Visible: Pebble Group’s success in working with top companies such as Burberry means it pays a dividend
Chris Lee was a young accountant in his 20s when he started doing the books for promotional products group 4Imprint.
In 2000, he moved to the business full-time and by 2008, he had been given his own division to run, supplying multinational companies such as IBM and British Airways with promotional goods.
The subsidiary grew and in 2012 Lee acquired it from his employers for £24 million, with the help of financial backers.
Today Lee’s company, Pebble Group, is valued on the stock market at £160 million and should become significantly bigger over the next three years and beyond.
Based in Didsbury, Manchester, Pebble works with some of the best-known companies in the world, including Google, Unilever, Estee Lauder, Michelin, HSBC, Cadillac and Burberry.
In each case, Pebble is charged with supplying promotional wares that are a little bit different from the norm – products that are well priced and delivered on time but also look good and spark interest.
Alongside the artfully designed mugs, pens, caps and T-shirts, there are quirky Jameson trainers, Google socks and Michelin suitcases.
VIP guests at designer firms’ fashion shows may receive branded chess sets or jewellery boxes.
Customers buying top-of-the-range beauty products may be rewarded with beach bags or make-up holders.
And, as Christmas approaches, branded advent calendars, candles and other festive gifts are sent out in their thousands for distribution to hard-working staff, loyal customers and diligent suppliers.
Pebble’s range is extensive, with more than 1.5 million products supplied each year to about 100 businesses.
Reputation is paramount for these companies so Pebble does not just deliver goods that are appealing to the eye.
Lee must also ensure that everything is responsibly sourced and made in factories with ethical work practices. Quality and provenance are essential and Pebble employs teams of people to monitor both.
When Lee became involved in the business, there were a handful of clients and one office. Today, Pebble has offices across the world so that it can supply customers globally.
This is a key benefit for international companies, allowing them to source all their promotional goods from one place and enjoy keener pricing as a result.
The group is well known in its field but there is plenty more potential for expansion. Promotional wares are inexpensive but effective, helping firms to retain workers, attract consumers and cement business relationships.
Lee has an 800-strong list of companies that might respond to Pebble’s offer, discussions are ongoing with several and revenues are expected to accelerate next year and beyond.
The group has another arm too, Facilisgroup, which provides software for small promotional businesses so they can run their operations more efficiently.
Lee came across the firm, based in St Louis, Missouri, when he was expanding in the US. He liked the business so much, he bought the company. The decision proved astute. There are 20,000 independent promotional firms in America alone, many of which are entrepreneurially minded and keen to use technology to drive growth.
Facilisgroup is a leader in the field, growing at a rate of knots and expected to continue in that vein.
Pebble joined the London Stock Exchange’s junior AIM market in December 2019 at £1.05 a share.
Markets have been disrupted by one event after another since then – the pandemic, war in Ukraine, soaring inflation and now turmoil in the Middle East.
Pebble’s share price has not been immune, trading at 92p today but Lee has grown his business and views the future with confidence.
Brokers expect a 3 per cent increase in turnover to £138 million for 2023, climbing to £147 million next year and nearly £160 million in 2025.
Profits are forecast to increase at a faster pace, up 6 per cent this year to £13 million and exceeding £16 million in two years’ time.
Unusually for a small, recently-listed AIM firm, Pebble already pays a dividend, with 0.9p pencilled in for this year, doubling to 1.8p by 2025.
Midas verdict: Chris Lee, a self-confessed ‘tight Yorkshireman’, has built Pebble into a substantial business by keeping a watchful eye on costs, even as the firm has grown and developed. Expect more of the same. Pebble is highly regarded, financially robust and trusted by some of the world’s biggest companies. At 92p, the shares are a buy.
Traded on: AIM Ticker: PEBB Contact: thepebblegroup.com or 07500 124121
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