A casket of a Muslim man, who recently passed away from what is believed to be the coronavirus, is brought to a van for burial at a busy Brooklyn funeral home on May 9 2020 in New York City. Picture: AFP/ GETTY IMAGES/ SPENCER PLATT
A casket of a Muslim man, who recently passed away from what is believed to be the coronavirus, is brought to a van for burial at a busy Brooklyn funeral home on May 9 2020 in New York City. Picture: AFP/ GETTY IMAGES/ SPENCER PLATT

London — Funeral services company Dignity says spending on funerals has slumped due to UK social-distancing measures introduced to counter the Covid-19 pandemic.

About 60% of clients are choosing a “simple” funeral package, up from 20% in the first quarter, the undertaker said on Monday.

The trend has reduced Dignity’s average income from each funeral before ancillary revenue to about £2,200, compared to £2,648 in the first quarter, it said.

The UK government announced guidelines on restricting funeral attendances in April. It is 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 UK regulators probing competition in the sector.

The company announced the departure of CEO Mike McCollum on April 3 and said on Monday that the search for a successor is continuing.

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 650p. 

“With uncertainty on both the full impact of the Covid pandemic as well as the outcome of the ongoing Competitions and Market Authority funeral market investigation, we model more cautiously on midterm 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 150p  from 200p, saying 2021/22 earnings estimates will be reduced.

Dignity shares gained 3.9% to 243p by midmorning in London amid outperformance by domestic UK shares after Prime Minister Boris Johnson announced the “first careful steps” to easing lockdown rules.

Bloomberg