H&R Block Posts Loss as CEO Seeks to Stem Defections
The loss from continuing operations was $127.6 million, or 40 cents a share, for the three months ending July 10, compared with $130.6 million, or 39 cents, in the same period last year, H&R Block said today in a statement. The average estimate of eight analysts surveyed by Bloomberg was a loss of 41 cents a share. The net loss narrowed to $130.7 million from $133.6 million.
“We are working diligently to reverse the early-season client losses we have experienced in each of the past two years,” Bennett said in the statement.
Bennett, the 59-year-old director and former CEO, returned in July after Russ Smyth resigned. The Kansas City, Missouri- based company stopped providing detailed earnings guidance earlier this year after missing its fiscal 2010 forecast as online competitors such as Intuit Inc.’s TurboTax gained share.
H&R Block said in May it would close 400 under-performing tax offices and cut 400 jobs to decrease annual operating expenses by as much as $150 million by the end of fiscal 2012. The company’s results this quarter included a severance charge of 4 cents a share related to staff and office cuts.
Shares of H&R Block rose 84 cents, or 6.7 percent, to $13.41 at 5:35 p.m. after the close of regular trading on the New York Stock Exchange. They declined 44 percent this year through today’s close, the second-worst performance in the Standard & Poor’s 500 Index.
Most of H&R Block’s annual profit is reported in the fiscal fourth quarter, which corresponds with the U.S. tax season ending April 15. The company typically reports losses for the first half of the fiscal year.
H&R Block added an executive with experience running digital businesses to its board last month in William C. Cobb. The company has ceded share to Mountain View, California-based Intuit, which said Aug. 19 that unit sales of its Web-based TurboTax software climbed 19 percent for fiscal 2010.
Bloch said in a letter to the board filed with regulators on July 16 that he would decline re-election, citing “fundamental” disagreements with Chairman Richard Breeden and “the intense pressure from short-term oriented shareholders.”
The Internal Revenue Service’s decision to withhold data the company uses to underwrite loans to customers expecting a tax refund will cut profit 5 cents a share this fiscal year, H&R Block said last month. Advocacy groups including the National Consumer Law Center criticized the loans as predatory because the interest rates topped 100 percent on an annualized basis.
Jackson Hewitt Tax Service Inc., the second-biggest U.S. tax preparer, is scheduled to post fiscal first-quarter results on Sept. 8.