Dignity Says Britons Spending Less on Funerals During Pandemic
Dignity Says Britons Spending Less on Funerals During Pandemic
(Bloomberg) --
Dignity Plc said spending on funerals has slumped due to U.K. social distancing measures introduced to counter the Covid-19 pandemic.
About 60% of clients are now choosing a “simple” funeral package, up from 20% in the first quarter, the undertaker said in a statement Monday.
The trend has reduced Dignity’s average income from each funeral before ancillary revenue to about 2,200 pounds ($2,717), compared to 2,648 pounds in the first quarter, it said.
The U.K. government announced guidelines on restricting funeral attendances last month. It’s the latest headwind for Dignity, whose share price has slumped about 87% since the start of 2018 amid pressure on pricing from smaller rivals and U.K. regulators probing competition in the sector.
The company announced the departure of Chief Executive Officer Mike McCollum on April 3 and said Monday that the search for a successor is progressing.
The stock lost its only buy rating among analysts tracked by Bloomberg as Investec downgraded Dignity to hold, cutting its price target to 260 pence from 650 pence.
“With uncertainty on both the full impact of the Covid pandemic as well as the outcome of the ongoing CMA funeral market investigation, we model more cautiously on mid-term growth,” Investec analyst Andrew Whitney wrote in a note.
Peel Hunt analyst Charles Hall, who has a sell rating on the shares, cut his price target to 150 pence from 200 pence, saying 2021/22 earnings estimates will be reduced.
Dignity shares gained 3.9% to 243 pence as of 11:20 a.m. in London amid outperformance by domestic U.K. shares after Prime Minister Boris Johnson announced the “first careful steps” to easing lockdown rules on Sunday, with further details due to be published on Monday afternoon.
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