Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

Summer may be almost over but for H&R Block, there's only one season that counts.

The tax-service provider, whose shares fell 10.5 percent Wednesday after it reported lackluster first-quarter results, has much to prove in the 2017 tax season.

As I've written, H&R Block has been plagued by slowing growth. The $4.8 billion company has struggled to retain existing clients and attract new ones as it contends with lower-cost alternatives and independent competitors. And although the shares have recovered some after falling to a three-year low in May, they're still down 35 percent so far this year, making H&R Block the fifth-worst performing stock in the S&P 500 Index in 2016. 

H&R Block is among the S&P 500's worst performers so far in 2016
Source: Bloomberg

H&R Block is now pledging to make some changes -- dramatic enough changes, in fact, that investors and analysts will see a very different version of itself when it tackles next year's tax season, or so it says.

The company has been purposefully sparse with details, alluding elusively to "client-experience enhancements," but it did outline a "fundamentally different" marketing plan as well as what it hopes will be compelling product offers. Among these could be an answer to tax refund anticipation loans offered by independent rivals: H&R Block could reintroduce fee-free loans of their own. It may also snatch back market share from do-it-yourself providers such as TurboTax by matching on price, even if that includes making its most basic service free.  

Too Many Deductions?
Wall Street analysts on balance believe that H&R Block is undervalued, with the average price target of $29.56 representing a return of almost 37 percent
Source: Bloomberg

H&R Block's President and Chief Executive Bill Cobb has an added incentive to see that the company follows through on its game-changing plan. He missed out on a 2016 cash bonus and his personal stake in the company has taken a hit. It's now worth $16.7 million, down from $21.1 million at the start of the year despite a small boost in share ownership according to a July filing. 

But Cobb's fellow shareholders needn't follow his lead in topping up their own positions. After all, the company has two more loss-making quarters in store before the verdict is delivered: Will H&R Block get next tax season right?

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at