BLOCK DOWN - ANNOUNCES LAYOFFS

[Lee B]

Very interesting considering the incessant TV advertising !

H&R Block reports business decline and 250 layoffs

By Diane [email protected] and Mark [email protected]

Kansas City-based H&R Block on Tuesday reported a disappointing tax season and 250 layoffs.

The company expects a 2016 revenue decline compared with 2015, based on a lower volume of tax returns prepared by the company. It declined to offer details of its just-completed tax season, promising its full year report on June 9.

Block said it handled 4.6 percent fewer tax returns this season across all parts of its business, from the retail outlets it owns and those operated by franchisers to the desktop software and online services it provides in its digital business.

In all, Block said it handled 19.59 million tax returns in the just-completed tax season, compared with 20.52 million a year ago.

The company said it undertook the layoffs in Kansas City and at its field locations across the United States. Affected employees, which equaled 12.6 percent of its workforce, were notified Tuesday.

News of the layoffs came the same day that Overland Park-based Waddell & Reed Financial said a decline in its business led it to shed 10 percent of its workforce through a voluntary separation program and layoffs.

H&R Block chief executive Bill Cobb said the company’s disappointing results came largely in the early part of the tax season. He vowed to be aggressive in attracting business next tax season.

“I believe in the future of H&R Block and, as you will hear from me on June 9th, this season does not change our long-term outlook for the company. We are focused on developing an aggressive 2017 program to appeal to a broad segment of tax preparation clients,” Cobb said in the company’s announcement.

In response to the business slowdown, Block said it is realigning field operations and beginning a “significant cost reduction effort.”

Tuesday’s changes include a shuffling of responsibilities for Block’s retail operations and products, which covers its chain of stores that provide tax preparation help to consumers.

Chief financial officer Greg Macfarlane was named senior vice president of the company’s U.S. retail operations, covering all stores and products on the retail side, such as Tax Identity Shield and Emerald Card. Kip Knight, who had been in charge of retail operations, now heads the franchise operations in the United States as well as Block offices in Canada and Australia.

H&R Block promoted vice president Karen Orosco to senior vice president overseeing sales and services in the retail operations. She had reported to Knight and now, like Knight and Macfarlane, will report to Cobb.

A year ago at this time, the company reported 90 staff cuts, mostly at its Kansas City headquarters, a result of business being down early in that year’s tax season. It had 2,200 full-time employees at the end of tax season a year ago. This round of layoffs leaves it with 1,735 full-time employees.

In 2012, H&R Block similarly sought to cut costs following the tax season though it had handled a then-record 22.2 million tax returns. Its cutbacks then eliminated 350 jobs and closed 200 tax stores

 

[Elrod]

Must be they gave away too many $1,000.00 dollar bills.

[Catherine]

Or people are glomming on to the fact that they WAY overcharge.  I've had folks show up here with an ill-prepared prior year hrb return and see the bill for close to $500 for a return I would charge ~$350 for at most. 

[FDNY]

My theory is that smart people will go there once, then realize they should have asked around.  Others may not be savvy enough to do a little research, understand what the big box shops are all about, and just think it is what it is, like everyone pays $500 for a 1040 and Sch A, and don't forget the state, that really brings the price up.

[Lee B]

5 hours ago, Elrod said:

Must be they gave away too many $1,000.00 dollar bills.

They supposedly gave away $ 1,000 to a thousand people per day for 30 days  = $30,000,000.

My favorite was the commerical, jogging with basketball player Anthony Davis.

"Bring your return to Block and get half off last years fee "

[SaraEA]

What perplexes me (with Block and other corps that announce big layoffs) is that if they can dismiss 13% or their workforce, does that mean those employees didn't do any work?  Why did they have them on payroll in the first place?  I surmise that the worker bees were the ones who got pink slips and not a single assistant to the assistant to one of many vice presidents of this and that.  Sounds to me like Block's support staff was downsized--the ones who support their thousands of tax offices and develop the training for their zillions of tax preparers.  Not a good sign (unless you're a competitor).

Successful corporations do a good job balancing the needs of their clients, employees, and shareholders.  Seems like Block is only interested in the latter.  Sad to see a good company, the one that started the paid tax preparation business and set the standards, lose sight of the big picture.

[Max W]

When you have a successful business, competitors will spring up to try and take a bite out of it.  

Two of them, Jackson-Hewitt and Liberty were both founded by an ex HRB exec, John Hewitt. There are also the do-it-yourselfers that have also taken a bite as well as non-profit volunteers and the IRS itself who will now assist with returns up to what? $60K, or so.

The report says that the loss was mostly in the early part of the season with most of the decline coming in 1040EZ and EITC returns. A large part of this may be due to Liberty's spanish speaking offices "Siempre" and to the demise of the instant refund programs.

All companies eventually reach a peak and then decline and level off at some point.  What is so remarkable about HRB is that it took so long for it to happen to them, over 60 years, but that is probably due to the lack of any meaningful competition for so long.

 Some of the layoffs in recent years may be due to overstaffing that happens when you are successful.