benefit (3)(56)(65)(111)(128)
Franchise salon rent 292 881 48 952 
Company-owned salon rent (4)2,601 606 5,245 884 
Total$3,598 $2,149 $6,821 $3,213 
_______________________________________________________________________________
(1)Rental income associated with the sublease of the corporate office space is recorded in other income and was $0.3 million for both three month periods ended December 31, 2025, and 2024, and $0.6 million for both six month periods ended December 31, 2025, and 2024.
(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 13.

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 Condensed Consolidated Statements of Operations. For the three and six months ended December 31, 2025, and 2024, franchise rental income and franchise rent expense were $17.2 million and $20.0 million, and $34.6 million and $41.7 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 4.71 and 4.68 years, and the weighted average discount rate was 6.73% and 6.45% for all salon operating leases as of December 31, 2025, and June 30, 2025, respectively.
As of December 31, 2025, 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 PaymentsSublease Income to be Received from FranchiseesNet Rent Commitments
Remainder of 2026$33,178 $3,752 $689 $37,619 $(33,178)$4,441 
202760,317 6,143 1,401 67,861 (60,317)7,544 
202850,787 4,372 1,436 56,595 (50,787)5,808 
202939,914 2,633 1,472 44,019 (39,914)4,105 
203026,998 1,402 1,509 29,909 (26,998)2,911 
Thereafter32,574 362 — 32,936 (32,574)362 
Total future obligations$243,768 $18,664 $6,507 $268,939 $(243,768)$25,171 
Less amounts representing interest35,752 1,876 571 38,199 
Present value of lease liability$208,016 $16,788 $5,936 $230,740 
Less short-term lease liability52,639 6,155 1,164 59,958 
Long-term lease liability$155,377 $10,633 $4,772 $170,782