H&R Block has closed about 400 of its “under-performing” tax offices out of its network of 11,000 retail tax locations, and eliminated approximately 400 positions throughout the organization.

The re-alignment is expected to decrease the tax prep giant’s annual operating expenses by $140 million to $150 million per year by the end of fiscal year 2012. The Kansas City, Mo.-based company plans to allocate more resources toward client growth initiatives. The total number of tax returns prepared by Block this tax season in its retail locations fell 4.9 percent compared to last year, while online tax returns grew 2.6 percent.

“We operate in a challenging and competitive environment, and to be successful we must find new ways to provide better value to our clients,” said Block president and CEO Russ Smyth in a statement. “This requires that we narrow our focus and invest in a few key initiatives that will have the greatest impact on attracting and retaining clients in our retail and digital channels, while eliminating other activities and their related costs.”

“Changes like these are never easy and we appreciate the hard work and loyalty of the affected associates,” he added. “However, these steps are necessary to improve our business performance and better serve our clients.”

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