H&R Block Falls as Fewer Tax Returns Processed
H&R Block Inc. (HRB), the biggest U.S. tax-preparation firm, plunged as much as 11 percent in extended trading after saying it handled fewer returns than expected during the 2013 tax season.
“The industry experienced unprecedented delays and changes to the timing of taxpayer filings,” Chief Executive Officer Bill Cobb said today in a statement by the Kansas City, Missouri-based company. That “created significant challenges,” he said.
H&R Block, which plans to report fiscal fourth-quarter results in June, served about 22 million U.S. clients through April 18, a decline of 0.9 percent, according to the statement. The company has fought to regain market share from TurboTax maker Intuit Inc. (INTU), which tumbled the most in a decade today after cutting sales and profit forecasts amid a decline in Internal Revenue Service returns received this tax season.
“There may have been an expectation that volumes would be positive,” said Mark Palmer, a New York-based analyst at BTIG LLC. “There could be significant numbers of taxpayers who requested extensions that could be impacting these figures.”
H&R Block tumbled $2.03, or 7.2 percent, to $26 at 4:33 p.m. in extended trading in New York and had fallen as low as $24.92. The shares climbed 51 percent this year through the close of regular trading. Intuit, based in Mountain View, California, fell 11 percent today to $57.09.
H&R Block said that online tax returns rose 10 percent as its share of total U.S. returns remained “essentially flat” from a year earlier. The profit margins on tax filings prepared online are higher than for returns processed in stores, according to Palmer.
“It’s indicative of share gains, likely at the expense of TurboTax,” he said. “Any weakness is likely to be short- lived.”
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