The Professional Beauty Association's Salon & Spa Performance Index Records

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Categories: Business & Economy

The Professional Beauty Association's (PBA) Salon & Spa Performance Index (SSPI) recorded a modest decline of 0.3 percent for the third quarter of 2010 to stand at 103.3. The SSPI is a quarterly composite index that tracks the health of and outlook for the U.S. salon/spa industry. Following a record high in the second quarter of 2010 at 103.6, the SSPI remains in positive territory and is up 1.4 percent year-over-year. Softer retail sales and customer traffic levels in the third quarter are attributed to the decline, a first for the Index.

'Even with a slight decline in the Salon & Spa Performance Index, year-over-year results continue to reflect positive growth in the beauty industry,' said Steve Sleeper, Executive Director for the Professional Beauty Association. 'The beauty industry is an integral part of the broader economy and continues to demonstrate its resiliency as economic conditions remain uncertain.'
 
The SSPI is based on the responses to PBA's 'Salon & Spa Industry Tracking Survey' which is fielded quarterly among salon/spa owners nationwide on a variety of indicators. It is constructed so that the health of the salon/spa industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction. The Index consists of two components - the Current Situation Index and the Expectations Index.
 
The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours, and capital expenditures), stood at 101.3 in the third quarter - down .9 percent from its second quarter level. A broad-based decline was seen in each of the five indicators, with service and retail sales registering the sharpest declines. Changes in consumer routines due to the summer holiday season that encompasses the third quarter may have had a general impact, however haircuts, coloring, and depletion of styling products should eventually bring consumers back to their normal service and spending levels. Overall the Current Situation Index remains above 100 and in the range of expansion.  
 
The Expectations Index, which measures salon/spa owners' six month outlook, considers the following five industry indicators: service sales, retail sales, employees and hours, capital expenditures, and business conditions. With a positive increase of 0.2 percent from the second quarter, salon/spa owners showed slightly more optimism about overall industry growth and future economic conditions. Additionally, a majority of salon/spa owners indicated they expect to expand staffing levels in the months ahead.
 
Salon/spa owners also became more confident in the direction of the overall economy, after their outlook deteriorated significantly in the second quarter. Sixty-one percent of salon/spa owns said they expect economic conditions to improve in six months, up from 53 percent who reported similarly last quarter.
 
The full SSPI report and the 'Salon & Spa Tracking Survey' can be found at www.probeauty.org/research.