H&R Block promises changes, cancels traditional December tax season preview

H&R Block, coming off its worst tax season in years, won’t hold its traditional December meeting with analysts at which it normally offers a preview of the upcoming tax season.

CEO Bill Cobb announced the decision during a conference call with analysts Tuesday after the Kansas City-based company released financial results for its seasonally slow first quarter.

Canceling the meeting will help management stay focused on halting the decline in the number of tax filers that use Block, Cobb said.

“We can’t afford to have another season where we’re down almost a million clients,” he said.

At the same time, Cobb promised big changes in how H&R Block handles the next tax season. He said the company spent the summer analyzing its products, pricing, promotions and other facets of its operations to produce its plans for the next tax year.

Among the changes ahead will be “fundamentally different” marketing plans, Cobb said. He said other ideas such as refund anticipation loans, which many independent preparers offered last year, could return.

“You’re going to see a very different H&R Block in tax season ’17,” he said. “Everything is on the table. At the appropriate time, we’ll reveal what our plans are.”

He added, however, that he will not sacrifice the long-term health of the company for short-term gains.

Skipping the December meeting won’t make much difference, said analyst Alex Paris at Barrington Research. He said he’s optimistic about the push to make changes.

“Everything is on the table, so that means pricing, promos and product offerings. Sounds like they are bound and determined,” Paris said of the focus on attracting new customers.

In the first quarter of the new tax season, H&R Block’s revenues slipped and losses grew. The three months traditionally account for less than 5 percent of the company’s full year revenues.

Revenues in the quarter totaled $125.2 million, down 9 percent from $137.7 million in the early months of the previous tax filing year. Block said the decline was partly due to currency exchange rates in its international business and its sale of the H&R Block Bank. Costs were higher partly because of interest expenses on debt.

The net loss for May, June and July was $121 million, higher than the $97 million in the same months of last year.

H&R Block had been cutting expenses to improve its financial results in the wake of the company’s worst tax season in at least four years. Cobb had called those results “unacceptable.” Earnings had been down 21 percent for the tax year that ended in April, when compared with a year earlier.

The company had eliminated some jobs just after the tax season ended; cut information technology, infrastructure and support costs; and promised to focus more on gaining customers in the upcoming tax season.

H&R Block also has been the subject of rumors that it could be bought out. Analysts have said the idea makes some sense, even if they don’t see evidence that it’s going to happen.

This story was originally published August 30, 2016 at 3:25 PM with the headline "H&R Block promises changes, cancels traditional December tax season preview."