Funerals group warns price war will substantially reduce profits

Mike McCollum, chief executive of Dignity

The UK’s only listed provider of funeral services has warned investors that a price war in the funerals market is likely to reduce its profits substantially during the current year.

Dignity said new players in the marketplace were keen to take a slice of its business by aggressively undercutting it on price.
It has responded to the tactics by immediately slashing its own prices by a quarter.

However, in a trading update the Sutton Coldfield-based group said the action would have a dramatic effect on its profits for the current year.

It said: “The board is keen to address the continuing acceleration of price competition facing its funeral business.

“The board is therefore taking decisive action on its funeral pricing strategy with a view to protecting market share and repositioning the group for future growth.

“Consequently, the board believes that the results for the period ending December 28, 2018 will be substantially below the market’s current expectations.”

Effective immediately, the group said its simple funeral would be reduced by an average of 25% and there would be also be a price freeze on traditional funerals in the majority of the group’s locations.

It said it was implementing a “rigorous” review to ensure its funeral operations were organised to run more efficiently and effectively.

The group is also leading calls for the industry to be more regulated to prevent cowboy operators from damaging the industry.

It said: “Dignity firmly believes that the funeral industry will benefit from proper regulation to ensure that customers are not misled into accepting below-par service and standards. The group continues to engage Government and other stakeholders in calling for higher standards.”

It added: “The group remains committed to being recognised as the best-quality service provider in the market place. It prides itself on its excellent customer service results and this will continue to be a strategic priority.

“Its strong investment over the years means that it is well positioned to provide the best quality service at whatever price point and market segment it chooses.”

During 2017, the group said its pre-arranged and crematoria businesses had performed well with no change expected.

It therefore said its results for the period ended December 29, 2017 would be in line with market expectations. Its preliminary results will be published on March 14, 2018 at which time it is expected to update on the current situation.

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