Styles & Wood, the UK’s largest shopfitting and property services provider has warned that the retail market will be challenging in 2008, despite starting the year with a positive trading update.

In a statement last week, the company said that it had a forward order book of£137 million, against last year’s£121 million, an increase of 13 per cent.

Styles & Wood chief executive Neil Davies said: “The outlook is clearly challenging for our customers and we’ve got to hope that they stick to their commitments for their stores.”

Styles & Wood’s clients include Tesco, John Lewis and Marks & Spencer. Last week, M&S finance director Ian Dyson said that capital expenditure budgets were being revised, which some industry watchers interpreted as the retailer’s intention to rein in store design spending.

Planet Retail European director of research Bryan Roberts sounded a note of caution: “Some retailers have had to promote their way out of trouble and may be dismayed at how their new shopfits have not produced the results they expected.”

Styles & Wood has been at the top of the Retail Week shopfitting league for the past five years. For its half-year to August 31, it posted an 82 per cent rise in profits to£5.2 million, on a sales rise of 39 per cent to£149.8 million.

Styles & Wood will reveal its full-year figures at the end of next month.

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