March 8, 2010 / 11:33 PM / 9 years ago

UPDATE 2-H&R Block declines to provide outlook; posts dismal Q3

* Says not giving full-year outlook

* Q3 cont ops EPS $0.16 vs $0.20 yr-ago

* Q3 rev hit by lower filed returns

* Says to outperform competition; but not successful yet

* Stock falls 5 pct after the bell (Recasts; adds conference call details, background; updates stock activity)

By Anurag Kotoky

BANGALORE, March 8 (Reuters) - H&R Block Inc (HRB.N), the largest U.S. tax preparer, said it will not provide outlook for the year, after posting a 20 percent drop in quarterly profit from continuing operations, sending its shares down 4 percent after the bell.

On a conference call with analysts, the company said it was not comfortable providing any outlook for the year, at a time when reports of rival Intuit Inc (INTU.O) eating into its digital market share surfaces, in indications of a uncertain outlook for the tax service giant.

The company warned last month that its 2010 profit would disappoint as higher unemployment levels led to fewer tax filings.

H&R Block, however, Monday said it expects Internal Revenue Service tax return to be down between 2.5 percent and 3.5 percent for the full year. It also said it does not have plans to alter pricing.

Despite availability of refund anticipation loans, the company did not see any meaningful client growth, a company executive said on the call.

Jackson Hewitt Tax Service Inc JTX.N, H&R Block’s main rival, earlier this year said it could not secure a source for refund anticipation loans (RALs) for this year’s tax season, as the bank that originated those loans terminated its contract.

The development was widely expected to be a huge positive for the bigger rival. Tax preparers extend refund anticipation loans at high interest rates to taxpayers who expect to receive refunds from the government.

H&R Block considers optimising its office footprint as a tool to reduce costs, and expects those closures to hurt its market share in the assisted business by 10 to 15 basis points.

H&R Block provides tax return preparation services in person, and online through its H&R Block at Home software, formerly known as TaxCut, which competes with bigger tax software rival Intuit’s TurboTax.

It often loses money in its fiscal first and second quarters, which fall outside the main U.S. tax filing season.

For the third quarter ended Jan. 31, H&R Block earned $50.6 million, or 15 cents a share, compared with $47.4 million, or 14 cents a share, a year back.

From continuing operations, it earned 16 cents a share.

Revenue for the period fell 6 percent to $934.9 million.

Analysts were looking for a profit of 14 cents a share, on revenue of $949.6 million, according to Thomson Reuters I/B/E/S.

Shares of the Kansas City, Missouri-based company were down about 5 percent at $15.95 after the bell. They closed at $16.74 on the New York Stock Exchange. (Reporting by Anurag Kotoky in Bangalore; Editing by Maju Samuel)

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