rgs-20210630

This annual report, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission (the SEC) 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 adverse impact on our business and results of operations as a result of the uncertain duration and severity of the COVID-19 pandemic, including any adverse impact from the Delta variant; the impact of the COVID-19 pandemic on our key suppliers; consumer shopping trends and changes in manufacturer distribution channels; changes in regulatory and statutory laws including increases in minimum wages; laws and regulations could require us to modify current business practices and incur increased costs; changes in economic conditions; changes in consumer tastes and fashion trends; the continued ability of the Company to implement its strategy, priorities and initiatives including the re-engineering of our corporate and field infrastructure; new merchandising strategy; our and our franchisees' ability to attract, train and retain talented stylists; financial performance of our franchisees; success of the sale of salons to franchisees; the ability to operate or sell the salons transferred back from TBG; our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, employees, vendors or Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic to our franchisees' salons; our ability to maintain and enhance the value of our brands; reliance on information technology systems; reliance on external vendors; the use of social media; failure to standardize operating processes across brands; exposure to uninsured or unidentified risks; Opensalon® Pro may not yield the intended results on timing and amounts; compliance with credit facility covenants and access to the existing revolving credit facility; ability to re-finance our existing credit facility or the ability to re-finance at a similar rate; if our capital investments in technology do not achieve appropriate returns; premature termination of agreements with our franchisees; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; continued ability to compete in our business markets; reliance on our management team and other key personnel; the continued ability to maintain an effective system of internal controls over financial reporting; changes in tax exposure; potential litigation and other legal or regulatory proceedings could have an adverse effect on our business or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A of this 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.

Standards of Operations. The Company does not control the day-to-day operations of its franchisees, including employment, benefits and wage determination, establishing prices to charge for products and services, business hours, personnel management, and capital expenditure decisions. However, the franchise agreements afford certain rights to the Company, such as the right to approve locations, suppliers and the sale of a franchise. Additionally, franchisees are required to conform to the Company's established operational policies and procedures relating to quality of service, training, salon design and decor and trademark usage. The Company's field personnel make periodic visits to franchised salons to ensure they are operating in conformity with the standards for each franchising program. All of the rights afforded to the Company with regard to franchised operations allow the Company to protect its brands, but do not allow the Company to control day-to-day franchise operations or make decisions that have a significant impact on the success of the franchised salons. The Company's franchise agreements do not give the Company any right, ability or potential to determine or otherwise influence any terms and/or conditions of employment of franchisees' employees (except for those, if any, that are specifically related to quality of service, training, salon design, decor and trademark usage), including, but not limited to, franchisees' employees' wages and benefits, hours of work, scheduling, leave programs, seniority rights, promotional or transfer opportunities, layoff/recall arrangements, grievance and dispute resolution procedures, and/or discipline and discharge.

Supercuts franchise agreements have a perpetual term, subject to termination of the underlying lease agreement or termination of the franchise agreement by either the Company or the franchisee. All new franchisees enter into development agreements, which give them the right to enter into a defined number of franchise agreements. These franchise agreements are site specific. The development agreement provides limited territorial protection for the stores developed under those franchise agreements. Older franchisees have grandfathered expansion rights, which allow them to develop stores outside of development agreements and provide them with greater territorial protections in their markets. The Company has a comprehensive impact policy that resolves potential conflicts among Supercuts franchisees and/or the Company's Supercuts locations regarding proposed store sites.

Guest Experience. Our portfolio of salon concepts enables our guests to select different service scheduling options based upon their preference. We believe the ability to serve walk-in appointments and minimize guest wait times are essential elements in delivering an efficient guest experience. Our mobile applications and online check-in capabilities, including check-ins directly from Facebook Messenger® and Google®, allow us to capitalize on our guests' desire for convenience. We continue to focus on stylist staffing and retention, optimizing schedules, balancing variable labor hours with guest traffic and managing guest wait times. Our salons are located in high-traffic strip centers and Walmart Supercenters, with guest parking and easy access, and are generally open seven days per week to offer guests a variety of convenient ways to fulfill their beauty needs.

Our Company depends on its stylists to help deliver great guest experiences. We believe in the importance of the ongoing development of our stylists' craft. We aim to be an industry leader in stylist training, including the utilization of digital training that we enhanced significantly during fiscal years 2019 and 2020. Our stylists deliver a superior experience for our guests when they are well-trained technically and through years of experience. We employ trainers who provide new hire training for stylists joining the Company. We supplement internal training with targeted vendor training and external trainers that bring specialized expertise to our stylists. We utilize training materials to help all levels of field employees navigate the operation of a salon and essential elements of guest service training within the context of brand positions. In response to the global COVID-19 pandemic, we have provided stylist training virtually with the benefits of maintaining social distancing, sanitization, personal protective equipment and other safety protocols.

In the United States, the Company's franchise operations are subject to the Federal Trade Commission's Trade Regulation Rule on Franchising (the FTC Rule) and by state laws and administrative regulations that regulate various aspects of franchise operations and sales. The Company's franchises are offered to franchisees by means of a disclosure document containing specified disclosures in accordance with the FTC Rule and the laws and regulations of certain states. The Company has registered its offering of franchises with the regulatory authorities of those states in which it offers franchises and in where registration is required. State laws that regulate the franchisee/franchisor relationship presently exist in a substantial number of states and, in certain cases, apply substantive standards to this relationship. Such laws may, for example, require that the franchisor deal with the franchisee in good faith, may prohibit interference with the right of free association among franchisees, and may limit termination of franchisees without payment of reasonable compensation. The Company believes that the current trend is for government regulation of franchising to increase over time. However, such laws have not had, and the Company does not expect such laws to have, a significant effect on the Company's 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 has had, and may continue to have, an adverse impact on our operations. 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, our salons across essentially all geographies are allowed to be open; however, states may again decide to require the closure of salons as the level of COVID-19 positive cases continues to fluctuate, as we have already seen in Canada. Each time we are required to close and re-open salons, we will continue to experience the risks and business impacts described here, and further requirements to again close salons or limit and/or modify services or operations may exacerbate these impacts.

In addition, some of our franchisees, many of whom were in the early stages of developing their businesses prior to the onset of the pandemic, have chosen, or may choose, not to resume operation of their salons and/or are facing challenges rehiring employees, reestablishing operations with their landlords and other vendors, and attracting customers back to their salons. As a result, many of our franchisees requested reductions or other modifications to their royalty payments or other amounts due to us, which may be critical to their ability to reestablish operations, and they may simply be unable or unwilling to make lease, royalty or other payments to us and may be unable to continue to operate or may need to close their salons. The removal or reduction of these payments, including the added expense associated with closed locations where we may have residual lease liability, has continued, and is expected to continue, to adversely impact our revenues and cash flows. Customers and employees have been cautious about returning to personal service providers, and we and our franchisees are incurring substantial additional costs to ensure the safety of our employees and customers. Furthermore, as a result of the pandemic, many of our customers have themselves experienced adverse financial impacts, including loss of disposable income, which may limit their spending on personal care, including purchasing of beauty products, or have identified other means for hair care. The trend of increased remote work and utilization of advanced video-conferencing technology has led to a less-formal work environment, which could impact the frequency of our hair care services. In addition, COVID-19 may cause additional workers' compensation claims and customer claims associated with the pandemic. Regarding support for our franchisees, the pandemic could impact workers at our headquarters and/or compromise the performance of our technology center in Fremont, California.

A number of U.S. states, Canadian provinces, and municipalities in which we do business with have recently increased, or are considering increasing, the minimum wage, with increases generally phased over several years depending upon the size of the employer. Increases in minimum wages and overtime pay result in an increase in our costs, and our ability to offset these increases through price increases may be limited. In fact, increases in minimum wages have increased our costs over the last five years. In addition, a growing number of states, provinces and municipalities have passed, or are considering passing, requirements for paid sick leave, family leave, predictive scheduling (which imposes penalties for changing an employee's shift as it nears), and other requirements that increase the administrative complexity of managing our workforce. Finally, changes in labor laws, such as recent legislation in Ontario and Alberta that was designed to facilitate union organizing, could increase the likelihood of some of our employees being subjected to greater organized labor influence. If a significant portion of our employees were to become unionized, it would have an adverse effect on our business and financial results.

Various state and federal laws govern our relationships with our franchisees and our potential sale of a franchise. If we fail to comply with these laws, we could be liable for damages to franchisees and fines or other penalties. A franchisee or government agency may bring legal action against us based on the franchisee/franchisor relationship. Also, under the franchise business model, we may face claims and liabilities based on vicarious liability, joint-employer liability or other theories or liabilities. All such legal actions could not only result in changes to laws and interpretations, which could make it more difficult to appropriately support our franchisees and, consequently, impact our performance, but could also result in expensive litigation with our franchisees, third parties or government agencies, which could adversely affect both our profits and our important relationships with our franchisees. In addition, other regulatory or legal developments may result in changes to laws or to the franchisee/franchisor relationship that could negatively impact the franchise business model and, accordingly, our profits.

We are now substantially dependent on franchise royalties 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 or recovering from the impacts of COVID-19. This could adversely impact our revenue and profitability during this next stage of our transformation. 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. 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 are exiting the wholesale distribution model and have entered into preferred supplier agreements with two suppliers. This change will reduce our future revenue and we may incur significant costs related to the transition. In addition, if our new suppliers are unable to source the products at the prices expected by our franchisees, our franchisees' profitability and our profitability may be adversely impacted. Further, economic instability and other impactful events and circumstances in the regions in which our suppliers and their manufacturers are located (such as in the ongoing COVID-19 pandemic), the financial instability of our suppliers, our suppliers' failure to meet our terms and conditions or our supplier standards, product safety and quality issues, disruption or delay in the transportation of products from our suppliers and their manufacturers to our salons, transport availability and cost, transport security, inflation and other factors relating to the suppliers and the areas in which they are located are beyond our control.

