Jackson Hewitt Tax Service Inc.'s (JTX) fiscal second-quarter
loss narrowed slightly, topping analysts' estimates, as the
company's costs declined.
Looking ahead, President and Chief Executive Harry Buckley noted
that the company has expanded its refund-anticipation loan coverage
from last year and is working with Wal-Mart Stores Inc. (WMT) to
put in place operational improvements designed to drive more
clients to Jackson-Hewitt kiosks. He said the company is "better
positioned to successfully compete" in the 2011 tax season.
Shares of the No. 2 tax preparer in the U.S. after much bigger
H&R Block Inc. (HRB) surged 34% Thursday after saying it has
secured full assisted-refund coverage for the 2011 tax season. With
an assisted refund, customers don't have to pay for tax preparation
up front. The tax preparation cost and other fees are deducted from
the refund.
Meanwhile, Jackson Hewitt's stock is still down 75% this year,
getting battered on concerns it wouldn't be able to secure funding
for its popular refund-anticipation loans, a requirement under its
credit agreement. The company has seen the number of returns it
prepares dwindle of late as more people turn to doing their own
taxes amid the downtrodden economy. On Tuesday, H&R Block said
its second-quarter loss narrowed, also because of declining
operating costs.
For the quarter ended Oct. 31, Jackson Hewitt reported a loss of
$19.4 million, or 67 cents a share, from a loss of $19.5 million,
or 68 cents a share, a year earlier.
Excluding items such as income-tax adjustments and impacts from
employee termination and corporate-advisory services, the loss was
flat at 66 cents. Analysts polled by Thomson Reuters had most
recently forecast 74 cents.
Revenue dropped 14% to $3.5 million.
Tax-preparing companies typically post losses during the summer
and fall quarters because tax season ends in the spring.
Total expenses fell 8.4%, with overhead costs down 11% and
marketing-and-advertising costs falling 34%.
Shares closed at $1.10 on Thursday and were inactive
premarket.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com
