Promotion Costs Stunt H&R Block Financials

Considered to be America’s largest tax preparer, H&R Block Incorporated (HRB) showed third quarter losses amid analysts’ prediction of profit with free services attracting clients ended with lower revenues. Net loss amounting to $3.57 million in continuing operations for three months ending January 31 was experienced, which represented 1 cent per share, was a disappointment, specially when compared to $11 million in losses, representing 4 cents per share in the same period a year ago for the company, which is headquartered in Kansas City, Missouri.

William Cobb, the company’s CEO, has dutifully increased spending on marketing and presented free services to recover its market share from competitors, while spending some $121 million on advertising last year, the biggest investment by any tax preparer.  Cobb said that management continues to work to position the company for long-term growth in revenues and earnings.

H&R Block also dipped revenues by 52 cents, or 3.3 percent.  The company had difficulty dealing with the revenue losses from refund-anticipation loans for the second year after US regulators ordered HSBC Holdings to desist from offering the loans in December 2010.

Technical analysis show that H&R Block stock is in a definite downtrend since its last unsuccessful attempt to break the $30 mark, registered in July 2005. HRB did show certain signs of possible recovery, as it approached a short-term resistance of $17.65 in February 2012, closing at $17.20. But it then has slipped once again, now trading slightly below $16.