Regis Corporation (RGS) Q4 2020 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Regis Corporation Fourth Quarter Fiscal 2020 Earnings Call. My name is Ryan and I will be your conference facilitator today. At this time, all participants are currently in a listen-only mode. [Operator Instructions] As a reminder, this call is being recorded for playback and will be available approximately 12:00 p.m. Central Time today. I'll now turn the conference call over to Biz McShane, AVP of Finance. Please go ahead.

Thank you, Ryan. Good morning, everyone and thank you all for joining us. On the call with me today, we have Hugh Sawyer, our Chief Executive Officer; Kersten Zupfer, our Executive Vice President and Chief Financial Officer; Eric Bakken, President of our Franchise segment; and Amanda Rusin, our General Counsel. Before turning the call over to Hugh, there are a few housekeeping items I would like to address. First, today's earnings release and conference call include forward-looking statements within the private -- within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance, and by their nature, are subject to inherent risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and recent SEC filings, including in our most recent Form 10-K for the year ended June 30, 2020 for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after this call. Second, this morning's conference call must be considered in conjunction with the earnings release we issued this morning and our previous SEC filings, including our most recent 10-K. On today's call, we will be discussing non-GAAP as adjusted financial results that exclude the impact of certain business events and other discrete items. These non-GAAP financial measures are provided to facilitate meaningful year-over-year comparisons, but should not be considered superior to or the substitute for our GAAP financial measures and should be read in conjunction with GAAP financial measures for the period. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in this morning's release, which is available on our website at www.regiscorp.com/investorrelations. With that, I will now turn the call over to Hugh.

