Newspaper article THE JOURNAL RECORD

Rising Tax Preparer Plans Mass Assault on Leader H R Block

Newspaper article THE JOURNAL RECORD

Rising Tax Preparer Plans Mass Assault on Leader H R Block

Article excerpt

By Karen Haywood

Associated Press

VIRGINIA BEACH, Va. _ There's a new kid trying to muscle in on H R's block.

While still a distant second to the well-known Kansas City, Mo.-based tax preparer, Jackson Hewitt Tax Service has been rapidly expanding its offices and increasing the number of returns it prepares each year.

John T. Hewitt, chief executive officer of parent Jackson Hewitt Inc., says he hopes to further close the gap with H R Block Inc. with a planned $10 million to $15 million public stock offering later this summer.

"This is an industry where there's only been one," Hewitt said in a recent interview. "There was a vacuum in the market. There was H R Block and no one else."

A key to Jackson Hewitt's growth is a computer program developed 12 years ago by Hewitt's father, Daniel, to standardize the way tax preparers interview clients.

The Hewitts actually had tried to sell the program to H R Block and other companies, but after failing to do so, they decided to go into business for themselves.

Hewitt, his wife Linda, and about a dozen investors bought into an existing business called Mel Jackson's Tax Service in 1982 when it had six locations. They renamed the company and over the years grew into 600 offices, including franchises, in 27 states and the District of Columbia. Jackson Hewitt prepared 311,000 tax returns last year, about 100,000 more than in 1991.

Its expansion, however, hasn't been without some growing pains along the way.

Jackson Hewitt's biggest break came in October 1989, when it received a contract to open offices in Montgomery Ward department stores and almost overnight went from being a regional company to one with a nationwide presence.

But the company ended up closing about 70 concessions a few months later, resulting in a loss in earnings. "We bit off more than we could chew, although since then it's turned out to be very good for us," Hewitt said of the concessions deal.

The company moved into the black in 1990 and is expected to turn a modest profit for its fiscal year ended April 30, according to Hewitt.

Thomas M. Bloch, H R Block's president and chief executive officer, says his company welcomes Jackson Hewitt's competition. …

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