A Bad Day for Carpets and Coffins Hurts U.K. Consumer Stocks

(Bloomberg) -- Hard-pressed British consumers are avoiding new carpets and scrimping on funerals.

Carpetright Plc, the nation’s largest seller of floor coverings, said Friday that a drop in consumer confidence caused a “sharp deterioration” in its U.K. business. Dignity Plc, the biggest funeral services provider, warned of a major profit setback due to big price cuts. Shares of each company plunged about 50 percent, dragging consumer peers lower.

Both warnings show how Britons are becoming more price-sensitive as the consumer economy weakens. In the case of discretionary items like carpets, people have become more reluctant to spend at all, whereas for funerals they are shopping around for cheaper options.

A Bad Day for Carpets and Coffins Hurts U.K. Consumer Stocks

“U.K. consumers have got much more nervous about purchasing big-ticket items,” said Charles Allen, an analyst at Bloomberg Intelligence. That had a direct impact on sales at Carpetright, which cited reduced consumer confidence. Dignity’s difficulties had more to do with a greater degree of price transparency brought about by online competition, Allen said.

The warnings follow disappointing holiday sales reports by companies ranging from grocer Tesco Plc to department-store operator Debenhams Plc. Official figures on Friday showed U.K. retail sales fell the most in 18 months in December, further evidence that inflation and shaky consumer confidence are hitting British stores.

Dignity said it will lower the cost of its simple funeral by about 25 percent while also freezing prices for other traditional funerals in the majority of locations. Customers are “shopping around more” in an increasingly price-conscious and over-supplied industry, it said in Friday’s announcement.

“People have been able to go and search and find the product online for less in a way they couldn’t two or three years ago,” Allen said of the funerals industry. “It is an area in which there has been almost no price transparency before.”

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