O death! Where is thy sting? Nowhere, if Stewart Enterprises has anything to do with it. The #2 provider of funeral services in North America -- behind Service Corporation International (SCI) -- Stewart Enterprises operates some 220 funeral homes and 140 cemeteries in about 25 US states and Puerto Rico. It offers funeral prearrangement, cremation, family consultation, sales of caskets and flowers, use of funeral home facilities for visitation and worship, and transportation. Its cemetery operations include plot sales, burial services, monuments, and memorials. Founded in 1910, Stewart Enterprises operates more than 40% of its locations in some of the most populous states: California, Florida, and Texas.
The company strategically runs its businesses in clusters, meaning its funeral homes and cemeteries are located near each other so that each can efficiently share vehicles, staff, and other services. For example, Stewart Enterprises in late 2012 acquired Garden Oaks Funeral Home located in West Houston to operate alongside its other funeral homes in the Houston area. Stewart Enterprises boasts an average of some 250 funerals and 335 burials annually. That's well above the US average for similar facilities, which perform an average of 120 funerals and 150 burials each year.
After years of making acquisitions and selling underperformers, Stewart Enterprises is focusing on pre-selling cemetery plots and expanding its cremation offerings as it continues to sell fewer funeral homes. The death care company employs about 1,100 commissioned sales counselors that sell preneed properties, services, and products. As of late 2010 the company's preneed backlog (services paid for but not performed) totaled $1.7 billion. In 2012, however, the company modestly reduced its support services staff and restructured its organization, combining funeral and cemetery operations and sales employees under one regional leader.
The hard choice is intended to improve sales and margins, and other operating issues. Stewart Enterprises, like rivals in the funeral market, confronts rising demand for cremations, which are less profitable than traditional burials. The company has buoyed revenues by enhancing its cremation services with options for customization, such as personalized memorial services that include a casket, columbarium, or niche in a mausoleum in which to place the cremains. Stewart Enterprises has also worked to improve its inventory of cremation products.
Indeed, the company's 3% rise in average revenue per cremation service in 2010 outperformed the increase in average revenue per traditional funeral service. Results reflect a 9% increase in merchandise delivered and a 5% boost in cemetery property sales. The growth was offset by declining preneed funeral sales and same-store funeral services.
Its dominant position in the death care industry has made Stewart Enterprises an acquisition target. Rival SCI in 2008 began to chase after the #2 death care company with an $881 million takeover offer as it looked to fortify its operations. Stewart Enterprises rejected it as inadequate, and considered a second higher offer of $1.5 billion (or $11 per share) from SCI, before it was rescinded.
Chairman Frank B. Stewart, Jr., controls about 35% of the company's voting power. Increased friction between president and CEO Thomas Crawford and the company's chairman eventually spurred Crawford to retire in early 2011. Crawford, who had joined Stewart Enterprises in early 2007, was succeeded by the firm's senior EVP and CFO Thomas Kitchen. – less