Dignity shares plunge on profit warning
The group was down nearly 50% in morning trading on the London Stock Exchange.
Shares in Dignity have plummeted after the funeral firm warned over profits as it attempts to fend off fierce competition by slashing prices.
The group was down nearly 50% in morning trading on the London Stock Exchange after flagging that annual results would be “substantially below” market expectations.
Dignity said it would overhaul its pricing strategy to protect market share and launch a “rigorous review” of the business to help drive down costs.
In a statement, the company said: “While the pre-arranged and crematoria businesses are performing strongly with no change to the board’s expectations for these businesses, 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.”
The cost of Dignity’s simple funeral will be cut by 25%, while the prices will be frozen for its traditional funerals in the “majority” of locations.
The group has been grappling with an assault on its market share for some time.
The average fall in the number of funerals per location, per 1,000 deaths, has deepened from 3.6% between 2004 and 2014, to 6.8% between 2015 and 2017.
Dignity said the decline will continue, but price cuts will help to stem the falls in 2018.
It added that initial reported deaths were 590,000 in 2017, with the firm carrying out 68,800 funerals.
Russ Mould, AJ Bell investment director, said: “Dignity’s pre-arranged and crematoria businesses are performing strongly and in line with forecasts but the group is having to take action to counter accelerating price competition facing its funeral business.”