No-frills funerals could help Dignity in ‘tougher’ market
SHARES in Dignity dropped 8pc yesterday after the boss of Britain’s only listed funeral provider warned of an “increasingly competitive environment” that is creating “challenges” for the company.
Chief executive Mike McCollum said: “As we’ve been saying for some time, in our funeral business we continue to see increasing competition, both in terms of new people coming into the market, and in terms of price competition.”
Dignity has been attempting to stave off this competition by acquiring some of its rivals, Mr McCollum said, and it has also spent an additional £1m so far this year on digital marketing.
Last year it launched Simplicity Cremations, a no-frills option starting at £1,095, where the deceased is collected, placed in a simple coffin and cremated without a funeral service. Their ashes can be returned to their family in a cardboard container for an extra £75.
That is now attracting 15 to 20 customers a week, Mr McCollum said, adding that Dignity could sell up to 1,000 of the direct cremations next year.
The low cost of each such cremation could significantly boost Dignity’s bottom line, he suggested.
“It’s pretty small but it’s interesting that an online-only business is immediately profitable for us and we hope that we might be able to do a couple of other new digital-type businesses.
“What is becoming clear is that there is a growing price-conscious segment in the funeral business.”
Mr McCollum was speaking after Dignity reported its underlying profits grew 5pc to £79.4m in the 39 weeks to Sept 29, despite the number of deaths climbing only 1pc. Revenues were up 6pc to £243.9m.
“The bottom line is the business is performing as expected, our expectations remain positive and there’s no change to our thinking for the rest of the year,” Mr McCollum said.
The company acquired 20 funeral locations and one crematorium, and opened 20 satellite locations in the period. Dignity shares closed down 204p at £22.53.
Mike McCollum, chief executive of Dignity, says the company is operating in an increasingly competitive sector