UPDATE 3-H&R Block to close stores, cut jobs
* To cut 350 full time jobs, 200 underperforming stores
* Hires Crist Kolder to search for new CFO
* To take $30 mln pre-tax charge in Q4
* President of US retail tax services resigns
* Shares plunge 16 percent
By Jochelle Mendonca
April 25 (Reuters) - H&R Block said the head of its U.S. retail tax services unit resigned, and the top U.S. tax preparer announced another round of store closures and job cuts, as it realigns its business to focus on the fast-growing digital tax market.
Store-front tax preparers have been cutting jobs and closing stores as they have been hit hard by user friendly tax filing software such as Intuit Inc's TurboTax, and regulatory clamp down on their most profitable product - tax refund loans.
The company's major competitor Jackson Hewitt Tax Services filed for a pre-packaged bankruptcy last May, partly due to those reasons. Jackson Hewitt has since emerged from creditor protection.
Shares of the Kansas City, Montana-based company, which cut 400 jobs and shut equal number of stores in 2010, fell 16 percent to $14 in trading after the bell.
The company said it would now close about 200 underperforming company-owned stores and cut 350 full-time positions, while taking a related charge in the quarter ended April 18.
H&R Block said Phil Mazzini, its head of retail tax services resigned from the company, effective April 30.
H&R Block store-front business had lost clients for years, before reversing the slide last year.
The company named Jason Houseworth, who led its digital tax preparation operations, the head of its U.S. tax services division.
"It became clear during our strategic review and benchmarking that the model of having separate retail and digital leadership is no longer viable," said Chief Executive Bill Cobb, who has been in this role for a year.
The tax preparer is also looking for a new chief financial officer, and said it hired Crist Kolder Associates to lead the search.
Current CFO Jeff Brown will become the chief accounting and risk officer, the company said.
For fiscal 2012, the company said it expects earnings of 1.09 to $1.15 per share from continuing operations, on revenue of $2.9 billion.
On Wednesday, it agreed to pay $28.5 million to settle charges that its subprime mortgage unit Option One Mortgage Corp, now Sand Canyon Corp, misled investors in its offerings of subprime mortgage-backed securities.
H&R Block has been exiting non-core businesses, and has discontinued its EXPRESSTAX brand and sold its consulting unit RSM McGladrey.
DIGITAL DRIVES MARKET SHARE GAIN
Separately, the company said the number of tax filings it prepared through April 18, grew 4.5 percent to 22.2 million.
While the company's online and digital returns prepared rose 20 percent and 12.3 percent, respectively; its retail returns prepared grew by just 1 percent.
Last December H&R Block unveiled a slew of products like Block Live -- a Skype-like offering where do-it-yourself clients can contact tax preparers online -- and tax preparation apps for iPhone and Android phones and tablets to take on Intuit in the digital space.
"Our preliminary analysis suggests we gained approximately 50 basis points of total U.S. share, including 60 basis points of share in the digital online category," CEO Cobb said.
The company's prepaid cards grew 24 percent to 2.9 million units. Customers can opt to receive their tax refund as a direct credit on the prepaid card, and H&R Block can earn fees on certain transactions.
- Tweet this
- Share this
- Digg this