PARSPPANY, N.J. - Wal-Mart's decision to remodel its smaller stores put a crimp in the plans for tax chain Jackson Hewitt's expansion because the new design can't accommodate the tax business facilities in several Wal-Mart locations during the next filing season, while its revenue could also be impacted by its banking partners considering lowering interest rates on refund anticipation loans.
Meanwhile, the company said it also plans to launch its first online tax preparation program, although it gave no details about when the program would be introduced. These statements came as Jackson Hewitt reported results for the first quarter ended July 31. According to its SEC filings, the tax chain will operate in 1,500 to 1,750 Wal-Mart stores, but did not detal how many locations will be affected by the new design.. The company also stated it had learned of "potential structural changes under consideration with respect to the offering of RAL and Assisted Refund products by certain of our bank partners, including lowering the APR in the RAL program." The agreements, under which the banks pay Jackson Hewitt a fixed fee for offering and administering bank products, expire on Oct. 31, 2010.
For most tax software and service companies, quarters after tax season are money losers and the July quarter was no exception with Jackson Hewitt's loss risng to $21.8 million, up from $20.5 million in last year's corresponding period. Revenue for the most recently ended period was $5 million, up 15 percent from $4.3 million. Financial product fees, largely involving a prepaid debit card program, represented the bulk of that revenue, hitting $3.3 million, up 26 percent from $2.6 million a year earlier.
The last few months have produced several important developments for the tax services operations. These included the hiring of Goldman Sachs to "to assist the board in examining a range of strategic and financial alternatives for the company." No further information has been released on this step. In June, it hired Harry Buckley, a former president and CEO of H&R Block Tax Services as Jackson Hewitt's CEO and president, replacing Michael Yerington.
