H&R Block is cutting costs and will be closing more offices before next tax season, allowing the company to reduce its continuing losses.
The company sold 127 offices last quarter and plans to sell approximately another 150 by the end of the year, according to Reuters. The Kansas City, Mo.-based tax giant reported on Thursday that its net loss from continuing operations narrowed in its fiscal 2011 first quarter, which ended July 31, to $114.8 million, or $0.36 per share prior to a severance charge, compared to a prior-year loss of $130.6 million, or $0.39 per share.
Block incurred a pretax charge in the current period of $21.2 million, or $0.04 per share, for the cost of termination benefits in connection with the realignment of field and support services it announced in May. Blocks net loss from continuing operations in the current period after the severance charge was $127.6 million, or $0.40 per share.
However, total revenues last quarter fell $1.0 million from the prior year to $274.5 million.
Our first quarter results demonstrate the progress we have made in reducing embedded costs, and we believe we can achieve more in this area, said president and chief executive officer Alan Bennett, who took over the company in July after the abrupt resignation of Russ Smyth (see H&R Block CEO Steps Down). Our balance sheet reflects a strong position that gives us considerable financial flexibility going forward. We are working diligently to reverse the early-season client losses we have experienced in each of the past two years.
Along with Smyth, the company is also contending with the departure of Thomas Bloch, son of company founder Henry Bloch, from the board (see Henry Blochs Son to Leave H&R Block Board). Bloch resigned from the board in July and wrote a letter explaining his disagreement with the companys direction under chairman Richard Breeden.
First quarter segment revenues at subsidiary RSM McGladrey fell 1.6 percent compared with the prior year to $174.7 million. The segment recorded a first-quarter pretax loss of $0.4 million compared to pretax income of $1.3 million a year ago. Total expenses declined $1.2 million, or 0.7 percent, from the prior year.
In July, RSM McGladrey acquired the Boston-based accounting firm Caturano & Co. (see McGladrey and Caturano Together at Last). The acquisition is expected to add approximately $30 million to fiscal 2011 revenues and be neither accretive nor dilutive to Blocks fiscal 2011 earnings.
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