Guest loyalty is strongly dependent upon the stylists who serve our guests and the customer experience in our salons. Qualified, trained stylists are key to a memorable guest experience that creates loyal customers. In order to profitably grow our business, it is important for our salons to attract, train and retain talented stylists and salon leaders and to adequately staff our salons. Because the salon industry is highly fragmented and comprised of many independent operators, the market for stylists is typically highly competitive. In addition, labor shortages, increases in minimum wage requirements may impact the number of stylists considering careers outside the beauty industry. In most markets, we and our franchisees have experienced a shortage of qualified stylists or a reduction in the hours stylist will work. Offering competitive wages, benefits, education, and training programs are important elements to attracting and retaining qualified stylists. In addition, due to challenges facing the for-profit education industry, cosmetology schools have experienced declines in enrollment, revenues, and profitability in recent years. If the cosmetology school industry sustains further declines in enrollment or some schools close entirely, or if stylists leave the beauty industry, we expect that we and our franchisees would have increased difficulty staffing our salons in some markets. In addition, we have observed that some stylists are not comfortable coming back to the salon environment during the COVID-19 pandemic and the enhanced unemployment amounts provided by the federal government during the COVID-19 pandemic, in some cases, decreases stylists' incentive to come back to work or return to their full workload. If our salons are not successful in attracting, training and retaining stylists or in staffing salons, our same-store sales or the performance of our franchise business could experience periods of volatility or sales could decline and our results of operations could be adversely affected.

In addition, our franchisees are subject to the same general economic risks as our Company, and their results are influenced by competition for both guests and stylists, market trends, price competition and disruptions in their markets and business operations due to public health issues, including pandemics, severe weather and other external events. Like us, they rely on external vendors for some critical functions and to protect their company data. They may also be limited in their ability to open new locations by an inability to secure adequate financing, especially because many of them are small businesses with much more limited access to financing than our Company, by the limited supply of favorable real estate for new salon locations, or by government-mandated restrictions on salon operations due to COVID-19 or other pandemics. They may also experience financial distress as a result of over-leveraging, which could negatively affect our operating results due to delayed or non-payments to us. The bankruptcy, default, abandonment, or other default or breach by or of a franchisee could also expose us to liability under leases, which are generally sub-leased by us to our franchisees.

On December 31, 2019, we re-acquired certain assets that were used in the operation of the mall-based salon business in the United States and Canada for which we had 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 $9 million as of June 30, 2021. We are attempting to renegotiate these lease obligations and re-franchise certain salons; 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 with TBG for which we had already recorded a full reserve against the promissory notes evidencing TBG's obligations to us.

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. 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.

The normal operations of our business and our investments in technology involve processing, transmitting and storing potentially sensitive personal information about our guests, employees, franchisees, vendors and our Company, all of which require the appropriate and secure utilization of such information and subjects us to increased focus regarding our data security compliance. Cyber-attacks, including ransomware, designed to gain access to sensitive information by breaching mission critical systems of large organizations (and their third-party vendors) are constantly evolving and high-profile electronic security breaches leading to unauthorized release of sensitive information have occurred at a number of large U.S. companies in recent years. Furthermore, there has been heightened legislative and regulatory focus on data security in the U.S. and abroad, including requirements for varying levels of customer notification in the event of a data breach. These laws are changing rapidly and vary among jurisdictions. We will continue our efforts to meet any applicable privacy and data security obligations; however, it is possible that certain new obligations may be difficult to meet and could increase our costs. We rely on commercially available systems, software, and tools to provide security for processing, transmitting, and storing of sensitive information. As this risk of cyber-attacks increases, our related insurance premiums may also increase. Despite the security measures and processes we have in place, our efforts (and those of our third-party vendors), to protect sensitive guest, employee, franchisee, vendor, and Company information may not be successful in preventing a breach in our systems or detecting and responding to a breach on a timely basis. As a result of a security incident or breach in our systems, our systems could be interrupted or damaged, and/or sensitive information could be accessed by third parties. If that occurred, our guests could lose confidence in our ability to protect their information, which could cause them to stop visiting our salons altogether or our franchisees could exit the system due to lack of confidence. Such events could also lead to lost future sales and adversely affect our results of operations. In addition, as the regulatory environment relating to retailers and other companies' obligations to protect sensitive data becomes stricter, a material failure on our part to comply with applicable regulations could potentially subject us to fines, penalties, other regulatory sanctions, or lawsuits with the possibility of substantial damages. The costs to remediate security incidents or breaches that may occur could be material. Also, as cyber criminals become more frequent, intense, and sophisticated, the costs of proactive defensive measures may increase. Furthermore, while our franchisees are independently responsible for data security at their franchised salon locations, a security incident or breach at a franchised salon location could negatively affect public perception of our brands. More broadly, our incident response preparedness and disaster recovery planning efforts may be inadequate or ill-suited for a security incident and we could suffer disruption of operations or adverse effects to our operating results.

As of June 30, 2021, we had 1,757 SmartStyle or Cost Cutters salons within Walmart locations. Walmart is our largest landlord, and we believe we are Walmart's largest tenant. Our business within each of those 1,757 salons relies primarily on the traffic of visitors to the Walmart location, so our success is tied to Walmart's success in bringing shoppers into their stores. We have limited control over the locations and markets in which we open new SmartStyle locations, as we only have potential opportunities in locations offered to us by Walmart. Furthermore, Walmart has the right to close up to 100 of our salons per year for any reason, upon payment of certain penalties, to terminate lease agreements for breach, such as if we failed to conform with required operating hours, subject to a notice and cure period, and to terminate the lease if the Walmart store is closed. In fiscal year 2017, we began franchising SmartStyle salons. Future franchising activity will require, and be limited, by the approval of Walmart on a location-by-location basis. Walmart may not give its approval to franchise some or all of our company-owned salons. Further, Walmart may attempt to impose changes to the terms and conditions of our agreements, which may be contrary to our economic interests. Operating SmartStyle salons adds complexity in overseeing franchise compliance and coordination with Walmart.

Our future growth and profitability may depend on the effectiveness, efficiency and spending levels of our marketing and advertising efforts to drive awareness and traffic to our salons. In addition, delivering a quality guest experience is crucial to drive repeat visits to our salons. We are developing our marketing and advertising strategies, including national and local campaigns, to build awareness, drive interest, consideration and traffic to our salons. We are also focusing on improving guest experiences to provide brand differentiation and preference as well as ensure our guests' needs are met. If our marketing, advertising, and improved guest experience efforts do not generate sufficient customer traffic and repeat visits to our company-owned and franchise-owned salons, our business, financial condition, and results of operations may be adversely affected. Our future growth and profitability may depend on the effectiveness, efficiency and spending levels of our marketing and advertising efforts to drive awareness and traffic to our salons. In addition, delivering a quality guest experience is crucial to drive repeat visits to our salons. We are developing our marketing and advertising strategies, including national and local campaigns, to build awareness and drive interest, consideration and traffic to our salons. We are also focusing on improving guest experiences to provide brand differentiation and preference, and to ensure our guests' needs are met. If our marketing, advertising, and improved guest experience efforts do not generate sufficient customer traffic and repeat visits to our salons, our business, financial condition, and results of operations may be adversely affected.

Our success depends, in large part, on our ability to maintain and enhance the value of our brands, our customers' connection to our brands and a positive relationship with our franchisees. Declining franchisee revenue reduces the advertising funds available to invest in the brands and a decline in the Company's investment in its brands could reduce brand awareness and the overall value of our brands. Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity, including via social media or if they result in litigation. Some of these incidents may relate to the way we manage our relationships with our franchisees, our growth strategies, our development efforts or the ordinary course of our, or our franchisees' business. Other incidents may arise from events that may be beyond our control and may damage our brands, such as actions taken (or not taken) by one or more franchisees or their employees relating to health, safety, welfare or otherwise, litigation and claims, security breaches or other fraudulent activities associated with our back-office management or payment systems, and illegal activity targeted at us or others. Consumer demand for our products and services and our brands' value could diminish significantly if any such incidents or other matters erode consumer confidence in us or our products or services. This could result in lower sales and, ultimately, lower royalty income, which could materially and adversely affect our business and operating results.

The efficient operation of our business is dependent on our management information systems. We rely heavily on our management information systems to collect daily sales information and guest demographics, generate payroll information, monitor salon performance, manage salon staffing and payroll costs, and other functions. Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, hacker attempts, security breaches and natural disasters. In addition, some of our management information systems are currently developed and maintained by external vendors, and some are outdated or limited functionality exists that are not owned by us or not exclusively provided by us. These management information systems may require upgrades or replacements periodically, which involve implementation and other operational risks. The failure of our management information systems to perform as we anticipate, to meet the continuously evolving needs of our business, or to provide an affordable long-term solution, could disrupt our business operations and result in other negative consequences, including remediation costs, loss of revenue and reputational damage. Further, if our external vendors fail to adequately provide technical support for any one of our key existing management information systems or if new or updated components are not integrated smoothly, we could experience service disruptions that could result in the loss of important data, increase our expenses, decrease our revenues and generally harm our business, reputation and brands. Also, any such conduct with respect to our franchisees could also result in litigation.

Our reputation is critical to our ability to compete and succeed. However, our reputation may be damaged by negative publicity on social media or other channels regarding the quality of products or services we provide. There has been a substantial increase in the use of social media platforms, which allow individuals to be heard by a broad audience of consumers and other interested persons. Negative or false commentary regarding us or the products or services we offer may be posted on social media platforms at any time. Customers value readily available information and may act on information without further investigation or regard to its accuracy. The harm to our reputation may be immediate, without affording us an opportunity for redress or correction. Our reputation may also be damaged by factors that are mostly or entirely out of our control, including actions by a franchisee or a franchisee's employee.

