The outlook for the salon/spa industry remained positive in the third quarter, as the Professional Beauty Association’s (PBA) Salon/Spa Performance Index (SSPI) rose for the second consecutive quarter. The SSPI – a quarterly composite index that tracks the health of and outlook for the U.S. salon/spa industry – stood at 101.9 in the third quarter, up 0.1% from its second-quarter level. The SSPI 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 for key industry indicators.

“For the first time this year, salon/spa owners reported a net increase in service sales. However, they also reported that retail sales continue to be soft,” said Sam Leyvas, PBA’s director of government affairs. “Long term we are seeing growing optimism on the part of salon/spa owners both in terms of service and retail sales in the months ahead.

The SSPI is based on the responses to PBA’s Salon/Spa Industry Tracking Survey, which is fielded quarterly among 800 salon/spa owners nationwide on a variety of indicators including service and retail sales, customer traffic, employee/hours and capital expenditures. 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 99.1 in the third quarter – down 0.6% from its second quarter level of 99.7. The Current Situation Index has remained below 100 throughout 2009, which represents contraction in the current situation indicators.

For the first time in 2009, salon/spa owners reported a net increase in service sales, meaning more owners reported higher sales than lower sales. Thirty-eight percent of salon/spa owners reported an increase in same-store service sales between the third quarters of 2008 and 2009, while 36% reported a sales decline.

Although salon/spa owners reported an improvement in service sales in the third quarter, they continued to report soft retail sales. Forty-seven percent of salon/spa owners reported lower retail sales in the third quarter while 36% of salon/spa owners reported higher retail sales between the third quarters of 2008 and 2009.

Salon/spa owners are also much more optimistic about stronger retail sales in the months ahead. Sixty-one percent of salon/spa owners said they expect to have higher retail sales in six months (compared to the same period in the previous year. In comparison, just 9% expect their retail sales to decline in six months (compared to the same period in the previous year).

“PBA takes pride in providing timely and relevant economic data to the marketplace,” said Sam Leyvas “doing so is critical to our mission as the industry’s leading trade association.”

The full SSPI and second quarter Salon/Spa Tracking Survey Report can be found at www.probeauty.org.