Dignity’s profits hit by cheaper funerals
Funeral provider Dignity recorded losses across all but one of its services in its latest financial results as competitors, including Co-op Funeralcare, focused on offering cheaper funerals.
In the 13 weeks to 28 September 2018, the underlying operating profit for the firm’s funeral division was £11.1m compared to last year’s £15.3m. The pre-need and central overheads recorded a decrease in underlying profits of £300,000 and £7.4m respectively. Its crematoria arm stayed flat with underlying operating profits of £8.8m.
Overall, its underlying quarterly profits fell 39 percent to £12.2m from £19.9m; the board said this was in line with its expectations.
The results also showed clients were opting for the firm’s cheaper funeral and cremation options, with full service accounting for 44 percent of services compared with 60 percent in 2017. Simple options saw a sharp increase from seven percent to 24 percent.
Mike McCollum, chief executive of Dignity, said: “We are pleased with how the group has performed in the period and following these results our expectations for the full year remain unchanged. Our work on the transformation plan is critical and we are encouraged by the progress that has been made in the initial weeks.
“Alongside the expansion of our digital offerings, we continue to provide a greater choice for consumers and our focus on high standards and excellent client service remains central to our plans for the future. The group’s significant research projects highlight the need for minimum professional standards and support calls for regulation that we have been making for some time.”
James Dunn, co-founder of funeral price comparison site Beyond, added: “Dignity’s results speak resoundingly to the changing shape of the funeral sector. Death may be permanent but the funeral market is in the process of radical change.
“The provider, which is in the middle of a restructuring, has historically reaped the rewards of an incredibly uncompetitive market. Despite targeting price reductions, Dignity is still very much overpriced when compared to your typical independent business. The average funeral director fee of chains – such as Dignity – is still 56 percent higher than that of independents.”
“There could be another surprise for large incumbents down the line – at the end of the month, the CMA is due to issue a report that is likely to tackle the fundamental lack of transparency in the sector. This report couldn’t come sooner. In the UK, people are overspending by more than half a billion every year on funerals by failing to shop around for more cost-effective deals that they might find at independents. Dignity is certainly making the right noises in rising to these challenges – but time will tell if they’ve been quick enough to react to this rapidly changing landscape,” he added.