We are currently making, and expect to continue to make, strategic investments in technology to improve guest experiences and improve our back-office systems, including without limitation, our Opensalon mobile application and platform that we launched in 2019 and our Opensalon Pro salon management system that we launched in August 2020. These investments might not provide the anticipated benefits or desired return and could expose us to additional legal and compliance risks. Furthermore, some of our technology capabilities and developments involve third-party partnerships that we are dependent on. If these partnerships are unsuccessful, the technology-enabled capabilities may not fully achieve their anticipated returns. In addition, if we are unable to successfully protect any intellectual property rights resulting from our investments, the value received from those investments may be eroded, which could adversely affect our financial condition. Among other things, targeting the wrong investment opportunities, failing to successfully meet our strategic objectives when making the correct investments, being unable to make new concepts scalable or achieving appropriate market or franchisee adoption, and/or making an investment commitment significantly above or below our needs could adversely affect our financial condition and results of operations.

Our franchise agreements may be subject to premature termination in certain circumstances, such as failure of a franchisee to cure a default, monetary or otherwise, a franchisee bankruptcy, voluntary termination, or abandonment of the franchise. If terminations occur for these or other reasons, we may need to enforce our right to damages for breach of contract and related claims, which could cause us to incur significant legal fees and expenses and/or to take back and operate such salons as company-owned salons. Any damages we ultimately collect could be less than the projected future value of the fees and other amounts we would have otherwise collected under the franchise agreement. In addition, with many of our brands, we remain liable under the lease and, therefore, will be obligated to pay rent or enter into a settlement with the landlord, and we may not be made whole by the franchisee. A significant loss of franchisee agreements due to premature terminations could hurt our financial performance or our ability to grow our business.

In 2020, we entered into an agreement to sell to the other owner our 55% ownership stake in Empire Education Group (EEG), an operator of accredited cosmetology schools. The transaction is subject to regulatory approval before it can close, and there is no guarantee that the regulatory approval will occur, which has been delayed, in part, due to COVID-19. Due to poor financial performance of EEG, we fully impaired the investment in prior years. If the transaction does not close as anticipated and EEG is unsuccessful in executing its business plan, or if economic, regulatory and other factors, including declines in enrollment, revenue and profitability continue for the for-profit secondary education market, our financial results may be affected by certain potential liabilities related to this investment. The transaction is expected to close in fiscal year 2022, at which time we expect to record an immaterial non-operating gain.

Competition on a market-by-market basis remains challenging as many smaller chain competitors are franchise systems with local operating strength in certain markets and the hair salon industry, as a whole, is fragmented and highly competitive for customers, stylists and prime locations. Therefore, our ability to attract guests, raise prices and secure suitable locations in certain markets can be adversely impacted by this competition. Our strategies for competing are complicated by the fact that we have multiple brands in multiple segments, which compete on different factors. We also face significant competition for prime real estate, particularly in strip malls. We compete for lease locations not only with other hair salons, but with a wide variety of businesses looking for similar square footage and high-quality locations. If we are unable to successfully compete, we may lose market share and our ability to grow same-store sales and increase our revenue and earnings may be impaired.

We are subject to income taxes in the U.S. and other foreign jurisdictions. Significant judgment is required in determining our tax provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are subject to the examination of our income tax returns, payroll taxes and other tax matters by the Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for income taxes and payroll tax accruals. There can be no assurances as to the outcome of these examinations. Although we believe our tax estimates are reasonable, the final determination of tax audits, and any related litigation, could be materially different from our historical tax provisions and employment taxes. The results of an audit or litigation could have a material effect on our Consolidated Financial Statements in the period or periods where that determination is made. Also, in the future, our effective income tax rate could be adversely affected by a number of factors, including changes in the mix of earnings in countries with different statutory tax rates, changes in tax laws or the outcome of income examinations.

From time-to-time in the ordinary course of our business operations, we are subject to litigation, including potential class action and single-plaintiff litigation, arbitration and other legal or regulatory proceedings or claims. Litigation to defend ourselves against claims by third parties, or to enforce any rights that we may have against third parties, may be necessary, which could require significant time commitments from our management team and result in substantial costs and diversion of our resources, which may cause an adverse effect on our business, financial condition and revenues. We establish accruals for potential liabilities arising from litigation and other legal or regulatory proceedings or claims when potential liabilities are probable and the amount of the loss can be reasonably estimated based on currently available information. We may still incur legal costs for a matter even if we have not accrued a liability. In addition, actual losses may be higher than the amount accrued for a certain matter or in the aggregate. Any resolution of litigation or other legal or regulatory proceedings as well as claims could adversely affect our business, financial condition or revenues.

During fiscal year 2021 and the second half of fiscal year 2020, the global coronavirus pandemic (COVID-19) had an adverse impact on our operations. Nearly all salons were closed for some time during April 2020 with franchise salons gradually starting to open near the end of April. Company-owned salons began opening in June 2020 and our salons did not experience significant mandated closures during the remainder of the year, with the exception of California and Canada. California and Canada had significant mandated closures throughout fiscal year 2021, predominantly in the second half of the year. To offset the loss of revenue, in April 2020, a furlough program was implemented for a majority of the workforce across the corporate headquarters, field support, and distribution centers; and reductions in the pay for executives and other working employees. The furlough program was in effect for the majority of the fourth quarter of fiscal year 2020 and was gradually lifted in the first quarter of fiscal year 2021. Despite actions taken to resume business operations, COVID-19 and the volatile regional and global economic conditions stemming from the pandemic could potentially prolong and intensify the impact on our business.

(1)Fiscal year 2021 system-wide same-store sales are calculated as the total change in sales for system-wide franchise and company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Fiscal years 2020 and 2019 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. Adjusting the definition to include salons that were open under the current ownership for less than one year negatively impacted the 2021 comparables by approximately 1%. 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. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

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


	Fiscal Years
	2021		2020		2019		2021		2020		2019		2021	2020

	(Dollars in millions)						% of Total Revenues (1)						Basis Point (Decrease) Increase

Service revenues	$	108.1	$	331.5	$	749.7	26.0	%	49.5	%	70.1	%	(2,350)	(2,060)
Product revenues	91.5		137.6		225.6		22.1		20.5		21.1		160	(60)
Franchise royalties and fees	88.1		73.4		93.8		21.2		11.0		8.8		1,020	220
Franchise rental income	127.4		127.2		—		30.7		19.0		—		1,170	N/A

Cost of service (2)	79.1		222.3		452.8		73.2		67.1		60.4		610	670
Cost of product (2)	79.2		84.7		128.8		86.6		61.6		57.1		2,500	450
Site operating expenses	51.5		71.5		141.0		12.4		10.7		13.2		170	(250)
General and administrative	105.4		131.0		177.0		25.4		19.6		16.6		580	300
Rent	40.9		76.4		131.8		9.9		11.4		12.3		(150)	(90)
Franchise rent expense	127.4		127.2		—		30.7		19.0		—		1,170	N/A
Depreciation and amortization	22.7		37.0		37.8		5.5		5.5		3.5		—	200
Long-lived asset impairment	13.0		22.6		—		3.1		3.4		—		(30)	N/A
TBG restructuring	—		2.3		21.8		—		0.3		2.0		(30)	(170)
Goodwill impairment	—		40.2		—		—		6.0		—		(600)	N/A

Operating loss (3)	(104.2)		(145.3)		(22.1)		(25.1)		(21.7)		(2.1)		(340)	(1,960)

Interest expense	(13.8)		(7.5)		(4.8)		(3.3)		(1.1)		(0.4)		(220)	(70)
(Loss) gain from sale of salon assets to franchisees, net	(16.7)		(27.3)		2.9		(4.0)		(4.1)		0.3		10	(440)
Interest income and other, net	15.9		3.4		1.7		3.8		0.5		0.2		330	30

Income tax benefit (3)	5.4		4.6		2.1		4.6		2.6		9.6		N/A	N/A

Income from discontinued operations, net of taxes	—		0.8		5.9		—		0.1		0.6		(10)	(50)

Net loss (3)	(113.3)		(171.4)		(14.2)		(27.3)		(25.6)		(1.3)		(170)	(2,430)

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


	Fiscal Years
	2021			2020			2019

	(Dollars in thousands)
Franchise salons:
Product excluding TBG	$	56,699		$	50,411		$	42,915
TBG product	—			2,010			16,990
Total franchise product	56,699			52,421			59,905
Royalties and fees	88,057			73,402			93,761
Franchise rental income	127,392			127,203			—
Total, Franchise salons	272,148			253,026			153,666
Franchise same-store sales (decrease) increase (1)	(24.5)		%	(4.4)		%	0.3		%

Company-owned salons:
SmartStyle	$	48,657		$	203,361		$	208,531
Supercuts	23,055			54,121			383,380
Portfolio Brands	71,253			159,221			323,462
Total, Company-owned salons	142,965			416,703			915,373
Company-owned salon same-store sales decrease (2)	(33.4)		%	(4.4)		%	(0.4)		%

Consolidated revenues	$	415,113		$	669,729		$	1,069,039
Percent change from prior year	(38.0)		%	(37.4)		%	(13.5)		%

(1)Franchise same-store sales in fiscal year 2021 are calculated as the total change in sales for franchise locations that were open on a specific day of the week during the current period and the corresponding prior period. Fiscal years 2020 and 2019 franchise same-store sales are calculated as the total change in sales for franchise 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. Adjusting the definition to include salons that were open under the current ownership for less than one year negatively impacted the 2021 comparables by approximately 1%. 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. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

Consolidated revenue decreased $254.6 million, or 38.0%, during fiscal year 2021. Service revenue and product revenue decreased $223.4 million and $46.0 million, respectively. The decline in service and product revenue is primarily due to the Company's sale of salons to franchisees. During fiscal year 2021, 747 salons were sold to franchisees, net of buy backs and 1,038 and 36 system-wide salons were closed and constructed, respectively (2021 Net Salon Count Changes). The impact to consolidated revenue due to the sale of salons to franchisees and closure of salons was $223.3 million. System-wide sales also declined, primarily due to fewer guest visits and government-mandated closures related to the COVID-19 pandemic, which also contributed to the decline in service, product and royalties and fees revenue. In fiscal year 2020, the Company refunded $14.9 million of previously collected cooperative advertising fees, which reduced royalties and fees in the prior period.

