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H&R Block Sees Office Traffic Falling

NEW YORK (Reuters) - H&R Block Inc. (NYSE:HRB - news) on Thursday said it expects a drop in clients coming to its offices for tax preparation services this fiscal year and it affirmed an earnings forecast that trails current Wall Street estimates.


H&R Block shares fell 6 percent to their lowest level in more than four months.


The top U.S. tax preparation service said the number of retail office clients fell 2.4 percent through March 15. That was offset by a 15.2 percent increase in customers using its computer-based tax services, leading to a modest overall gain in clients of 0.4 percent.


Tax preparation and related fees increased 5.6 percent to $1.6 billion through March 15, the Kansas City company said. The average fee per retail office client rose 8.2 percent to $136.08.


"We continue to see weakness in the number of clients in our retail offices and now expect that retail office clients served will likely decline for the year," Chairman and Chief Executive Officer Mark Ernst said in a statement.


Block expects earnings for the fiscal year ending later this month to be in line with its previous estimate of $3.65 to $3.85 per share.


That, however, trails the average analyst's estimate of $3.89 per share for the year, according to Reuters Research, a unit of Reuters Group Plc. Most of the annual profit is expected to come from the current fourth quarter, which coincides with the U.S. tax return filing season. Analysts have pegged fourth-quarter earnings at $3.19 per share.


"We remain on plan for revenue growth per retail client, which we expect will increase in the range of 6 to 8 percent," Ernst said.


Block said it will provide additional interim updates on April 16 and April 30. In a March 18 update, Ernst had said the company was on track for a tax season that was "good, but not great."


Block's shares were down $2.78 at $48.25 on the New York Stock Exchange (news - web sites), where they were the second-biggest loser.



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