H&R Block Feels the Pain from TurboTax

Posted Mar 9th 2010 12:30PM by Tom Taulli
Filed under: Earnings Reports, H and R Block (HRB)

Late last month, H&R Block (HRB) dropped a bomb on investors. The company slashed its outlook because of the slow start of the tax season. As a result, H&R Block's stock price fell 13%.

So Monday, the company reported its official fiscal third-quarter results. Profits came to $50.6 million, or $0.15 per share, up from $47.4 million, or $0.14 per share in the same period a year ago.

Unfortunately, it looks like H&R Block's problems go beyond the travails of the recession. Basically, consumers are getting more savvy with online alternatives, especially Intuit's (INTU) TurboTax (the web-based offering saw a 23% increase in unit sales this year).

If anything, H&R Block's retail model looks somewhat dated. For the tax season, same-office tax returns fell 6.8% and overall revenues were off 6% to $935 million. Keep in mind that total IRS filings are projected to fall by 2.5% to 3.5% this year.

While H&R Block is still confident, the company has decided not to provide full-year guidance.

In Tuesday morning trading, the shares were down roughly 2% to $16.15.

Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.

Tags: H and R Block, HRB, Intuit, Taxes, TurboTax