H&R Block Reports Interim Results

Zacks Investment Research
updated | Zacks.com

Yesterday, H&R Block Inc. (NYSE:HRB) announced its preliminary tax season results for the interim period through Mar 15, 2010. While the company experienced an improvement in results during the Mar 1 – 15 period, the results were still down for the tax season-to-date through March 15. 

For the period March 1 – 15, same-office tax returns prepared in retail operations increased 7.0% from the prior-year period, while total tax returns prepared grew 4.3%. Total retail returns prepared were up 4.4% and the net average retail fee per tax return increased 2.1%.
 
According to H&R Block’s management, the improvement in results in the first half of March reflects an increase in overall return filing trends, a deceleration of assisted returns shifting to the digital mode and a decline in market share loss in both the Retail and the Digital businesses.
 
However, for the tax season-to-date through March 15, same-office tax returns prepared in retail operations dropped 5.1% from the prior-year period. Total tax returns prepared were down 6.3%. Though total retail returns prepared decreased 7.6%, net average retail fee per tax return increased 2.3%. Digital returns prepared by H&R Block were down 3.4%, while online returns rose 2.6%. 

Earlier in March, H&R Block reported fiscal third quarter 2010 (ended Jan 31, 2010) net income of $50.6 million or 15 cents, up from $47.4 million or 14 cents in the year-ago period. However, income from continuing operations was 16 cents, down 4 cents from the prior-year period. Results were slightly ahead of the Zacks Consensus Estimate of 14 cents, primarily driven by cost cuts. However, revenues were down year-over-year as the company prepared fewer tax returns.
 
The tax filing market is experiencing shrinkage due to the rise in unemployment. Also, there is a continued shift from assisted tax preparation to the digital space, where H&R Block’s growth is not yet satisfactory.
 
Following the announcement of the interim results, the shares of H&R Block were up 49 cents or 2.86% to $17.62 in Tuesday’s regular session on the New York Stock Exchange.

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