Good morning, everyone. I want to begin my remarks by thanking our stylist community, franchise partners, and our field and corporate employees who have all performed in a remarkable and courageous manner during this terrible pandemic. I am grateful to each one of you for your many contributions to our business, while confronted with these extraordinary unprecedented conditions. There's little doubt that the most important event of the quarter was the company's successful amendment of its revolving credit facility in the month of May, an amendment that expires in March of 2023. Among other things, these negotiations removed all prior financial covenants, including the net leverage ratio and fixed charge coverage ratio and added a minimum liquidity covenant, while providing the lender security in the company's assets. This covenant light facility is expected to provide the long-term flexibility we need to see our transformational strategy through to completion and at the same time enable us to successfully navigate the uncertainties caused by the pandemic. We were pleased with this outcome, particularly given all of the uncertainty related to the pandemic and the state of the economy in North America. Broadly speaking, we expect the amended credit facility will enable us to move forward, move forward to embrace the full potential of our growth strategy, which includes among other elements, completing our conversion to a capital-light franchise platform, transforming our company with technology, focusing on the values salon sector and our core brands, eliminating costs while continuing to invest in capabilities needed for a better future and upgrading our marketing and ongoing digital education efforts. As to the current state of our salon operations, with the exception of our salons in California, which opened and then were closed again due to a state mandate, and several company-owned salons we elected not to open, our salons have substantially reopened. As I understand it, Governor Newsom announced on Friday that salons in California can re-established indoor operations subject to County approval. We believe this is late breaking good news for us given our significant populations of salons in California. But as of today, at month end, roughly 82% of our total salon portfolio was open for business, including both franchise and company-owned salons. Of course, we expect the number of open salons will begin to increase as California and its individual counties begin to reopen. Excluding the salons in California that are temporarily closed due to state mandate, 90% of our franchise salons and about 88% of our company-owned salons representing approximately 90% of the company's portfolio have reopened. So, normalizing for California folks, we are substantially reopened and we just got a little bit of good news on late last week out of Governor Newsom. I think you would be interested to know that we've been working very closely with our franchisees, our franchise councils and our companies operating teams to identify ideas, new ideas, to adjust our operations to a post-COVID reality, while keeping the safety of our stylists and customers as our top priority. As we previously shared with you, we worked with infectious disease specialists at the University of Minnesota to assure that the health and safety of our customers and stylists would be at the forefront of our salon operating procedures. As I mentioned earlier, while adjusting to the impact of this pandemic, we are trying creative new ideas to help build traffic, while maintaining social distancing and our safety protocols. For example, collaborating with one of our leading Supercuts franchisees, we recently introduced an outdoor salon concept in Southern California in a format somewhat similar to a sidewalk cafe. While it's still early days, we really like the new concept and believe it may ultimately prove to have a longer-term application in other locations and perhaps brands. While our post-COVID volumes are down, our scale confers significant benefit that's not shared by most of the salon sector. And we certainly believe that consumer interest in good grooming is something that has long-term sustainability. It's important to consider that despite constantly changing external conditions, Regis has been around for almost 100 years now. We have survived in spite of multiple recessions, a great depression in the second world war. And I believe that with advances in the treatment of COVID-19, better testing and the potential introduction of new vaccines in the months ahead, our customers and their families will return to a more normal lifestyle that will include visits to our salons. Although much has changed since we embarked on our multi-year strategy, we remain committed to our transformation to a capital-light growth platform. We originally believed we would complete our refranchising process by the end of this calendar year and that was the trajectory. However, no one expected this pandemic and the timing of our transition will likely be delayed a few months by the disease. Given the impact of the pandemic, we now expect to be substantially complete with refranchising effort on or before the end of fiscal year 2021. In other words, we think we'll finish the process no later than next summer. At this point in the transition, we also anticipate that the one-time cash proceeds generated by this last phase of our refranchising process will be lower due to the uncertainty and traffic erosion created by the pandemic. However, as you may expect, these assumptions could change depending on the length or severity of the pandemic and the potential impact of advances and treatment, better testing, and the introduction of new vaccines. Although we have more work to do and must find effective ways to adapt to this new reality, we believe the core elements of our strategy and our continuing evolution to a technology enabled growth platform will in the long run enhance shareholder value. In order to support our growth strategy and provide enhanced capabilities to our franchisees and to establish frictionless customer relationships, we kept our promise and made a long-term commitment to strategic technology investments, which we shared with you today. In August, the company launched its proprietary cloud-based salon management and point of commerce solution, OpenSalon Pro. OpenSalon Pro technology now powers customer facing booking and information delivery on branded platforms. This follows a wider initiative launch in 2019 to enable booking directly from Google, Facebook, Messenger and Amazon Alexa. We overhauled and launched the Supercuts mobile app, which improves same day check in and the ability to book services for the following day. This update represents an alternative to the traditional walk-in model that consumers and even some States are demanding, particularly in the face of COVID-19 restrictions and wider consumer preference. And finally, during the quarter, we also launched the new Cost Cutters mobile app on iOS and Android, and a new Cost Cutters website. With the ability to book an appointment up to three days out, the new mobile app will also be at the center of brand-wide loyalty and rewards programs at Cost Cutters. When downloading the app, customers will be able to earn points in our salons for discounts on future services or towards purchase of Regis’ exclusive private label retail products. And we've also kept our promises regarding expense rationalization. In June, we took further action to eliminate administrative costs and personnel with an expected annualized savings of $6 million. And during the year, we made a number of -- frankly, painful decisions to eliminate non-essential G&A costs as we continued our transition to a fully franchised portfolio. On a full year basis, our G&A expense was approximately $45.3 million lower than last year, primarily due to the transition of company operated salons, the franchise, salon closures and furloughs resulting from the COVID-19 pandemic among other factors. In closing, I want to take a moment to acknowledge the pain and suffering that our nation has endured this year. Please note that our company rejects racism, inequality, cruelty, and hatred of any kind. My thoughts and prayers are also with our healthcare workers and first responders, who are helping fight this pandemic, the victims of Hurricane Laura and our firefighters in California. May God bless them all. I'm also grateful to each one of you for your continued interest in Regis. And I'll now turn the call over to Kersten, who will take you through the numbers.

