If it seemed you spent more at H&R Block this year, you probably did. And that helped the company report higher revenues despite preparing fewer returns in the recent tax season.
The Kansas City-based company said Wednesday that revenues climbed 4.1 percent to $3 billion in its fiscal year that ended April 30. It credited a 3 percent general price boost and increased customer use of its Emerald Card, refund transfer and Peace of Mind products.
Block’s strategy has targeted revenue growth through a program it calls Tax Plus. This means getting more tax preparation customers to use more of the other products.
“On the Tax Plus side, our strategy is working,” chief executive Bill Cobb said during a conference call with analysts.
The effort to boost revenues also meant offering discounts more strategically and charging to file extensions.
Profits climbed too, up 9.5 percent to $475 million during Block’s fiscal year.
H&R Block stopped doing free 1040EZ returns after a three-year run. It found that the promotion did not produce a crop of loyal spending customers, yet it still stressed the company’s resources and made paying customers wait longer in Block offices.
Previously, Block had said it handled 24.2 million tax returns, a drop of 2.6 percent from the previous tax season. Executives said the decline was mostly because it stopped doing 1040EZ tax returns free as a promotion.
H&R Block said regulators were reviewing its effort to sell H&R Block Bank, which is based in Kansas City. The sale will free up a lot of capital currently tied up in the bank.
The sale, along with some other moves, will leave Block with $850 million to $1 billion in “excess capital.” It plans to use the funds, as well as some additional borrowings, to return capital to shareholders.
Such moves could involve buying back the company’s stock, paying higher dividends and other measures, though Block did not identify specific plans.
H&R Block shares climbed $1.42, a 4.6 percent increase, to $32.15. The stock reached $32.50 on Wednesday, a new interday high.
Because most of Block’s work is done during the January-to-April tax season, the company posted most of its revenues and all of its profits in its final fiscal quarter. Earnings in the fourth quarter were nearly $910 million on revenues of $2.56 billion.