PingPong1 - part 14 Feb 2017 22:31
PingPong1 – Thanks for your response but as you say, you’re just putting information out there with no real evidence. And in terms of looking at things from both sides your comments seem very one sided.
Take a look at my posts and you’ll see I have been critical of aspects of Dignity’s recent progress, particularly the recent loss of market share in spite of their spending on acquisitions. I also demonstrate a good understanding of their business, with a very accurate prediction of the 2016 market only a few months in, while Dignity’s own prediction missed by the proverbial mile. Incidentally, I subsequently looked at historic market share and found that Dignity has lost share in previous years only to regain it the following year. Maybe management needs the occasional kick up the bum or perhaps they manage market share in line with their long term bonus incentives – geez how cynical is that!
Your last comment is interesting from someone in the business, my assessment is very different. You say, ‘That with Dignity and the Co-op merrily buying up all the business's they can, and therefore keeping funeral costs and profits quite high, they are also leaving a huge vacuum underneath, and all it would take is a large enough company to market themselves underneath these and things could soon become a quite difficult and obviously reduce profits.’
Dignity buy established business’, maintaining the trading name but operating under the Dignity model. Conversely, the Co-Op establishes new operations under the Co-Op Funeral Care brand name. Between them they own fewer than 30% of funeral homes in the UK. The remaining 70% is very fragmented – mainly single site businesses and very few operations with more than a dozen funeral homes. As a long term investor in Dignity I hope that they continue to maximize revenues and minimize costs. Since 2004 they have done a very good job on both fronts, incidentally much better than the Co-Op on costs. The Competitions and Mergers Commission are tasked with ensuring local completion exists. Clearly with 70% of the market most of this competition comes from the fragmented end of the market, although I suspect the Co-Op and Dignity compete in most localities. The possibility of local monopolies drawing the attention of the CMC prevented Dignity from acquiring all 83 homes from Laurel Funerals in 2015, but it left them free to effectively cherry pick 36 funeral homes to complement their existing estate. To your other point it leaves open the possibility of an acquirer of the remaining business, including the head office, growing that business to ultimately compete with Dignity and the Co-Op. If the original owners of Laurel with 83 funeral homes cashed in, what chance do you give any new acquirer of the rump of the business becoming a serious competitor?
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