Thanks, Hugh, and good morning, everyone. As Hugh mentioned, the last few months have been unprecedented, but we are committed more than ever to our strategy. And despite the unfortunate consequences of this pandemic, we continue to be pleased with the progress of our transformation. We reported this morning on a consolidated basis fourth quarter revenues of $60 million, which represents a 76% decrease from prior year and as a result of the government mandated closures of our salon. At one point in the fourth quarter, virtually all of our salons were closed. Franchisees began opening their salons in April and more than half were opened in May and June. Company-owned salons began reopening in June. As additional insight, we estimate we lost roughly $105 million of revenue in the fourth quarter due to the COVID pandemic. We are pleased, but as of today, approximately 82% of our salons are open across the entire portfolio. Excluding California salons, nearly 90% of our salons are opened. As Hugh mentioned, with California reopening, that number should increase in the next few weeks. We also reported that our operating loss was $69 million during the quarter. The economic disruption caused by the pandemic was the key driver of this loss. Our management was quick to react to the store closures and furlough the majority of our workforce in April and into May and June to partially offset the lost revenue. Further, we implemented aggressive wage reductions for the small number of essential employees who continued to work. Additionally, the company recognized a $23 million non-cash long-lived asset impairment, primarily related to its lease assets during the quarter. The impairment was also driven by the impact of the pandemic. Fourth quarter consolidated adjusted EBITDA loss of $34 million was $73 million or 186% unfavorable to the same period last year, and was driven primarily by the decrease in the gain associated with the sale of company-owned salons of $27 million and the planned elimination of the EBITDA that had been generated in the prior year period from the net 1,448 company-owned salons that have been sold and converted to the franchise portfolio over the past 12 months. As we promised, management has taken steps to align the company's cost structure to materially offset the decline in adjusted EBITDA from our company-owned salons. We executed workforce reductions in January and June resulting in nearly $25 million of annualized savings. We have also significantly reduced our marketing spend. As I've already noted, COVID-19 pandemic also contributed to the decline in the fourth quarter adjusted EBITDA. On a year-to-date basis, consolidated adjusted EBITDA of $20 million was $103 million or 84% unfavorable versus the same period last year. The change includes a $20 million decrease in the gain, excluding non-cash goodwill derecognition related to the year-to-date sale and conversion of 1,475 company-owned salon to the franchise portfolio. Excluding the impact of the gain, fourth quarter year-to-date adjusted EBITDA was a loss of $30 million, which was $82 million unfavorable year-over-year. And [technical difficulty] fourth quarter results, this unfavorable variance was also largely driven by the elimination of the EBITDA related to the sold and transferred company-owned salons over the past 12 months and the COVID-19 pandemic. Of course, as you know, the elimination of EBITDA associated with the sold and transferred company-owned salon was a key element of our strategy and a planned event. Turning now to segment specific performance and starting with our Franchise segment. Fourth quarter Franchise royalties and fees of $7 million decreased $19 million or 72% versus the same quarter last year. Product sales to franchisees decreased $5 million year-over-year to $7 million. Both decreases were driven by -- driven primarily by the COVID-19 pandemic. Franchise same-store sales were unfavorable 20% due to a decline in traffic as customers learned to navigate the pandemic. As a reminder, same-store sales represents the total change in sales for salons that were open on the same day each year. Salon closures are not included in the same-store sales. So, as we've previously discussed with you, it will take some time for the dust to settle and for same-store sales to be an entirely reliable metric for our performance. Let's hope that by this time next year, we can all rely on these year-over-year comp comparison as a key indicator of traffic and performance. Fourth quarter franchise EBITDA of $1 million declined approximately $9 million year-over-year driven by reduced royalties and product sales due to the government mandated bond quarters and response to the COVID-19 pandemics partially offset by a decline in G&A. Year-to-date franchise adjusted EBITDA of $38 million was flat decreasing by less than a $1 million or 2% year-over-year. Adjusted EBITDA was favorable year-over-year until the impact of COVID-19 pandemic hit. Looking now at the company-owned salon segment, fourth quarter revenue decreased $195 million or 93% versus prior year to $15 million. COVID-19 was the primary driver along with the year-over-year decrease of approximately 1,476 company-owned salons over the past 12 months, which can be bucketed into three main categories. First, the conversion of a 1,475 company-owned salons to our asset-light franchise platform over the course of the past 12 months, of which 112 were sold during the fourth quarter. Second, the closure of approximately 250 company-owned salons over the course of the last 12 months, most of which were underperforming salons that we closed at lease expiration and are not essential to our future strategy. And third, these net company-owned salon reductions were partially offset by 234 salons that were bought back from franchisees over the last year, and 15 new company-owned organic salon openings during the last 12 months, which we expect to transition to our franchise portfolio in the months ahead. While historically the company has waited until we send a close underperforming salon. In the current environment, we may utilize our balance sheet to terminate some leases early, where the economics justify the decision, which will lead the early termination fees. However, we believe closing certain salons sooner is in our best interest as we get close to a fully franchise model. Fourth quarter company-owned salon segment adjusted EBITDA decreased $44 million year-over-year to a loss of $22 million. Consistent with the total company consolidated results, the unfavorable year-over-year variance was driven primarily by