The first look at H&R Block’s tax season this year comes this afternoon, with investors hoping the company has stopped shedding customers.
For three straight years, the Kansas City-based tax preparation firm has prepared fewer and fewer customers’ returns in the early weeks of tax-filing season.
The slide at Block offices has been so stubborn that management said in December only that it hoped to slow the in-store decline, not halt it outright. Block’s digital tax business saw a drop in customers early last tax season, too, but CEO Bill Cobb had called that an anomaly and said the digital customer count would grow this season.
Adding customers in total remains a job for the future.
This season’s first customer count will come after the stock market closes, which is when H&R Block is set to release the results from the third quarter of its fiscal year that covers November, December and January. Its fiscal year ends April 30 after the tax season has wrapped up.
A year ago, H&R Block’s report showed the company had prepared 10.585 million tax returns for clients through Feb. 28, or 6.1 percent fewer than at that point during the tax filing season in 2015.
“We think anything less than a significant curtailment in HRB’s (H&R Block) loss rate would be a disappointment,” Mark Palmer, an analyst at BTIG Research wrote clients in a Feb. 21 note.
One source of help this year comes from a delay in the refunds of millions of filers whose returns claimed the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS held on to those returns at least until Feb. 15 in an effort to thwart tax identity theft.
H&B Block, and other preparers, have offered advances against clients’ refunds as a lure to win their business. Cobb had said he saw the delayed refunds as adding to the allure of a refund advance loan.
“We’re looking to do a lot of loans, and we’ll be marketing them aggressively,” Cobb said in December. “New clients are going to be the key.”
Taxing H&R Block’s returns
Number of U.S. tax returns prepared by H&R Block through Feb. 28 each year
2016 — 10.585 million, down 6.1 percent
2015 — 11.277 million, down 4.2 percent
2014 —11.772 million, down 5.9 percent
Source: H&R Block Inc.