H&R Block (NYSE: HRB), a tax preparation firm with almost 10,000 locations across the U.S., announced on Tuesday that it would be closing 400 locations due to a discouraging financial outlook for rest of 2018. Following the announcement, shares of H&R Block plunged 18 percent the next day.
Locations that will be closing mostly consist of small storefront within a five mile radius of another location, Jeff Jones, CEO of H&R Block, told analysts in a call. He also said that there will be no plans for job cuts. Instead, employees working at locations closing down will be transferred to nearby locations.
In an attempt to stay competitive with tax preparation software that allows people to prepare taxes themselves, H&R Block has offered its own home tax software. Last year, client base for this software increased by 8 percent.
In addition to trying to stay competitive by offering online tax preparation software services, the closings can be attributed to President Trump’s tax overhaul, which includes a provision that would limit how much tax advisors can charge their customers.
According to the Wall Street Journal, H&R Block is cutting costs due to a lowered revenue projection for 2019 of just under $3.1 billion in comparison to analysts projection of $3.14 billion.
A large portion of new customers going to H&R Block locations are millennials aged 35 and under. These customers account for half of the tax preparation firm’s new customers. Jones says that customer retention is still strong but an expanding client base for the company is crucial.