COVID-19 and the elimination of the adjusted EBITDA that had been generated in the prior year period from the company owned salons that were sold and converted into the franchise platform over the past 12 months. On a year-to-date basis, company-owned salon, consolidated adjusted EBITDA loss of $7 million was $95 million unfavorable versus the same period last year. The unfavorable year-over-year variance is driven by the elimination of the adjusted EBITDA related to the sold and transferred salons over the past 12 months and COVID-19. As I mentioned earlier, management has taken significant steps to reduce costs associated with this segment. It is important to remember that our company-owned salon performance will continue to be less critical to the future, to directory of our business. As we continue our conversion to a capital-light franchise model. Turning now to corporate overhead. Fourth quarter adjusted EBITDA loss of $14 million increased $20 million and is driven primarily by the $27 million decline in that gain, excluding non-cash Goodwill D recognition in the prior year from the sale of and conversion of company-owned salons, partially offset by the net impact of management initiatives to eliminate non-core, non-essential G&A expense. Finishing cash proceeds during the fourth quarter declined approximately $36 million or approximately 33,000 per salon compared to 49,000 per salon. And the third quarter of fiscal 20, the company is still committed to its conversion to an asset-light franchise business model and expects to substantially be -- substantially complete with the transition no later than the end of fiscal ‘21, a few months later than we had originally expected. We do believe the economic uncertainty created by the pandemic has and may impact the number of salons to be sold, the pace of sales to franchisees, and we expect proceed per salons to continue to decline. However, given the lack of visibility related to the length or severity of the pandemic, it is not possible for us to predict the outcome of our refranchising. We do remain confident that we will get it done. However, the timing and cash proceeds are still uncertain. We have tried to be conservative in our estimates and we'll keep you posted as we gain more knowledge regarding the impact of the pandemic to refranchising in the months ahead. Please remember salon proceeds are included in cash from investing activities, so they are not included in the reconciliation of operating cash flows to adjusted EBITDA. As Hugh mentioned, in May, we amended our revolving credit facility that expires in March of 2023. The amendment provided relief for the maximum consolidated net leverage covenant and minimum fixed charge coverage ratio. Our liquidity position as of June 30 was $210 million. This includes $96.5 million of available revolver capacity and $114 million of cash. This compares to a liquidity position of $241.5 million as of March 31, reduction of $31 million or approximately $10 million per month. We continue to believe that the successful amendment of our credit facility will provide the long-term flexibility we need to see our strategy through to completion and enable us to successfully navigate the uncertainties caused by this pandemic. I agree with you. This was the pivotal event of fiscal ‘20 and in my view greatly increased the probability of our long-term success in this uncertain environment. Please be aware that refinancing our credit facility was very challenging, but your management team and the credibility of our strategy both proved equal to the task. Since the onset of the pandemic, I can report that we have greatly increased our internal focus on all liquidity matters. It has not always been easy, but we are being aggressive on all fronts to preserve cash until visibility improves. This includes, but is not limited to an intense review of all company payables on a weekly basis. No dollar leaves the company without my personal approval. Formalizing a company policy for collection of any past due amount from our franchise partners. Historically, Regis has had very few problems with unpaid rent or royalties from our franchisees. However, we recognize that this risk exists in the new normal, and we intend to take appropriate steps to protect the interest of our shareholders. Ongoing negotiations with our landlords to seek rent abatements, deferrals, or permanent rent reduction. This aspect of cash management will not be a short-term project. So, we'll continue into the foreseeable future, including proactive negotiations at lease renewal. For example, we have recently been successful in securing various accommodations from Walmart in order to better support our SmartStyle and Cost Cutter salons in Walmart location. We are fortunate to have a collaborative long-term relationship with Walmart and greatly appreciate their partnership in the circumstance. Finally, we are proactively managing cash payments for suppliers, wherever is possible to do so. So, in summary, when it comes down to liquidity at Regis, you can be confident that cash is queen. Although the second half of fiscal ‘20 has proven to be unprecedented period and Regis as history we remain excited about the investments we've made in technology. In particular, we're pleased with the August launch of Open Salon Pro proprietary back office on management system designed to help our franchisees run their business in a more effective manner. When combined with the launch of our upgraded customer facing mobile apps and the launch of our private label merchandise lines, my confidence in our strategy and the company's future continues to grow. As I said earlier, I believe it was the long-term potential and viability of our strategy that enabled the successful outcome of our refranchising refinancing efforts. We are committed to the completion of our transformation and believe we remain well positioned to generate long-term shareholder value. As we transitioned the company to its growth phase in the coming calendar year, and as our nation receives a new vaccine and improved treatments for this terrible virus, I also believe our customers will ultimately return to our salons with their families. In closing, our thoughts are with all of you and your families for safety and wellbeing and the months ahead. These are certainly unusual time, but all of us at Regis remain focused on long-term value creation. For our shareholders, our franchise partners, and our employees. I'd like to thank all of you for your continued support and interest in Regis. And I will turn the car back to Ryan for any questions. Ryan?

