BIG PLANS — Shopfitter Styles & Wood is looking forward to a spending spree – and a new look
Styles & Wood was a surprise hit went it went public in November last year. Initially, the surprise was that a fit-out contractor had gone for plc status at all, but that was eclipsed by the enthusiastic response it received from the stock exchange: its shares were two-and-a-half times oversubscribed, and their price went up 15% on the first day.
This reception reflected institutional investors’ confidence in a company that had enjoyed 12 years of uninterrupted growth, had a forward order book worth £681m and a string of devoted high-street clients that included Tesco, Sainsbury’s, Marks & Spencer, Barclays and John Lewis. At the time of going to press, its shares had risen from their starting price of 150p to reach 184p.
In 2007, Styles & Wood hopes to hit the acquisition trail with the £16m it made from the initial public offering. It wants to bolster its fast-growing support services business with design or facilities management firms. The plan is to move towards a fee-based consultancy model – another unusual step for a shopfitter.
“Ultimately we want to offer a turnkey solution to the retailer,” says Ivan McKeever, service development director. “They want more from the supply base – not just fit-out – but the market is really poorly serviced. Our consultancy offer is the thinking part added to the doing part.”
In just five years, Styles & Wood’s three support services businesses have grown to achieve a combined turnover of £20m and they now contribute a quarter of the group’s profits. StorePlanning replaces the work done by architects, StoreCare replaces the maintenance duties supplied by facilities management firms and StoreData provides the technology to manage vast portfolios of stores.
There’s a marketplace of 50-100 retailers and we’re trading with 30 of them
McKeever says it will cross-sell support services to existing clients. More than 90% of Styles & Wood’s work is repeat business – retail isn’t a huge marketplace, so it must maintain customer loyalty. “Our business has been deliberately focused on the top-end retail players – those with the largest portfolio or the heaviest investors,” says McKeever. “There’s a marketplace of, say, 50-100 retailers that you’d want to do business with and we’re trading with 30 of them.”
The fastest growing stream is StoreCare, which helps retailers manage instore marketing initiatives – a significant gap in the market. “It hits that middle market between FM and large fit-out,” says McKeever. “It might not sound sexy but it’s an important part of what the retailer does. Everyone will get a story from the big jobs but I don’t think the industry has recognised this kind of activity yet and it’s really starting to take shape and grow fast – the numbers speak for themselves.”
Barclays and Tesco were the first customers to sign up for all four services, but Steve Wilton, the support services director, says other firms are now catching on. “We were at market two years before anyone else. Now that retailers have got their heads around frameworks for things like minor works and architecture services, they come to us because we brought the idea to them. It’s brought a bigger scale for contract wins.”
Revenues on the high street might be down but this is exactly what puts Styles & Wood in such a strong position, says McKeever. “When consumer spending was taking a dip in 2003/04, retailers wanted to get the cost out of their operations so they turned to property teams and either constrained the number of staff or restructured. But the work those people did had to go somewhere and we were well placed because we could offer the design, the project management, the maintenance and minor works management.”
Turnover 2005 £171m
Pre-tax profit £4.1m
Management team Chairman Gerard Quiligotti, chief executive Neil Davies
Offices Headquarters in Altrincham, Cheshire; offices in London, Nottingham and Milton Keynes
Sector Retail fit-out, support services