Dignity turnaround still in 'early days', warns boss

Dignity has been forced to slash its prices amid tough competition - www.alamy.com

The boss of funeral provider Dignity warned that the firm’s efforts to halt a slide in customers were still in their early stages on Monday after a surprise increase in the number of deaths boosted revenues in its first quarter.

Mike McCollum, chief executive, said Dignity is still experimenting with how to price its services after previously warning it faced tough competition as customers increasingly shop around for a good deal.

He said: “We are seeing some signs of our funeral market share responding positively to the price reductions we’ve put through but it really is early days.”

The firm slashed the price of its no-frills “simple” funerals earlier this year and had expected the proportion of its customers choosing the cheaper option to almost treble to 20pc as a result, which would have dented its profits.

But by the end of March just 15pc of customers were doing so, up from 7pc last year, while the drop in the number of higher-priced funerals was also lower than feared.

Mr McCollum said: “More people have continued to pay significantly more money and choose the full service traditional funeral than we had thought.”  

The turnaround measures follow a series of warnings about tough competition in the market that slashed Dignity's market value by more than half and cost Mr McCollum and his fellow executives combined bonuses of more than £1m. 

Total revenues grew 2pc to £95m in the 13 weeks to March 30 on the back of an 8pc increase in deaths, helping Dignity hold its underlying operating profits steady at £37.5m.

The strong showing sent its shares up 3.7pc to £12.61 in afternoon trading. 

Dignity said it did not expect the higher death rate to continue throughout the rest of the year but that it was now confident 2018 would see at least as many deaths as 2017’s 590,000.

Mr McCollum said he hoped Dignity’s funerals business would be offset by growth in its more stable crematoria division, which provides cremations for other funeral providers and local authorities. It recently finished building a new crematorium in Derbyshire, taking its total to 46, and plans to open two more next year.

Dignity also revealed it was on the lookout for a new chairman after the incumbent, Peter Hindley, informed the board he plans to retire next year.