Kansas City, Mo. ? H&R Block Inc., the nation’s largest income tax preparer, said Wednesday that its fourth-quarter earnings increased 7 percent after a strong tax season, and that its board of directors had approved a two-for-one stock split.

But the Kansas City, Mo.-based company said profits were down 10.5 percent for the year due to slower mortgage business and continued losses in its investment services division.

For the three months ending April 30, the company reported net income of $616.5 million, or $3.66 per share, compared to $576.9 million, or $3.24 per share, during the same period a year ago. Revenue was up 7.2 percent to $2.4 billion.

Analysts surveyed by Thomson Financial had expected earnings of $3.52 on revenue of $2.3 billion.

H&R Block Inc.'s new world headquarters is under construction in downtown Kansas City, Mo. H&R Block posted an increase in earnings during the fourth quarter Wednesday.

After the opening of more than 1,200 new retail offices and department store kiosks, H&R Block’s tax business saw quarterly revenues increase 6 percent to $1.7 billion, despite near flat growth in the number of retail customers. That was viewed as a victory after the company saw a 3.2 percent drop in customers last tax season.

Pressured by free online services and competing software products, the company’s digital tax business saw a 6.3 percent decline in customers.

“The (retail) expansion contributed to a significant increase in early season clients, reversing a two-year trend of declining client traffic,” said Mark Ernst, chairman and chief executive officer. “While we’re disappointed in our digital tax solutions results, we are encouraged by increasing consumer use of our services that blend digital technology with tax professional assistance.”

For the year, the company reported earnings of $635 million, or $3.76 per share, compared to $709.1 million, or $3.92 per share, in 2004. That still surpassed Wall Street projections of earnings of $3.52 per share. Revenue for the year increased 4.1 percent to $4.4 billion, in line with analyst predictions.

H&R Block said its board members have agreed to a stock split, effective Aug. 22 for stockholders of record on Aug. 1.