GROWTH IN THE HAIR COLOR BUSINESS

If you're in the color business, we thought you might be interested in an article from the March issue of Modern Salon - HAIR COLOR BUSINESS: GREAT GROWTH by Cyrus Bulsara. Below are some highlights.

During the 2002-2007 period, when the all hair care products taken together grew only 3.2 percent, hair color product sales grew at 6.3 percent, nearly double the overall market growth rate.

At $644 million in 2007, it is the largest salon hair care product category.

In the salon, hair color is projected to grow at approximately 5.5 percent over the next five years, with most of the business, understandably, on the service side.

In 2007, hair color services at salon level grew by 5.3 percent from $12.54 to $13.20 billion.

In 2007, dollar shipments of permanent hair color in both liquid and creme/gel form together total $343 million and constitute 53 percent of hair color sales.

Cremes and gels constitute 30.1 percent of the category and permanent liquids contribute 23.1 percent.

Semi- and semipermanent products are now rather flat, although at 20.2 percent they form the second largest segment of salon color.

Bleaches and lighteners rank third and constitute a 10.4 percent share of hair color with sales of $67 million.

Color refreshers also show good growth for a segment share of 8.4 percent. These mainly consist of salon retail products for use between hair color services.

FASTEST GROWTH

Service Type

Cutting & Styling: In 2006 25.85; In 2007 26.55; 2.7 % Increase

Hair Coloring: In 2006 12.54; In 2007 13.20; 5.3 % Increase

Perming & Relaxing: In 2006 8.64; In 2007 8.81; 2.0 % Increase

Total of hair care services: In 2006 47.0; In 2007 48.6; 3.3 % Increase

COLOR BY NUMBERS
Segments in 2007

Permanents - creme: 194 Million; 30.1 % of Total

Permanents - liquids: 149 Million; 23.1 % of Total

Semi-Demipermanents: 130 Million; 20.2 % of Total

Bleaches/lighteners: 67 Million; 10.4 % of Total

Color refreshers: 54 Million; 8.4 % of Total

Temporaries: 32 Million; 5.0 % of Total

Toners: 18 Million; 2.8 % of Total

Total: 644 Million; 100.0 $ of Total

THE LOTTERY IS JUST ANOTHER TAX

Over the years, many people have described lotteries as taxes on stupidity and taxes on people with no math skills. I still got a kick out of this scene from the most recent episode of Reaper, where Ray Wise as the Devil claims that he invented the lottery and has a familiar nickname for it.

WHERE IS MY REBATE CHECK?

We have received questions lately from people that have not received their rebate check. I think we have already posted just about every bit of information available regarding the Stimulus Rebate, but there are a few items worth repeating.

To view these items, go to our website at www.kopsaotte.com. Click on Forms and Publications, and then select Answers to Your Stimulus Payment Questions.

GAS $10.00 PER GALLON

I remember the "good old days" when gas was less than $1.00 per gallon. That's not all. An attendant would come out to your car; fill your tank; wash your windows; check your oil; air your tires... and you would get a set of silverware as a promotion. Those days are gone.

Here is an interesting article that estimates what would happen if gas went to $10.00 per gallon. There is a calculator in the article that estimates your gas cost should this happen. What If Gas Cost $10 A Gallon?

SALON SOFTWARE

If you are looking at installing or changing salon software, there is a very interesting article you should look at in the May 2008 issue of Modern Salon. In this two page article, they feature SalonBiz, Salon Transcripts, and Millennium Software by Harms. We have clients that use all three of these software programs, and they are all excellent.

Also, we have on file a comparison from an earlier magazine on the various software programs. If you are interested, let me know, and I would be glad to email you the information.

Larry Kopsa CPA

SALON RETENTION RATES

Every once in a while we are asked about Retention Rates for new and repeat business. We are looking into compiling a list with a new population of numbers. If you could send us your retention rates (and if we get enough of a response) we'll post the averages so you can compare with other salons of your size.

Remember, confidentiality is very important to us. We would never disclose client names or any client information without permission.

TAX BREAKS FOR HYBRID VEHICLES

As the price of gas continues to go up we have been receiving questions about hybrid vehicles.You may find the following information helpful.

A purchaser of a hybrid passenger automobile is allowed a tax credit of from $400 to $3,400 depending on the model. A credit is usually more advantageous than a deduction because a tax credit is subtracted dollar-for-dollar off the bottom line of your federal tax bill, while a deduction simply reduces taxable income. The credit applies to both business and personal vehicles.

The amount of the hybrid credit depends on the fuel efficiency of the vehicle. The more gas it saves, the higher the credit. However, calculating the credit is a bit complicated, with the exact amount of your credit depending on three separate factors: the weight of the vehicle, its fuel economy, and its lifetime fuel savings. IRS has certified various hybrid models made by Ford, General Motors, Toyota, Honda, Nissan, and Mazda as qualifying for the credit. In each case, the certification specifies the amount of the credit for the particular model.

However, the law limits the credits to 60,000 hybrid vehicles from each automaker. This total includes all brands sold by the particular automaker. Thus, for example, the Ford total includes Ford and Mercury hybrids. Once a manufacturer has sold 60,000 hybrid vehicles, the tax credit for that manufacturer's hybrids is slowly reduced over the next five consecutive quarters, eventually dropping to zero.

Honda hybrid sales reached the 60,000-vehicle limit during the calendar quarter ended Sept. 30, 2007. As a result, the credit for Honda hybrid vehicles is being phased out. For Honda hybrid vehicles purchased after Dec. 31, 2007 and before July 1, 2008, the credit is 50% of the otherwise allowable credit amount. Honda hybrids purchased after June 30, 2008 and before Jan. 1, 2009 qualify for 25% of the otherwise allowable credit. Toyota hybrid sales reached the 60,000-vehicle limit during the calendar quarter ended June 30, 2006. Accordingly, the credit for Toyota hybrids has completely phased-out. After Sept. 30, 2007, purchasers of Toyota (including Lexus) hybrid vehicles cannot claim the related tax credit. Hybrid vehicles built by the other hybrid manufacturers haven't yet reached the 60,000-vehicle limit, and thus continue to qualify for the maximum credit allowable.

Here are some additional points about the credit:

In general, the credit is allowed to the vehicle owner, including the lessor of a vehicle subject to a lease. Thus, if you lease a hybrid (rather than purchase it), you won't qualify for the credit.

The credit is allowed in the year the vehicle is placed in service.

The vehicle must be used predominantly in the U.S. to qualify for the credit.

The original use of the hybrid auto must begin with you, i.e., the vehicle must be new.

The credit isn't allowed if you buy the hybrid auto for resale.

No credit is allowed for the portion of the cost of any property taken into account under Code Sec. 179, the expensing election provision.

Please email us at lkopsa@kopsaotte.com if you would like to receive additional general information about hybrid vehicles, or if you would like to be advised in connection with a specific purchase.