Royalties and fees increased $14.7 million, or 20.0%, during fiscal year 2021. This increase was primarily due to an increase in cooperative advertising funds charged to franchisees of $8.7 million. In fiscal year 2020, the Company refunded $14.9 million of previously collected cooperative advertising fund fees, which reduced royalties and fees in the prior period. Cooperative advertising funds were temporarily reduced as part of our COVID-19 pandemic relief effort and also declined due to lower same-store sales. The declines in cooperative advertising are offset in site expense and have no impact on operating income. Royalties and fees were also impacted by the decreases in franchise same-store sales of 24.5%, partially offset by an increase in franchise salons. Total franchised locations open at June 30, 2021 were 5,563 as compared to 5,209 at June 30, 2020.

(3)Franchise same-store sales in fiscal year 2021 are calculated as the total change in sales for franchise locations that were open on a specific day of the week during the current period and the corresponding prior period. Fiscal years 2020 and 2019 franchise same-store sales are calculated as the total change in sales for franchise 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. Adjusting the definition to include salons that were open under the current ownership for less than one year negatively impacted the 2021 comparables by approximately 1%. 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. F same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG same-store sales are excluded from fiscal year 2019 to be consistent with fiscal years 2020 and 2021.

Funds generated by operating activities, available cash and cash equivalents, proceeds from sale of salons sold to franchisees, and our borrowing agreements are our most significant sources of liquidity. Additionally, on February 3, 2021, the Company filed a $150 million shelf registration and $50 million prospectus supplement with the Securities and Exchange Commission under which it may offer and sell, from time to time, up to $50 million worth of its of its Class A common stock in “at-the-market offerings.” Net proceeds from sales of shares under the “at-the-market” program, if any, may be used to, among other things, fund working capital requirements, repay debt and support of our brands and franhisees. The timing and amount of sales of shares, if any, will depend on a variety of factors, including prevailing market conditions, the trading price of shares, and other factors as determined by the Company. To date we have not issued any shares under the agreement.

The Company closely manages its liquidity and capital resources. The Company's liquidity requirements depend on key variables, including the performance of the business, the level of investment needed to support its business strategies, 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 in 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 strategic plan as discussed within Part I, Item 1. To the best of our knowledge and based on our current liquidity position and forecast, we believe we have adequate liquidity to run our business and support our growth initiatives.

As of June 30, 2021 and 2020, the Company had $186.9 and $177.5 million, respectively, of outstanding borrowings under its revolving credit facility. The five-year revolving credit facility expires in March 2023 and includes a minimum liquidity covenant of not less than $75.0 million, provides the Company's lenders security in substantially all of 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. Total liquidity per the agreement was $128.9 million as of June 30, 2021. See Note 8 to the Consolidated Financial Statements. The revolving credit facility includes a $30.0 million sub-facility for the issuance of letters of credit and a $30.0 million sublimit for swingline loans. The Company may request an increase in revolving credit commitments under the facility of up to $115.0 million under certain circumstances. 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.

The Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the 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 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 Consolidated Financial Statements.

The first step in the impairment test under ASC 360 is to determine whether the long-lived assets are recoverable, which is determined by comparing the net carrying value of the salon asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. Estimating cash flows for purposes of the recoverability test is subjective and requires significant judgment. Estimated future cash flows used for the purposes of the recoverability test were based upon historical cash flows for the salons, adjusted for expected changes in future market conditions related to the COVID-19 pandemic, and other factors. The period of time used to determine the estimates of the future cash flows for the recoverability test was based on the remaining useful life of the primary asset of the group, which was the ROU asset in all cases.

Step two of the long-lived asset impairment test requires the fair value of the asset group be estimated when determining the amount of any impairment loss. For the salon asset groups that failed the recoverability test, an impairment loss was measured as the amount by which the carrying amount of the asset group exceeds its fair value. The Company applied the fair value guidance within ASC 820-10 to determine the fair value of the asset group from the perspective of a market-participant considering, among other things, appropriate discount rates, multiple valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group. To determine the fair value of the salon asset groups, the Company utilized market-participant assumptions rather than the Company's own assumptions about how it intends to use the asset group. The significant judgments and assumptions utilized to determine the fair value of the salon asset groups include; the market rent of comparable properties, the asset group's projected sales for properties with no recently negotiated leases, and a discount rate.

For fiscal year 2021, the Company recognized a long-lived impairment charge of $13.0 million, which included $9.5 million related to ROU assets on the Consolidated Statement of Operations. The impairment loss for each salon asset group that was recognized was allocated among the long-lived assets of the group on a pro-rata basis using their relative carrying amounts. Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including for the ROU assets included in the salon asset groups. Assessing the long-lived assets for impairment requires management to make assumptions and to apply judgment that can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses for its long-lived assets, including its ROU assets. However, the ultimate severity and longevity of the COVID-19 pandemic is unknown, therefore, if actual results are inconsistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material.

Over 92% of the Company's operations are transacted in United States dollars. However, because a portion of the Company's operations consists of activities outside of the United States, the Company has transactions in other currencies, primarily the Canadian dollar, and to a lesser extent, the British pound. In preparing the Consolidated Financial Statements, the Company is required to translate the financial statements of its foreign subsidiaries from the currency in which they keep their accounting records, generally the local currency, into United States dollars. Different exchange rates from period to period impact the amounts of reported income and the amount of foreign currency translation recorded in accumulated other comprehensive income (AOCI). As part of its risk management strategy, the Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and purchases denominated in foreign currencies. As of June 30, 2021, the Company did not have any derivative instruments to manage its foreign currency risk.

As described in Notes 1 and 15 to the consolidated financial statements, the Company operates in two reportable segments, Company-owned salons and Franchise salons. Note 6 describes the Company’s Right of Use Assets ("ROU asset"), a portion of which relates to Company-owned salons. Management determined that triggering events had occurred related to Company-owned salons and was required to perform quantitative impairment assessments during fiscal year 2021. The Company first assessed its Company-owned salon asset groups at the individual salon level, which included the ROU assets, to determine if the carrying value was recoverable. Recoverability is determined by comparing the net carrying value of the salon asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. For the Company-owned salon asset groups that failed the recoverability test, an impairment loss was measured as the amount by which the ROU asset within the asset group exceeded its fair value, which was determined using a discounted cash flow methodology. As described by management, the results of this assessment indicated that the estimated fair value of certain Company-owned salon asset groups did not exceed the carrying value and an impairment expense was recorded to the ROU asset balance.

A company's internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

(Dollars in thousands, except per share data)


	June 30,
	2021		2020

ASSETS
Current assets:
Cash and cash equivalents	$	19,191	$	113,667
Receivables, net	27,372		31,030
Inventories	22,993		62,597
Other current assets	17,103		19,138

Total current assets	86,659		226,432

Property and equipment, net	23,113		57,176
Goodwill (Note 5)	229,582		227,457
Other intangibles, net	3,761		4,579
Right of use asset (Note 6)	611,880		786,216
Other assets	41,388		40,934

Total assets	$	996,383	$	1,342,794

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	27,157	$	50,918
Accrued expenses	54,857		48,825
Short-term lease liability (Note 6)	116,471		137,271

Total current liabilities	198,485		237,014

Long-term debt, net (Note 8)	186,911		177,500
Long-term lease liability (Note 6)	518,866		680,454
Long-term financing liabilities (Note 8)	—		27,981
Other non-current liabilities	75,075		94,142

Total liabilities	979,337		1,217,091
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock, $0.05 par value; issued and outstanding, 35,795,844 and 35,625,716 common shares at June 30, 2021 and 2020, respectively	1,790		1,781
Additional paid-in capital	25,102		22,011
Accumulated other comprehensive income	9,543		7,449
Retained (deficit) earnings	(19,389)		94,462
Total shareholders' equity	17,046		125,703
Total liabilities and shareholders' equity	$	996,383	$	1,342,794

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


	Fiscal Years
	2021		2020		2019

Revenues:
Service	$	108,120	$	331,538	$	749,660
Product	91,544		137,586		225,618
Royalties and fees	88,057		73,402		93,761
Franchise rental income (Note 6)	127,392		127,203		—
Total revenue	415,113		669,729		1,069,039
Operating expenses:
Cost of service	79,144		222,279		452,827
Cost of product	79,167		84,698		128,816
Site operating expenses	51,463		71,543		141,031
General and administrative	105,433		130,953		177,004
Rent (Note 6)	40,930		76,382		131,816
Franchise rent expense (Note 6)	127,392		127,203		—
Depreciation and amortization	22,713		36,952		37,848
Long-lived asset impairment (Note 1)	13,023		22,560		—
TBG mall location restructuring (Note 3)	—		2,333		21,816
Goodwill impairment (Note 1)	—		40,164		—
Total operating expenses	519,265		815,067		1,091,158

Operating loss	(104,152)		(145,338)		(22,119)