Thank you, Hugh and Kersten. [Operator Instructions] We will take our first question today, and that is from Laura Champine with Loop Capital. Please go ahead with your question.

Thanks for taking my question. It's really on the mall-based salons. I think you disclosed in the release that they're still 166 of these that are company-owned. What's the likely fate and time horizon there? And if you can give us a sense of how long those leases extend from here, that would be great. Thanks.

I'll take the first part and then I'll let Eric address it. But we -- Laura too, thank you for the question. We approach the mall-based salons in the normal course as we do the rest of the company-owned salon portfolio. And our tendency is to look at salons at a granular level as we refranchise and move them to franchise partners. So, it's typically not likely that we'd make a broad-based assumption based on those salons. Sometimes we close them. Sometimes we sell them. Sometimes we bundle them with other deals that we're working on and move them into the hands of partners. But with that said, I'll let Eric add to that and clarify it.

Yes, thanks, Hugh, Laura. Our, our plan with the mall-based salons mirrors, what we're doing with the rest of our portfolio. So we plan to have all of that addressed by the time we get to the end of our fiscal year in June, and that'll be a combination of transferring stores to other owners and where it makes sense working something out with the landlord too, to exit again, where it makes sense. So, our plan is the same as the rest of our portfolio, and we have a relatively short lease term on these, as you know, we have not been extending them for some time. So, our lease term is greatly limited and that gives us optionality in terms of exiting the location or transferring it to a franchisee.

Understood. And then if I can just ask about the financial impact of the new POS system and how long you think that'll take to fully roll out across the chain.

I'll take the first part, we've always looked at the investment in our technology as a long-term undertaking, consistent with the multi-year strategy and transformation and all of our technology investments, Laura, we are trying to better enable the franchisees to run their businesses because we're clearly dependent upon their results. And on our mobile apps, we're trying to establish frictionless relationships directly with the consumer. So, I think we've described this in the past as a measured rollout where we've moved carefully, and of course our franchisees may have an existing agreement with other providers, and we certainly want them to abide by whatever service contracts they have in place and adhere to the terms of those agreements. So, it's I would look at this as your undertaking, and I think we’ve described it during the past. We still feel that way about.

Understood. Thank you.

You're welcome.

Thank you. We'll take our next question. And that is from Steph Wissink with Jefferies. Please go ahead with your question.

Thanks. Good morning, everyone. Hugh and Kristen, a question on the comp performance, it actually came in somewhat better than I would have expected. And I think Kirsten, you mentioned that's for comparable day-to-day opening. So, salons that were open on a comparable day last year, but it was down much less than I would have anticipated. Can you talk a little bit about the progression of comps during the quarter, maybe what you've seen quarter to date as your salons have reopened, are you finding that you're recovering some of that lost revenue and maybe re-engaging even a new customer?

And I'll take the first part of that and say, Steph, that not yet, we are not seeing the kind of recovery that we had hoped for. And I think that's probably their commonsensical reasons for that. As you know, schools aren't opened around the country and we always have been the beneficiary of kids going to school and families coming in and getting their hair cut. Most offices and headquarters, headquarters buildings are still closed around the nation. And I think people are zooming around in zoom tends to be a little more casual, and people are aren't quite as well-groomed as they were when they went to an office. But -- so what's happening for us as we're seeing a lot of variability in the traffic levels, literally from day to day and week to week, and we don't have the time of visibility that we need yet to know what that outcome will be. I think I would say it's still uncertain. But I don't think it's a permanent condition. As I said earlier so much of this is hung around the impact or hangs around the neck of this pandemic. If we get better treatments and if testing improves and God willing, we get this vaccine, I really do believe people are going to return to -- think people are anxious to return to a more normal life. I don't think they will. I think they're anxious to do it. And I think companies are ready to reopen their headquarters. And when that happens, I think people are going to go back to their normal grooming patterns and get the haircut and colored and all that kind of stuff. But right now, it's -- the visibility is not great and traffic has not returned to our historical levels Eric, you can build on that.

