StoneMor Partners, the Philadelphia based funeral home and cemetery limited partnership that is publicly traded, issued some interesting news this week. First of all, CEO Larry Miller, one of the firm’s founders has announced his resignation effective on August 31, 2017, or when a replacement is named. Secondly, according to an article in www.philly.com, the company has entered into a partnership with the Donohue Funeral Homes which serve the Philadelphia area.
According to Bill Johnson, StoneMor’s national vice president of insurance products, the affiliation agreement will be an exclusive insurance agreement whereas the companies can leverage each other’s strength to better help each other and make it easier for the consumer to pre-arrange. Consumers will now be able to pre-arrange all arrangements, for funeral and cemetery, either at one of Donohue’s mulitple locations or at one of the 13 Catholic cemeteries that StoneMor operates for the archdiocese.
Michael K. Donohue, President of Donohue Funeral Homes, points out in the article that the agreement is good for the community in general and does not specify a funeral home to be built in any of the cemeteries at this time, but did not rule out the possibility that a funeral home could be built on one of the 13 cemetery sites in the future.
StoneMor Partners owns or manages about 100 funeral homes and over 300 cemeteries nationwide. In the Philadelphia area it is believed that they conduct over 7,000 burials in the Catholic cemeteries.
Funeral Director Daily take: CEO Larry Miller leaving is not a surprise. As a small investor myself, I have known that the stock price has dropped and sales have not been good for StoneMor system wide. The company, which is heavily reliant on the cemetery business, is going through many of the same pains that small individual mortuaries and cemeteries are going through in relation to the consumer preference of cremation.
As for partnering with a funeral home for leverage with the Catholic business, I seem to have seen this dance before. I think in 1997 Stewart Enterprises spent over $37 million to put funeral homes in the six cemeteries of the Archdiocese of Los Angeles. The homes still operate after Stewart’s sale to Service Corporation International, but have went through some problematic times such as a 2014 lawsuit between them.
I’m of the opinion that the consumer public does not like to be told to use a certain business just because it is sold as “more convenient”. This is a marriage that may not end good for either party. Bonds and loyalty can be high – especially in the funeral business – time will tell if Donohue gets more business through StoneMor’s cemetery clients from this or if StoneMor gets more cemetery business through Donohue’s funeral clients or they both prosper or fail. This sounds good for both parties, but my gut feeling is that the consumer public will eventually be the jury.