Other (expense) income:
Interest expense	(13,813)		(7,522)		(4,795)
(Loss) gain from sale of salon assets to franchisees, net	(16,696)		(27,306)		2,918
Interest income and other, net	15,902		3,353		1,729

Loss from continuing operations before income taxes	(118,759)		(176,813)		(22,267)

Income tax benefit	5,428		4,619		2,145

Loss from continuing operations	(113,331)		(172,194)		(20,122)

Income from discontinued operations, net of income taxes (Note 3)	—		832		5,896

Net loss	$	(113,331)	$	(171,362)	$	(14,226)

Net loss per share:
Basic and diluted:
Loss from continuing operations	$	(3.15)	$	(4.79)	$	(0.48)
Income from discontinued operations	—		0.02		0.14
Net loss per share, basic and diluted (1)	$	(3.15)	$	(4.77)	$	(0.34)





Weighted average common and common equivalent shares outstanding:
Basic and diluted	35,956		35,936		41,829

(Dollars in thousands, except share data)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Deficit)		Total
	Shares	Amount

Balance, June 30, 2018	45,258,571	$	2,263	$	194,436	$	9,656	$	280,083	$	486,438
Net loss	—	—		—		—		(14,226)		(14,226)
Foreign currency translation	—	—		—		185		—		185
Stock repurchase program	(8,605,430)	(431)		(154,114)		—		—		(154,545)
Exercise of SARs	22,263	1		(222)		—		—		(221)
Stock-based compensation	—	—		9,003		—		—		9,003

Recognition of deferred compensation (Note 11)	—	—		—		(499)		—		(499)
Net restricted stock activity	193,845	10		(1,951)		—		—		(1,941)
Minority interest (Note 1)	—	—		—		—		51		51
Balance, June 30, 2019	36,869,249	1,843		47,152		9,342		265,908		324,245
Net loss	—	—		—		—		(171,362)		(171,362)
Foreign currency translation	—	—		—		(1,462)		—		(1,462)
Stock repurchase program	(1,504,000)	(75)		(26,281)		—		—		(26,356)
Exercise of SARs	1,776	—		28		—		—		28
Stock-based compensation	—	—		3,275		—		—		3,275
Recognition of deferred compensation (Note 11)	—	—		—		(431)		—		(431)
Net restricted stock activity	258,691	13		(2,163)		—		—		(2,150)
Minority interest (Note 1)	—	—		—		—		(84)		(84)
Balance, June 30, 2020	35,625,716	1,781		22,011		7,449		94,462		125,703
Net loss	—	—		—		—		(113,331)		(113,331)
Foreign currency translation (Note 1)	—	—		—		1,888		—		1,888

Exercise of SARs	3,775	—		(24)		—		—		(24)
Stock-based compensation	—	—		3,254		—		—		3,254
Recognition of deferred compensation (Note 11)	—	—		—		206		—		206
Net restricted stock activity	166,353	9		(139)		—		—		(130)
Minority interest (Note 1)	—	—		—		—		(520)		(520)
Balance, June 30, 2021	35,795,844	$	1,790	$	25,102	$	9,543	$	(19,389)	$	17,046

(Dollars in thousands)


	Fiscal Years
	2021		2020		2019

Cash flows from operating activities:
Net loss	$	(113,331)	$	(171,362)	$	(14,226)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash adjustments related to discontinued operations	—		(1,098)		306
Depreciation and amortization (Note 1)	17,871		33,101		33,261


Salon asset impairment	—		3,851		4,587
Long-lived asset impairment	13,023		22,560		—
Deferred income taxes	(3,388)		(3,934)		(9,812)
Inventory reserve	12,068		—		—

Gain from disposal of distribution center assets	(14,997)		—		—
Gain from sale of company headquarters, net	—		(2,513)		—
Loss (gain) from sale of salon assets to franchisees, net	16,696		27,306		(2,918)
Non-cash TBG mall location restructuring charge (Note 3)	—		—		21,008
Goodwill impairment	—		40,164		—

Stock-based compensation	3,254		3,275		9,003
Amortization of debt discount and financing costs	1,839		398		275
Other non-cash items affecting earnings	(351)		(539)		(903)
Changes in operating assets and liabilities (1):
Receivables	(279)		(3,902)		(17,304)
Inventories	17,879		(2,255)		(8,492)
Income tax receivable	1,295		(1,804)		(703)
Other current assets	1,658		2,827		(783)
Other assets	(2,896)		(10,094)		(5,546)
Accounts payable	(21,669)		4,588		(5,836)
Accrued expenses	5,296		(27,622)		(20,158)
Net lease liabilities	(19,248)		276		—
Other non-current liabilities	(14,603)		368		717
Net cash used in operating activities:	(99,883)		(86,409)		(17,524)
Cash flows from investing activities:
Capital expenditures	(11,475)		(37,494)		(31,616)

Proceeds from sale of company headquarters	—		8,996		—
Proceeds from sale of assets to franchisees	8,437		91,616		94,787
Costs associated with sale of assets to franchisees	(261)		(2,089)		—
Proceeds from company-owned life insurance policies	1,200		—		24,617
Net cash (used in) provided by investing activities:	(2,099)		61,029		87,788
Cash flows from financing activities:
Borrowings on revolving credit facility	10,000		213,000		—
Repayments of revolving credit facility	(589)		(125,500)		—
Repurchase of common stock	—		(28,246)		(152,661)
Proceeds from sale and leaseback transactions	—		—		28,821
Minority interest buyout	(562)		—		—
Distribution center lease payments	(724)		(769)		(378)
Taxes paid for shares withheld	(348)		(2,320)		(2,477)

Net cash provided by (used in) financing activities:	7,777		56,165		(126,695)
Effect of exchange rate changes on cash and cash equivalents	477		(284)		35
(Decrease) increase in cash, cash equivalents and restricted cash	(93,728)		30,501		(56,396)
Cash, cash equivalents and restricted cash:
Beginning of year	122,880		92,379		148,775


End of year	$	29,152	$	122,880	$	92,379

The following provides additional information concerning selected balance sheet accounts:


	June 30,
	2021		2020

	(Dollars in thousands)
Other current assets:
Prepaid assets	$	4,121	$	5,165
Restricted cash	9,961		9,213
Other	3,021		4,760
Total other current assets	$	17,103	$	19,138

Property and equipment:
Buildings and improvements	$	8,251	$	36,379
Equipment, furniture and leasehold improvements	29,102		198,983
Internal use software	41,927		71,212
Total property and equipment	79,280		306,574
Less accumulated depreciation and amortization	(56,167)		(249,398)
Total property and equipment, net	$	23,113	$	57,176

Accrued expenses:
Payroll and payroll related costs	$	16,176	$	18,204
Insurance	7,525		10,278
Rent and related real estate costs	11,197		4,179
Other	19,959		16,164
Total accrued expenses	$	54,857	$	48,825

Other non-current liabilities:
Deferred income taxes	$	10,650	$	13,916
Insurance	12,722		20,301
Deferred benefits	10,028		11,106
Deferred franchise fees	38,936		45,478
Other	2,739		3,341
Total other non-current liabilities	$	75,075	$	94,142

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. In addition, our existing point-of-sale system supplier had challenged the development of certain parts of our technology systems in litigation brought in the Northern District of California, case No. 20-cv-02181-MMC. The Company and the supplier entered into an agreement, effective June 25, 2021, that provided for the dismissal of the lawsuit and set forth a commercial services agreement pursuant to which the supplier will assist in the transfer of franchise salons from its point-of-sale system to the Company's salon management system, Opensalon® Pro. Under the agreement, the Company expects to pay the supplier between $3.0 and $5.0 million over two years. The Company recorded $3.0 million in general and administrative expense on the Consolidated Statement of Operations and an accrual of $3.0 million on the Consolidated Balance Sheet, which represent the low end of the estimated cost range.


	For the Year Ended June 30, 2020
	Franchise		Company-owned		Corporate(1)		Consolidated

	(Dollars in thousands)
Revenues:
Service	$	—	$	331,538	$	—	$	331,538
Product	52,421		85,165		—		137,586
Royalties and fees	73,402		—		—		73,402
Franchise rental income	127,203		—		—		127,203
	253,026		416,703		—		669,729
Operating expenses:
Cost of service	—		222,279		—		222,279
Cost of product	40,032		44,666		—		84,698
Site operating expenses	13,341		58,202		—		71,543
General and administrative	33,725		24,638		72,590		130,953
Rent	872		72,921		2,589		76,382
Franchise rent expense	127,203		—		—		127,203
Depreciation and amortization	922		29,113		6,917		36,952
Long-lived asset impairment	1,712		20,848		—		22,560
TBG restructuring	2,333		—		—		2,333
Goodwill impairment	—		40,164		—		40,164
Total operating expenses	220,140		512,831		82,096		815,067
Operating income (loss)	32,886		(96,128)		(82,096)		(145,338)
Other (expense) income:
Interest expense	—		—		(7,522)		(7,522)
Loss from sale of salon assets to franchisees, net	—		—		(27,306)		(27,306)
Interest income and other, net	—		—		3,353		3,353
Income (loss) from continuing operations before income taxes	$	32,886	$	(96,128)	$	(113,571)	$	(176,813)

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act), 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), at the end of the period. Based on their evaluation, our CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2021.