Yes, thanks, Hugh. Hi, Steph we -- our focus is extensively on growing our revenues. I mean that's what we're looking at. And, you know, I would say most of our owners are now looking at revenue growth on a week-to-week basis or from a pay period to pay period basis as opposed to looking back to the prior year. You know, so many things have changed that it's important to push the numbers forward and grow the business both in terms of traffic as well as comps. And so, we're looking at things like how do we grow ticket for customers that are coming into the salons. We're focusing more on color. That's an important aspect of what we're doing today, we're heavily focused on those that are in the shopping centers. They've made the decision to come out of their home and get out. So, we're really trying to be scrappy in how we deal with those folks, whether it's posted on the windshield or increased signage, which cities and landlords are much more open to today than they were in the past. So, we're heavily focused on growing traffic, but also growing ticket with our existing customers.

Right. That’s great. Two follow up questions. The first here was just summarizing, you've got a lot of digital initiatives going on. I think I heard you talking about digital training. Certainly, marketing has pivoted more to digital and social, and then they roll out of Open Salon Pro is kind of a digital engine core engine for your franchise partners. Can you just talk about overall what you're thinking about the horizon may look like for transforming the technology of the company at the franchise site level, as well as at the corporate level.

Sure. And you're right to call that out, Steph. It is a digital revolution at Regis and in my own experience and in readers may prove to be perhaps a different or faster than my own experiences. But I -- technology is cultural and that's not just operational or, and not just the tech itself. It just takes time for human beings to embrace and convert to new technologies, let they, they do. And I can remember stuff that I greatly resisted, greatly resisted giving up my Blackberry because I've loved that Blackberry. And for several years I would not give that Blackberry up. I was used to using it. I understood it. I'd run my business with a Blackberry for many years. And then somebody put an Android in my hand and I said, what was I thinking? Why didn't I use this Android? So, when you have human beings involved at corporate in the field, and we have franchise partners who have been very successful running their businesses and in a historical way for 20 or 30 years, it takes a little time. But I still think that a year from now two years from now, the company is going to look very different. As it relates to the utilization of forward-leaning technology to interact with customers and to run their local businesses. We're building those great capabilities and we're still at the very front end of that launch process. And it's going to be fun to watch this because I think it's going to help revolutionize this company and make the company a better business than it is today. Be easier to do business with Steph both, or it's going to be easier for customers to do business with us. And I think over time, it's, the franchisees are going to embrace it and they're going to find it. It enables their local operations as well.

Okay, great. Last one is a question for you just on rent deferrals to your franchisees. I think during the early onset of the pandemic, you had afforded your franchisees a couple of months of deferrals. Any update on the standing of your franchise network and any risks around, franchisees now pass the PPP government assistance, any risks to that franchise base, where you're needing to step in and potentially remediate. Thank you.

Yes. As there, as it relates to deferrals, I just to clarify, we did not suffer any branch with the franchisees. We did do some deferral of royalty payments. So, as it relates to franchisees, we're obviously keeping a very close eye on this topic and we'll continue to do so, because I think, the next few months, while there would be telling as it relates to what this really looks like. And I would add since there are always risk. And I would add [indiscernible] there’s always risk with that, but the reality is we're pushing very hard to help our franchisees obtain concessions from landlords. And you looked at Walmart rent, that's mostly variable. And, and we're working closely with Walmart to make sure that, that we have a good path forward. And likewise, we are working with virtually all of our franchisees to assist them where they needed to obtain a favorable rent deal from the landlords.

And Eric, we retained third-party advisors to help with those process, right? Yeah, we did. We engaged JLL Jones, Lang LaSalle to help us. So, we have a terrific team there that we worked with in the past. And they've been helpful along with an outstanding group internally. That's also working with many of our franchisees. And I think Eric it’s fair to say, thank you, agree with us that this process is going to go on for some time because the -- Steph, you know as well as anybody on this call, the havoc that's occurring right now in commercial real estate. So, I think that with the passage of time the opportunity to gain concessions improves and particularly when we get the lease renewal, Eric and that a good way to think about it. So, this isn't some short-term project, it will go on for a while.

Yes. That’s well put it, we will continue on for, I would say several years.

All right. Thanks for the information, guys.

You are welcome. Thank you. This concludes the Q&A portion of the call. I will now turn the conference back over to Hugh.

Thank you everyone for your kind participation today. We extend B, to send our best wishes to you and your families and God blessing, [indiscernible] during this pandemic, we hope you all stay safe and we'll keep everybody on the call and not the watching prayers. Thank you everyone. Bye bye.

Ladies and gentlemen, this concludes our conference call for today. If you wish to access the replay for this presentation, you may do so by visiting Regis Corp com in the investor relations section of the website or by dialing +1 888-203-1112 with an access code of 9393529. Thank you all for participating in today's call and have a nice day. All parties may now disconnect.