To remain focused on core tax-preparing brand and services, H&R Block Inc. (HRB) decided to cease services under its EXPRESSTAX brand.
As a result, the company will incur a pretax charge of 2 cents to 3 cents in fiscal second quarter of 2012.
EXPRESSTAX was purchased by H&R Block in 2006. At present, there are 269 EXPRESSTAX franchise offices preparing 100,000 tax returns. Royalty fees from the service grossed $3 million in fiscal 2011 for H&R Block. The company decided to discontinue the service as it believes that EXPRESSTAX no longer featured in its long-term growth strategy.
The company will propose EXPRESSTAX franchisees to join H&R Block.
Earlier, in August, H&R Block decided to divest RSM McGladrey to McGladrey & Pullen, LLP for a consideration of $610 million to focus more on its core tax business.
The company’s focus on its core tax business helped it to grow new clients by 19%, increased client retention by 4% besides boosting market share in retail as well as digital tax preparation channels in fiscal 2011.
The Zacks Consensus Estimate for fiscal second-quarter 2012 is a loss of 35 cents per share. For fiscal years 2012 and 2013, the Zacks Consensus Estimates are, respectively, $1.55 per share and $1.76 per share.
The quantitative Zacks #4 Rank (short-term Sell rating) for the company indicates downward pressure on the shares over the near term.
Headquartered in Kansas City, Missouri, H&R Block Inc. is a leading provider of tax preparation services. Through its subsidiaries, the company provides tax, retail banking, accounting and business consulting services and products in the U.S., Canada and Australia. The company competes with Intuit Inc. (INTU).
