H&R Block (HRB) reported a 1.3% decline in net income from a year earlier, reflecting how taxpayers -- the tax preparer's clients -- were hurt by unemployment caused by the Great Recession.
Consolidated net income fell to $479.2 million, or $1.43 a share, for the fiscal year ended April 30, 2010, from $485.7 million, or $1.45, a year earlier. Total revenue dropped 5.1% to $3.9 billion. The company's overall tax business fell 5% from a year earlier, primarily due to a 6.1% decline in total retail tax returns prepared.
"Our business results reflect the challenging economic conditions of this tax season, caused by record levels of sustained unemployment that led to fewer returns being filed by our core retail tax client base," said H&R Block President and CEO Russ Smyth in a statement.
Limiting the Damage with Cost Containment
The company said it was able to limit losses thanks to reducing costs by renegotiating lease payments at many retail locations and closing almost 400 others, while also implementing limited job cuts.
"Despite these difficult conditions, we were able to minimize the impact on consolidated net income," Smyth said. "At the same time we positioned our business for future success by improving the overall client experience, increasing client retention rates and optimizing our operating cost structure."
H&R Block expects its cost containment moves will save $140 million to $150 million per year through 2012.
"Moving forward, in our retail business we will aggressively market in the early season and leverage our access to best-in-class financial products, while continuing to improve our service levels for all clients. In our digital business, we will attract more new clients to our online segment and enhance the leadership talent to drive accelerated growth," Smyth said.
Shares of H&R Block ended Thursday at $14.96, down 41 cents or 2.7%.
H&R Block Reports Lower Profit After Slow Tax Season