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Cheesecake Factory profit falls 11%

Cheesecake Factory Inc. CAKE -0.02% said its first-quarter earnings fell 11% on higher costs as severe weather and a holiday shift weighed on the casual-dining chain’s same-store sales growth.

Cheesecake Factory, which has roughly 169 namesake restaurants and 11 Grand Lux Cafes, has outperformed many of its competitors by using its broad menu and upscale decor to drive customer traffic. However, an uneven recovery and meager wage gains have led to cutbacks in spending among middle-class households, the Cheesecake Factory’s main customers.

In the latest quarter, same-store sales rose 0.9% but were negatively impacted by 2% owing to the weather and holiday-shift impacts.

Cheesecake Factory reported a profit of $22.5 million and 43 cents a share, down from $25.3 million, or 47 cents a share, a year earlier. The company had projected per-share earnings of 48 cents to 50 cents.

Revenue increased 4% to $481.4 million. Analysts polled by Thomson Reuters expected $479 million.

Total costs and expenses rose 5.2%. The company said expenses related to a pending legal settlement weighed on the latest period’s results but didn’t provide further details.

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Citrix Systems earnings fall; outlook improves

Citrix Systems Inc.’s CTXS +4.73% earnings fell 6.3% in the first quarter as restructuring and other costs masked increased sales.

Shares rose about 3% after hours as the results beat the company’s own outlook and it raised the low end of its targets for the year.

“We saw growth in all our geographic markets, while delivering record cash flow from operations,” said David Henshall, the company’s chief financial officer and chief operating officer. “Our results were driven by balanced growth across all three of our primary businesses: mobile and desktop, cloud networking, and SaaS.”

Citrix also disclosed Wednesday plans to buy back up to an additional $1.5 billion in shares. As of March 31, the company had about $429 million outstanding for repurchases from previous authorizations.

The company–which specializes in virtualization, networking and cloud infrastructure–had posted quarterly double-digit revenue gains for more than three years as it benefited from increased demand for desktop visualization, a crucial step in cloud computing. Revenue rose 12% to $750.8 million in the latest period.

For the year, Citrix said it expects per-share adjusted earnings of $2.90 to $2.95 on revenue growth of 8.5% to 10%, raising the low end of its earnings view by five cents and the bottom of its revenue outlook by half a point.

For the current quarter, the company expects per-share adjusted earnings of 57 cents to 59 cents on revenue between $765 million and $775 million. Analysts most recently projected revenue earnings of 68 cents a share and revenue to grow to $785.1 million.

For the most recent period, which ended March 31, Citrix reported a profit of $55.9 million, or 30 cents a share, down from $59.7 million, or 32 cents a share, a year ago. Excluding compensation expenses and other items, per-share earnings rose to 64 cents from 62 cents.

The company in January had forecast adjusted earnings of 57 cents to 60 cents a share on revenue growth of 8% to 10%.

Revenue from product and licenses, or new product purchases, rose 7% to $207.4 million. Revenue from license updates and maintenance, which includes annuity revenue from subscriptions paid when new licenses are purchased, rose 9%. Software-as-a-service revenue was up 14%, while professional-services revenue rose 60%.

Gross margin narrowed to 82.1% from 82.9%. Operating expenses rose 8.62%.

The stock closed down at $55.99 Wednesday.

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SunTrust earnings rise 15% to top estimates

SunTrust Banks Inc. said its first-quarter profit increased 15%–beating market estimates–as the regional bank benefited from lower credit-loss provisions, offsetting a drop in revenue.

The Atlanta-based bank posted a profit of $405 million, up from $352 million a year earlier. Per-share earnings, which reflect the payment of preferred dividends, were 73 cents, up from 63 cents a year earlier.

Revenue declined 4% to $2.03 billion as mortgage production fell.

Analysts polled by Thomson Reuters expected earnings of 66 cents a share on $2.01 billion in revenue.

SunTrust, like other regional lenders, had benefited in recent years from a mortgage-refinancing boom prompted by low loan rates. But, as mortgage rates crept higher last year, refinancing demand died down, pressuring banks to trim costs to make up for weaker revenue.

For SunTrust, noninterest expense edged up slightly in the latest quarter to $1.36 billion because of higher salaries related to hiring in some businesses, the company said.

SunTrust, one of the largest lenders in the Southeast, has spent the past year trying to put to rest legal issues tied to mortgages made leading up to the financial crisis.

In October, the company said it would pay more than $1 billion under settlements with federal authorities over various home-loan practices. In February, it said in a regulatory filing that it was continuing to negotiate final terms for some of those agreements and noted it may not be able to reach a final agreement with the Federal Housing Administration over matters involving the agency.

