In a Webcast today, CEO Russ Smyth said the performance is not acceptable in a market that is growing in double digits. He said the company was redesigning its marketing and its Web site during this tax season, while not raising prices.
"We believe holding the line on price this year is the right strategy given the current economic situation," he said.
The company put greater effort to reach customers for tax preparation software and for online preparation. It renamed its TaxCut consumer software as H&R Block AtHome and launched a "Best of Both" product that combines desktop and Internet-based preparation. While the product received better reviews this year, it lost ground in the market, Smyth said.
Block worked to catch up by making free products available, an area in which it had lagged competitors.. But Smyth said the company's message "has not been crisp." He continued that, "When our marketing has been more effective in driving traffic to our Web site, we have not been successful in converting traffics to clients."
Major changes have occurred in the number of locations. It closed 100 company locations, another 100 at Sears and 1,000 in Wal-Mart, after it lost the Wal-Mart contact to rival Jackson Hewitt Tax Services. CFO Becky Shulman said when the company significantly expanded its store count in 2002, it had added "$300 million in expenses without increasing client count."