The Company has adopted a code of ethics, known as the Code of Business Conduct & Ethics that applies to all employees, including the Company's chief executive officer, chief financial officer, directors and executive officers. The Code of Business Conduct & Ethics is available on the Company's website at www.regiscorp.com, under the heading "Corporate Governance - Policies and Disclosures" (within the "Investor Relations" section). The Company intends to disclose any substantive amendments to, or waivers from, its Code of Business Conduct & Ethics on its website or in a report on Form 8-K. In addition, the charters of the Company's Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and the Company's Corporate Governance Guidelines may be found in the same section of the Company's website. Copies of any of these documents are available upon request to any shareholder of the Company by writing to the Company's Corporate Secretary at Regis Corporation, 3701 Wayzata Boulevard, Suite 500, Minneapolis, Minnesota 55416.


Part I.
	Item 1.	Business	4
		Executive Officers of the Registrant	11
	Item 1A.	Risk Factors	14
	Item 1B.	Unresolved Staff Comments	24
	Item 2.	Properties	25
	Item 3.	Legal Proceedings	25
	Item 4.	Mine Safety Disclosures	25
Part II.
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Repurchase or Purchases of Equity Securities	26
	Item 6.	Selected Financial Data	28
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	48
	Item 8.	Financial Statements and Supplementary Data	49
		Report of Independent Registered Public Accounting Firm	50
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	98
	Item 9A.	Controls and Procedures	98
	Item 9B.	Other Information	98
Part III.
	Item 10.	Directors, Executive Officers and Corporate Governance	99
	Item 11.	Executive Compensation	99
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	99
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	99
	Item 14.	Principal Accounting Fees and Services	99
Part IV.
	Item 15.	Exhibits and Financial Statement Schedules	100
	Item 16.	Form 10-K Summary	103
	Signatures		104


	June 30,
	2021		2020		2019

FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart stores	1,666		1,317		615
Supercuts	2,386		2,508		2,340
Portfolio Brands (1)	1,357		1,217		766


Total North American salons	5,409		5,042		3,721
Total International salons (2)(3)	154		167		230
Total Franchise salons	5,563		5,209		3,951
as a percent of total Franchise and Company-owned salons	95.3	%	76.1	%	56.0	%

COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart stores	91		751		1,550
Supercuts	35		210		403
Portfolio Brands (1)	107		505		1,155
Mall-based (2)	43		166		—
Total Company-owned salons	276		1,632		3,108
as a percent of total Franchise and Company-owned salons	4.7	%	23.9	%	44.0	%

OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	78		82		86

Grand Total, System-wide	5,917		6,923		7,145


	Fiscal Years
	2021	2020	2019

FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart stores	(56)	(29)	(18)
Supercuts	(273)	(102)	(72)
Portfolio Brands (1)	(82)	(43)	(33)
Mall based (2)	—	—	(807)
Total North American salons	(411)	(174)	(930)
Total International salons (2)(3)	(14)	(63)	(33)
Total Franchise salons	(425)	(237)	(963)

COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart stores	(252)	(72)	(39)
Supercuts	(54)	(26)	(21)
Portfolio Brands (1)	(190)	(111)	(73)
Mall based (2)	(117)	(41)	—


Total Company-owned salons	(613)	(250)	(133)


	Fiscal Years
	2021	2020	2019

FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart stores	405	727	69
Supercuts	130	231	618
Portfolio Brands (1)	212	490	48



Total Franchise salons	747	1,448	735

COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart stores	(408)	(727)	(71)
Supercuts	(125)	(176)	(513)
Portfolio Brands (1)	(208)	(545)	(151)
Mall based (2)	(6)	207	—


Total Company-owned salons	(747)	(1,241)	(735)


	June 30,
	2016		2017		2018		2019		2020		2021

Regis	$	100.00	$	82.49	$	132.85	$	133.33	$	65.70	$	75.18
S & P 500	100.00		117.90		134.84		148.89		160.06		225.36
S & P 400 Midcap	100.00		118.57		134.58		136.41		127.28		195.03
Dow Jones Consumer Services Index	100.00		115.98		138.67		157.87		169.05		233.90
Peer Group	100.00		103.63		101.39		118.71		85.44		150.07


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)

4/1/21 - 4/30/21	—	$	—	29,974,657	$	54,573
5/1/21 - 5/31/21	—	—		29,974,657	54,573
6/1/21 - 6/30/21	—	—		29,974,657	54,573
Total	—	$	—	29,974,657	$	54,573


	Fiscal Years						Increase (Decrease)
	2021		2020		2019		2021		2020

	(Dollars in thousands)
Salons sold to franchisees	748		1,475		767		(727)		708
Cash proceeds received	$	8,437	$	91,616	$	94,787	$	(83,179)	$	(3,171)

(Loss) gain on venditions, excluding goodwill derecognition	$	(16,696)	$	49,660	$	69,973	$	(66,356)	$	(20,313)
Non-cash goodwill derecognition	—		(76,966)		(67,055)		76,966		(9,911)
(Loss) gain from sale of salon assets to franchisees, net	$	(16,696)	$	(27,306)	$	2,918	$	10,610	$	(30,224)


		June 30,
	Maturity Dates	2021	2020	2021		2020

	(Fiscal year)	(Interest rate %)		(Dollars in thousands)

Revolving credit facility	2023	5.00%	5.50%	$	186,911	$	177,500
Long-term financing lease liability	2034	N/A	3.30%	—		16,773
Long-term financing lease liability	2034	N/A	3.70%	—		11,208
				$	186,911	$	205,481


As of June 30,	Debt to Capitalization

2021	91.6	%
2020	62.0	%
2019	26.8	%


Index to Consolidated Financial Statements:
Reports of Independent Registered Public Accounting Firms						50
Consolidated Balance Sheet as of June 30, 2021 and 2020						54
Consolidated Statement of Operations for each of the three years in the period ended June 30, 2021						55
Consolidated Statement of Comprehensive Loss for each of the three years in the period ended June 30, 2021						56
Consolidated Statement of Shareholders' Equity for each of the three years in the period ended June 30, 2021						57
Consolidated Statement of Cash Flows for each of the three years in the period ended June 30, 2021						58
Notes to Consolidated Financial Statements						59


	Year Ended June 30, 2021				Year Ended June 30, 2020				Year Ended June 30, 2019
	Franchise		Company-owned		Franchise		Company-owned		Franchise		Company-owned

	(Dollars in thousands)
Revenue recognized at a point in time:
Service	$	—	$	108,120	$	—	$	331,538	$	—	$	749,660
Product	56,699		34,845		52,421		85,165		59,905		165,713
Total revenue recognized at a point in time	$	56,699	$	142,965	$	52,421	$	416,703	$	59,905	$	915,373

Revenue recognized over time:
Royalty and other franchise fees	$	66,034	$	—	$	60,061	$	—	$	59,688	$	—
Advertising fund fees	22,023		—		13,341		—		34,073		—
Franchise rental income	127,392		—		127,203		—		—		—
Total revenue recognized over time	215,449		—		200,605		—		93,761		—
Total revenue	$	272,148	$	142,965	$	253,026	$	416,703	$	153,666	$	915,373


	June 30, 2021		June 30, 2020		Balance Sheet Classification

	(Dollars in thousands)
Receivables from contracts with customers, net	$	19,112	$	22,991	Accounts receivable, net
Broker fees	19,254		20,516		Other assets

Deferred revenue:
Current
Gift card liability	$	2,240	$	2,543	Accrued expenses
Deferred franchise fees unopened salons	40		77		Accrued expenses
Deferred franchise fees open salons	5,884		5,537		Accrued expenses
Total current deferred revenue	$	8,164	$	8,157
Non-current
Deferred franchise fees unopened salons	$	6,571	$	11,855	Other non-current liabilities
Deferred franchise fees open salons	32,365		33,623		Other non-current liabilities
Total non-current deferred revenue	$	38,936	$	45,478


Balance as of June 30, 2020	$	6,899
Provision for doubtful accounts (1)	509
Provision for franchisee rent (2)	1,920
Write-offs	(1,554)
Balance as of June 30, 2021	$	7,774


Balance as of June 30, 2020	$	20,516
Additions	2,112
Amortization	(3,180)
Write-offs	(194)
Balance as of June 30, 2021	$	19,254


2022	$	5,884
2023	5,820
2024	5,585
2025	5,208
2026	4,734
Thereafter	11,018
Total	$	38,249


	Fiscal Years
	2021		2020	2019

Repurchased Shares	—		1,504,000	8,605,430
Average Price (per share)	$	—	$17.50	$17.94
Price range (per share)	$	—	$16.25 - $18.49	$15.29 - $19.75
Total	$	—	$26.4 million	$154.4 million


	Fiscal Years
	2021		2020		2019

SmartStyle	(26.7)	%	(5.5)	%	1.0	%
Supercuts	(25.8)		(4.2)		(0.2)
Portfolio Brands	(24.8)		(3.7)		(0.8)


Total	(25.8)	%	(4.4)	%	(0.1)	%


	Franchise Reporting Unit

Goodwill, net at June 30, 2020	$	227,457
Translation rate adjustments	2,125


Goodwill, net at June 30, 2021	$	229,582


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

2022	$	127,656	$	8,997	$	3,566	$	140,219	$	(127,656)	$	12,563
2023	112,604		7,268		3,550		123,422		(112,604)		10,818
2024	98,764		4,738		3,616		107,118		(98,764)		8,354
2025	83,259		1,881		3,683		88,823		(83,259)		5,564
2026	70,393		938		3,681		75,012		(70,393)		4,619
Thereafter	168,279		780		23,657		192,716		(168,279)		24,437
Total future obligations	$	660,955	$	24,602	$	41,753	$	727,310	$	(660,955)	$	66,355
Less amounts representing interest	81,713		448		9,812		91,973
Present value of lease liabilities	$	579,242	$	24,154	$	31,941	$	635,337
Less current lease liabilities	105,946		8,430		2,095		116,471
Long-term lease liabilities	$	473,296	$	15,724	$	29,846	$	518,866


