Wednesday, February 24, 2010

H&R Block cuts guidance due to weak preliminary tax season results (HRB)



H&R Block (HRB) shares are down in premarket trading, after the firm said that a weak start to the 2010 filing season puts previous guidance for earnings out of reach:


KANSAS CITY, MO--(Marketwire - 02/24/10) - H&R Block Inc. (NYSE:HRB - News) today announced preliminary tax season results for the interim period through Feb. 15, 2010. Same-office tax returns prepared in retail operations fell 5.6 percent compared to the prior-year period. Total tax returns prepared through Feb. 15 were down 6.3 percent.
Total retail returns prepared year-to-date fell 8.2 percent, while the net average retail fee per tax return increased 1.9 percent. Total digital returns prepared by H&R Block (consisting of H&R Block At Home online and desktop software products, excluding Free File Alliance returns) were down 1.8 percent. Total online return growth of 3.1 percent was more than offset by a 7.6 percent decline in software-based returns. Total digital returns including the Free File Alliance fell 1.4 percent.
In light of the foregoing preliminary tax season results, the company's previously announced guidance for fiscal 2010 will not be reached.
"We believe industry filings are down significantly due to the recession and sustained, high levels of unemployment," said Russ Smyth, president and chief executive officer of H&R Block. "The weak economic conditions have also contributed to a greater shift to do-it-yourself tax preparation methods among first-half clients. We still have millions of clients to serve in the second-half of the tax season, which we are aggressively targeting," added Mr. Smyth.


The investment community expects revenue to be up 1.6% for the April quarter, and earnings per share to be up 7%.  The guidance looks to be significantly below those estimates.  Appropriately, shares are down 16% in early trading.

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