H&R Block Inc. is still shrinking in a rush to catch up with TurboTax, the Intuit Inc. offering that did an end run around bricks-and-mortar tax prep.
As it announced another dreary quarter, the Kansas City-based tax giant unveiled plans to sell, or "refranchise," another 150 offices by the end of the year. It is also funneling almost a million of its clients away from underperforming offices and into the hands of its top accountants.
Meanwhile, Block charged $21 million in severance costs for the recent quarter when it trimmed 400 positions from its headquarters.
With $1.1 billion in cash, Block is still the biggest kid on the block when it comes to taxes, but it has lost much of its swagger of late. It is still burdened by $563 million in shaky mortgage loans and is struggling with an exodus at the top. CEO Russ Smyth stepped down at the end of June after less than two years on the job.
In mid-July, Thomas Bloch, former CEO and son of cofounder Henry Bloch, quit the board, arguing that the company is charging too much in its retail stores and isn't measuring up well online. He also took issue with the board's $2 billion stock buyback plan.
TurboTax has been to CPAs what file-sharing was to musicians. The only upside, is the chance to scoop up an H&R franchise for a fire-sale price.
Write to Kyle Stock