H&R Block loss wider than expected, shares down
H&R Block Inc posted a wider-than-expected quarterly loss on Friday, hurt by a larger loss in tax services, and said it expects tax returns filed to fall about 1 to 2 percent in the coming tax season.
Shares of the largest U.S. tax preparer fell as much as 3 percent.
The Kansas City, Missouri-based company said it would close about 300 traditional offices prior to the tax-season and added that the company has no plans to open a “significant” number of new stores this year.
H&R Block is working on the specifics of its pricing strategy, and would offer some targeted price value schemes for the client segment most affected by the global economic meltdown, a company official said on a conference call with analysts.
The company provides tax return preparation services in person, and online through its TaxCut software.
H&R Block chairman Richard Breeden, who once chaired the U.S. Securities and Exchange Commission, has refocused the company on tax preparation after taking charge in 2007, shedding a money-losing subprime mortgage unit and a securities brokerage and reducing mortgage exposure at its H&R Block Bank unit.
On Thursday, smaller rival Jackson Hewitt Tax Service Inc said it could be forced to revisit pricing as its bank partners look to restructure certain refund programs, and posted a seasonal quarterly loss.
Q1 DISAPPOINTS
For the first quarter ended July 31, the company incurred a net loss of $133 business card.6 million, or 40 cents a share, compared with a net loss of $132.7 million or 41 cents a share, a year ago.
Revenue from continuing operations grew 1.3 percent to $275.5 million.
“Improved pre-season results from business services and lower corporate expenses were partially offset by an expected larger loss in tax services,” the company said in a statement.
Net loss from continuing operations was $130.6 million, or 39 cents a share, compared with a loss of $128.4 million, or 39 cents a share last year.
Analysts were expecting the company to report a loss of 37 cents a share, according to Reuters Estimates.
Loss from tax services was at $172 million, up from $163.7 million last year.
For fiscal 2010, the company maintained its view on earnings from continuing operations to be in the range of $1.60 and $1.80 per share.
Shares of the company were down about 2 percent at $16.70 Friday morning on the New York Stock Exchange. They touched a low of $16.53 earlier in the session.
(Reporting by Anurag Kotoky and Brenton Cordeiro in Bangalore; Editing by Jarshad Kakkrakandy, Ratul Ray Chaudhuri)