		June 30,
	Maturity Date	2021	2020	2021		2020

	(Fiscal year)	(Interest rate %)		(Dollars in thousands)
Revolving credit facility	2023	5.00%	5.50%	$	186,911	$	177,500


	Maturity Date	Interest Rate	June 30, 2021		June 30, 2020

	(Fiscal year)		(Dollars in thousands)
Financial liability - Salt Lake City Distribution Center	2034	N/A	$	—	$	16,773
Financial liability - Chattanooga Distribution Center	2034	N/A	—		11,208
Long-term financing liabilities			$	—	$	27,981


	Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
	SARs	SOs

Outstanding balance at June 30, 2020	1,285	—	$	11.79
Granted	—	1,459	6.53
Forfeited/Expired	(187)	—	14.74
Exercised	(57)	—	10.84
Outstanding balance at June 30, 2021	1,041	1,459	$	8.52	7.77	$	2,100
Exercisable at June 30, 2021	1,041	—	$	11.32	5.67	$	(2,040)
Unvested awards, net of estimated forfeitures	—	1,459	$	6.53	9.27	$	4,129


	Shares/Units (in thousands)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
	RSUs

Outstanding balance at June 30, 2020	706	$	17.72
Granted	896	7.15
Forfeited	(231)	16.00
Vested	(196)	16.12
Outstanding balance at June 30, 2021	1,175	$	10.30	$	10,998
Vested at June 30, 2021	262	$	13.76	$	2,452
Unvested awards, net of estimated forfeitures	800	$	8.87	$	7,488


	For the Year Ended June 30, 2021
	Franchise		Company - owned		Corporate(1)		Consolidated

	(Dollars in thousands)
Revenues:
Service	$	—	$	108,120	$	—	$	108,120
Product	56,699		34,845		—		91,544
Royalties and fees	88,057		—		—		88,057
Franchise rental income	127,392		—		—		127,392
	272,148		142,965		—		415,113
Operating expenses:
Cost of service	—		79,144		—		79,144
Cost of product	46,449		32,718		—		79,167
Site operating expenses	22,121		29,342		—		51,463
General and administrative	31,364		8,934		65,135		105,433
Rent	2,395		35,832		2,703		40,930
Franchise rent expense	127,392		—		—		127,392
Depreciation and amortization	1,049		14,730		6,934		22,713
Long-lived asset impairment	726		12,297		—		13,023


Total operating expenses	231,496		212,997		74,772		519,265
Operating income (loss)	40,652		(70,032)		(74,772)		(104,152)
Other (expense) income:
Interest expense	—		—		(13,813)		(13,813)
Loss from sale of salon assets to franchisees, net	—		—		(16,696)		(16,696)
Interest income and other, net	—		—		15,902		15,902
Income (loss) from continuing operations before income taxes	$	40,652	$	(70,032)	$	(89,379)	$	(118,759)


	For the Year Ended June 30, 2019
	Franchise		Company - owned		Corporate(1)		Consolidated

	(Dollars in thousands)
Revenues:
Service	$	—	$	749,660	$	—	$	749,660
Product	59,905		165,713		—		225,618
Royalties and fees	93,761		—		—		93,761
	153,666		915,373		—		1,069,039
Operating expenses:
Cost of service	—		452,827		—		452,827
Cost of product	47,219		81,597		—		128,816
Site operating expenses	34,099		106,932		—		141,031
General and administrative	32,888		57,219		86,897		177,004
Rent	740		130,214		862		131,816
Depreciation and amortization	762		28,263		8,823		37,848
TBG restructuring	21,816		—		—		21,816
Total operating expenses	137,524		857,052		96,582		1,091,158
Operating income (loss)	16,142		58,321		(96,582)		(22,119)
Other (expense) income:
Interest expense	—		—		(4,795)		(4,795)
Gain from sale of salon assets to franchisees, net	—		—		2,918		2,918
Interest income and other, net	—		—		1,729		1,729
Income (loss) from continuing operations before income taxes	$	16,142	$	58,321	$	(96,730)	$	(22,267)


2(a)						Portfolio Transfer Agreement (United States), dated as of December 30, 2019, between Regis Corp. and The Beautiful Group Management, LLC. (Incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K filed on December 31, 2019.)

2(b)						Portfolio Transfer Agreement (Canada), dated as of December 30, 2019, between Regis Holdings (Canada), Ltd. and The Beautiful Group Salons (Canada) Ltd. (Incorporated by reference to Exhibit 2.2 of the Company's Current Report on Form 8-K filed on December 31, 2019.)

3(a)						Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed on May 8, 2020.)

3(b)						Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K filed on May 8, 2020.)

4(b)						Description of the Company's Securities. (Incorporated by reference to Exhibit 4.B of the Company's Annual Report on Form 10-K filed on August 27, 2019.)

10(a)*						Regis Corporation Executive Retirement Savings Plan Adoption Agreement and Trust Agreement, dated November 15, 2008, between the Company and Fidelity Management Trust Company (The CORPORATE Plan for Retirement EXECUTIVE PLAN basic plan document is incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K filed on August 29, 2007). (Incorporated by reference to Exhibit 10(a) of the Company's Quarterly Report on Form 10-Q filed February 9, 2009.)

10(b)*						Form of Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated August 31, 2012, between the Company and certain senior executive officers. (Incorporated by reference to Exhibit 10(b) of the Company's Quarterly Report on Form 10-Q filed November 9, 2012.)

10(c)*						Separation and Consulting Agreement, dated July 1, 2021, between the Company and James Townsend.

10(d)*						Separation Agreement, dated December 7, 2020, between the Company and Eric Bakken. (Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q filed on February 3, 2021.)

10(e)*						Offer Letter, between Felipe A. Athayde and Regis Corporation, dated September 4, 2020. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on September 8, 2020.)

10(f)*						Non-compete, Non-disclosure, Non-Solicitation and Non-Hire Agreement, between Felipe A. Athayde and Regis Corporation, dated September 4, 2020. (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed on September 8, 2020.)

10(g)*						Restricted Stock Unit Agreement, dated October 5, 2020, between the Company and Felipe A. Athayde.

10(h)*						Matching Stock Option Agreement, dated October 5, 2020, between the Company and Felipe A. Athayde.

10(i)*						Stock Option Agreement, dated October 5, 2020, between the Company and Felipe A. Athayde.

10(j)*						Transition Services and Release Agreement, between Hugh E. Sawyer and Regis Corporation, dated September 4, 2020. (Incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed on September 8, 2020).

10(k)*						Employment Agreement, dated April 17, 2017, between the Company and Hugh E. Sawyer. (Incorporated by reference to Exhibit 10(n) of the Company's Annual Report on Form 10-K filed on August 23, 2017.)

10(l)*						Restricted Stock Unit Agreement, dated April 17, 2017, between the Company and Hugh E. Sawyer. (Incorporated by reference to Exhibit 10(n) of the Company's Annual Report on Form 10-K filed on August 23, 2017.)


10(m)*						Stock Appreciation Right Agreement, dated April 17, 2017, between the Company and Hugh E. Sawyer. (Incorporated by reference to Exhibit 10(o) of the Company's Annual Report on Form 10-K filed on August 23, 2017.)

10(n)*						Employment Agreement dated December 1, 2014, between the Company and Kersten D. Zupfer. (Incorporated by reference to Exhibit 10(g) of the Company's Annual Report of Form 10-K filed on August 31, 2020).

10(o)*						Restricted Stock Unit Agreement, dated November 11, 2019, between the Company and Kersten D. Zupfer.

10(p)*						Performance Units Agreement, dated November 11, 2019, between the Company and Kersten D. Zupfer.

10(q)*						Form of Restricted Stock Unit Agreement (Fiscal 2021 Executive Grants).

10(r)*						Amended and Restated 2004 Long Term Incentive Plan, as amended and restated effective October 22, 2013. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on October 11, 2013.)

10(s)*						Amendment to the Amended and Restated 2004 Long Term Incentive Plan, effective August 29, 2014. (Incorporated by reference to Exhibit 10(b) of the Company's Quarterly Report on Form 10-Q filed on November 4, 2014.)

10(t)*						Form of Restricted Stock Unit Agreement (Annual Fiscal 2018 Executive Grants). (Incorporated by reference to Exhibit 10(v) of the Company's Annual Report on Form 10-K filed on August 23, 2018.)

10(u)*						Form of Stock Appreciation Right Agreement (Annual Executive Grants). (Incorporated by reference to Exhibit 10(w) of the Company's Annual Report on Form 10-K filed on August 23, 2018.)

10(v)*						Form of Performance Units Agreement (Fiscal 2018 Executive Grants). (Incorporated by reference to Exhibit 10(x) of the Company's Annual Report on Form 10-K filed on August 23, 2018.)

10(w)*						Form of Restricted Stock Unit Agreement (Annual Fiscal 2017 and 2016 Executive Grants). (Incorporated by reference to Exhibit 10(u) of the Company's Annual Report on Form 10-K filed on August 23, 2017.)

10(x)*						Form of Performance Units Agreement (Fiscal 2017 Executive Grants). (Incorporated by reference to Exhibit 10(w) of the Company's Annual Report on Form 10-K filed on August 23, 2017.)

10(y)*						Regis Corporation 2016 Long Term Incentive Plan, effective October 18, 2016. (Incorporated by reference to Appendix A of the Company’s Proxy Statement on Definitive Form 14A filed on September 7, 2016.)

10(z)*						Regis Corporation Amended and Restated 1991 Contributory Stock Purchase Plan, as amended and restated effective October 18, 2016. (Incorporated by reference to Appendix B of the Company’s Proxy Statement on Definitive Form 14A filed on September 7, 2016.)

10(aa)*						Senior Executive Severance Policy, dated May 18, 2020, Applicable to Senior Vice Presidents and Above Who Do Not Have an Employment Agreement. (Incorporated by reference to Exhibit 10.3.1 of the Company's Quarterly Report on Form 10-Q filed on June 18, 2020.)

10bb)						Credit Agreement dated as of March 26, 2018 among Regis Corporation, the various financial institutions party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Keybank Capital Markets Inc., as Joint Lead Arrangers and Joint Bookrunners. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on March 30, 2018.)

10(cc)						Amendment No. 1 to Credit Agreement dated as of April 25, 2018 by and among Regis Corporation, various financial institutions and Bank of America, N.A. as Administrative Agent. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on April 27, 2018.)

10(dd)						Amendment No. 2 to Credit Agreement dated as of May 15, 2020 by and among Regis Corporation, certain of its subsidiaries, various financial institutions and Bank of America, N.A. as Administrative Agent. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on May 18, 2020.)

10(ee)						Amendment No. 3 to Credit Agreement dated as of July 29, 2020 by and among Regis Corporation, certain of its subsidiaries, various financial institutions and Bank of America, N.A. as Administrative Agent. (incorporated by reference to Exhibit 10(u) of the Company's Annual Report on Form 10-K filed on August 31, 2020.)

10(ff)*						Form of Letter Agreement with Executive Officers (August 31, 2018). (Incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q filed on October 30, 2018.)


10(gg)*						Form of Restricted Stock Unit Award (Annual Fiscal 2019 Executive Grants, Excluding Hugh E. Sawyer). (Incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q filed on October 30, 2018.)

10(hh)*						Form of Restricted Stock Unit Award (Annual Fiscal 2019 Grant, Hugh E. Sawyer). (Incorporated by reference to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q filed on October 30, 2018.)

10(ii)*						Form of Performance Stock Unit Award (Annual Fiscal 2019 Executive Grants, Excluding Hugh E. Sawyer). (Incorporated by reference to Exhibit 10.5 of the Company's Quarterly Report on Form 10-Q filed on October 30, 2018.)

10(jj)*						Form of Performance Stock Unit Award (Annual Fiscal 2019, Hugh E. Sawyer). (Incorporated by reference to Exhibit 10.6 of the Company's Quarterly Report on Form 10-Q filed on October 30, 2018.)

10(kk)*						Form of Restricted Stock Unit Agreement (Non-Employee Director Grants). (Incorporated by reference to Exhibit 10.7 of the Company's Quarterly Report on Form 10-Q filed on October 30, 2018.)

10(ll)*						Regis Corporation Amended and Restated Short Term Incentive Compensation Plan, effective February 27, 2019. (Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q filed on April 30, 2019.)

10(mm)*						Regis Corporation Stock Purchase and Matching RSU Program as amended and restated effective March 20, 2019, including form of SPMP and forms of Matching RSU Award Agreements. (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on April 30, 2019.)

10(nn)*						Regis Corporation 2018 Long Term Incentive Plan, effective October 23, 2018. (Incorporated by reference to Appendix A of the Company’s Proxy Statement on Definitive Form 14A filed on September 6, 2018.)

10(oo)*						Form of Restricted Stock Unit Award (Chad Kapadia September 1, and June 5, 2019). (Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q filed on October 29, 2019.)

10(pp)						Second US and Canada Omnibus Settlement Agreement dated as of June 27, 2019, among Regis Corp., Regis, Inc., Regis Holdings (Canada), Ltd., and The Barbers, Hairstyling for Men & Women, Inc. ("Regis Entities"), on the one hand, and The Beautiful Group Management, LLC, The Beautiful Group Salons (Canada) Ltd., The Beautiful Group Holdings, LLC, Archetype Capital Group, LLC, The Beautiful Group Ventures, LLC, TBG IP Holder, LLC, and Regent Companies, LLC ("TBG Entities"), on the other hand. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on July 3, 2019.)

10(qq)						Open Market Sale A greementSM, dated February 3, 2021, between the Company and Jefferies LLC . (Incorporated by reference to Exhibit 1.2 of the Company's Registration Statement on Form S-3 (No. 333-252700 .))

21						List of Subsidiaries of the Company.

23.1						Consent of Grant Thornton LLP.

23.2						Consent of PricewaterhouseCoopers LLP.

31.1						Chief Executive Officer of the Company: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Executive Vice President and Chief Financial Officer of the Company: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32						Chief Executive Officer and Chief Financial Officer of the Company: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following financial information from Regis Corporation's Annual Report on Form 10-K for the year ended June 30, 2021, formatted in Inline Xtensible Business Reporting Language (iXBRL) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Earnings; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.

101.INS						XBRL Instance Document

101.SCH						XBRL Taxonomy Extension Schema

101.CAL						XBRL Taxonomy Extension Calculation Linkbase

101.LAB						XBRL Taxonomy Extension Label Linkbase

101.PRE						XBRL Taxonomy Extension Presentation Linkbase


101.DEF						XBRL Taxonomy Extension Definition Linkbase

104						The cover page from Regis Corporation's Annual Report on Form 10-K for the year ended June 30, 2021, formatted in iXBRL (included as Exhibit 101).


			REGIS CORPORATION
			By			/s/ FELIPE A. ATHAYDE
						Felipe A. Athayde, President and Chief Executive Officer (Principal Executive Officer)

			By			/s/ KERSTEN D. ZUPFER
						Kersten D. Zupfer, Executive Vice President and Chief Financial Officer (Principal Financial Officer)

			Date: August 26, 2021



/s/ DANIEL G. BELTZMAN
Daniel G. Beltzman, Chairman of the Board of Directors						Date: August 26, 2021

/s/ FELIPE A. ATHAYDE
Felipe A. Athayde, Director						Date: August 26, 2021

/s/ M. ANN RHOADES
M. Ann Rhoades, Director						Date: August 26, 2021

/s/ MICHAEL J. MERRIMAN
Michael J. Merriman, Director						Date: August 26, 2021

/s/ VIRGINIA GAMBALE
Virginia Gambale, Director						Date: August 26, 2021

/s/ DAVID J. GRISSEN
David J. Grissen, Director						Date: August 26, 2021

/s/ MARK LIGHT
Mark Light, Director						Date: August 26, 2021

/s/ MICHAEL MANSBACH
Michael Mansbach, Director						Date: August 26, 2021


Type of Qualifying Termination			Applicable Portion of the RSUs
Clause (i) of the Definition of Qualifying Termination			a number of RSUs equal to the product obtained by multiplying (i) the total number RSUs by (ii) a fraction, the numerator of which is the number of days elapsed from the Grant Date through the date of Participant’s Termination of Employment and the denominator of which is the number of days between the Grant Date and the third anniversary of the Grant Date
Clause (ii) of the Definition of Qualifying Termination			a number of RSUs equal to the product obtained by multiplying (i) the total number RSUs by (ii) a fraction (not to exceed 1), the numerator of which is the number of days elapsed from the Grant Date through the date of Participant’s Termination of Employment plus 548 and the denominator of which is the number of days between the Grant Date and the third anniversary of the Grant Date


Nature of Participant’s Termination of Employment			Applicable Portion of the Units
Clause (i) of the definition of Qualifying Termination, and:
Prior to November 11, 2022			a number of Units equal to the product obtained by multiplying (i) the total number of Units by (ii) a fraction, the numerator of which is the number of days that have elapsed from the Grant Date through the date of the Participant’s Qualifying Termination and the denominator of which is the number of days between the Grant Date and the fifth anniversary of the Grant Date
On or after November 11, 2022 but before the Scheduled Vesting Date			100% of the Units
Clause (ii) of the definition of Qualifying Termination			a number of Units equal to the product obtained by multiplying (i) the total number of Units by (ii) 60%, if the date of Participant’s Termination of Employment is on or after the third anniversary of the Grant Date and before the fourth anniversary of the Grant Date, or 80%, if the date of Participant’s Termination of Employment is on or after fourth anniversary but before the Scheduled Vesting Date
Clause (iii) of the definition of Qualifying Termination			a number of Units equal to the product obtained by multiplying (i) the total number of Units by (ii) a fraction (not to exceed 1), the numerator of which is the number of days that have elapsed from the Grant Date through the date of the Participant’s Termination of Employment plus 548 and the denominator of which is the number of days between the Grant Date and the Scheduled Vesting Date


Company Name						Country or State of Incorporation/Formation
The Barbers, Hairstyling for Men & Women, Inc.						Minnesota
Roosters MGC International LLC						Michigan
Supercuts, Inc.						Delaware
Supercuts Corporate Shops, Inc.						Delaware
RPC Acquisition Corp.						Minnesota
RPC Corporate Shops, Inc.						Minnesota
Regis Corp.						Minnesota
Regis Insurance Group, Inc.						Vermont
Regis, LLC						Minnesota
First Choice Haircutters International, LLC						Delaware
Cutco Acquisition Corp.						Minnesota
EEG, Inc.						Delaware
Roger Merger Subco LLC						Delaware
RGS International SNC						Luxembourg
Regis International Holdings SARL						Luxembourg
Regis Holdings (Canada), Ltd						Nova Scotia
First Choice Haircutters, Ltd						Nova Scotia
Magicuts, Ltd						Nova Scotia
RHS UK Holdings Ltd						United Kingdom
HCUK Hair, Ltd*						United Kingdom
Supercuts UK (Franchise) Ltd						United Kingdom
Fremont Software, LLC						Delaware
*Inactive Entities



/s/ PricewaterhouseCoopers LLP

Minneapolis, Minnesota
August 26, 2021


August 26, 2021

/s/ Felipe A. Athayde
Felipe A. Athayde, President and Chief Executive Officer


August 26, 2021

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