Regional lenders have reported mixed results in recent days, as declining mortgage activity and low interest rates have constricted revenue growth. At the same time, some banks, including U.S. Bancorp, PNC Financial Services Group Inc. and BB&T Corp., have noted signs that demand for commercial loans is increasing, fueling optimism that loan growth could accelerate in the second half of the year.

SunTrust said its total loans increased 6.9% to $129.2 billion in the quarter, driven by growth in the company’s business and commercial real-estate loan portfolios. Provision for credit losses was $102 million, down from $212 million a year earlier.

SunTrust has been focused on expanding its corporate-banking services. In November, the company said its SunTrust Robinson Humphrey business was opening new offices in Dallas, San Francisco and Chicago to focus on midsize and large corporate clients in those markets.

Earlier this month, the company said it acquired Lantana Oil & Gas Partners, a firm that focuses on acquisitions and divestitures in the energy industry.

SunTrust’s shares were inactive premarket on Monday. The shares closed down 0.6% at $37.95 on Friday.

Ben Fox Rubin contributed to this article.

Corrections & Amplifications

The original version of this article misstated the provisions for credit losses in the prior year. The provision was $212 million, not $202 million.

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Hasbro swings to profit as girls’ products soar

Hasbro Inc. HAS +1.17% said it swung to a profit in the first quarter as costs fell and sales in the girls’ product category soared.

Earnings topped analysts’ expectations, while revenue fell short.

Hasbro’s results demonstrated signs of improvement amid continued difficulty in the toy industry as children turn more to electronic games and consumer electronics. Last week, rival toy maker Mattel Inc. MAT +1.20% posted a surprise first-quarter loss as core brands such as Barbie and Fisher-Price suffered sales declines.

Hasbro’s boys’ product sales–including such brands as Transformers, which has a new feature film headed to theaters this year–rose 2.1% to $247.8 million in the quarter. Demand for Hasbro’s toys traditionally considered for girls–such as My Little Pony–has recently grown in comparison. Sales in the girls’ category rose 21% to $138.7 million.

Games sales fell 4.5% to $220.5 million, and preschool sales fell 3.6% to $72.5 million.

Hasbro posted a profit of $32.1 million, or 24 cents a share, in the first quarter, compared with a loss of $6.7 million, or 40 cents a share, a year earlier. Excluding tax benefits and other items, per-share earnings rose to 14 cents from five cents. The year-ago period adjusted per-share earnings figure excluded a negative impact of 14 cents related to restructuring charges and other costs.

Revenue improved 2.4% to $679.5 million.

Analysts surveyed by Thomson Reuters had recent projected earnings of 10 cents a share and revenue of $690 million.

Gross margin widened to 61.9% from 59.7% as the company’s input costs fell 3.4%. Overhead expenses also declined, falling 4.6%.

Sales in the U.S. and Canada fell 1.3%, with revenue growth in the girls’ category offset by declines in other segments, while international sales improved 5.4%.

Shares of Hasbro were inactive premarket. The stock, which closed at $54.61 Thursday, is down less than 1% so far this year.

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McDonald’s to give China restaurants a makeover

BEIJING– McDonald’s Corp. is looking to beef up its image in China to lure diners amid an economic slowdown that could send them looking for cheaper alternatives.

The Oak Brook, Ill., company is overhauling a number of its China-based stores in places like Beijing, Shanghai and Guangzhou using a local designer, according to a company statement. It is also launching a new advertising campaign that focuses on Chinese aspirations and recruiting more locals to run its franchises in China. McDonald’s will also feature basketball star LeBron James in China-focused commercials later this year, the statement said.

The fast-food chain is also airing a three-minute ad that will appear later Friday, just after the widely watched evening news on China’s state broadcaster China Central Television. Both the length and time slot mark a rare purchase for McDonald’s. WPP PLC’s media-buying agency Group M estimates that time slot costs about $131,000.

The move comes as China’s economic growth slows. The country reported Wednesday that first-quarter growth fell to 7.4% from a year ago, its lowest level in 18 months and down from 7.7% in the fourth quarter. There is little sign that the economy will manage much faster growth in the near term.

China’s would-be burger eaters head to cheaper local restaurants, like noodle joints, as the speed of growth slows, executives told investors last year in conference calls. A McDonald’s Egg McMuffin with soy milk costs around 14 yuan, or $2.25, roughly double the price of buying steamed buns and soy milk at a street-side shop.

Last year, McDonald’s faced tough times in China, with comparable sales down 3.6% compared with 2012.

Industry experts say localizing is a good move for McDonald’s, which struggled initially in China because it didn’t localize its menu while other rivals did.

“This should help the company attract consumers that might otherwise be going to other restaurants,” said Ben Cavender, a principal at Shanghai-based consultancy China Market Research.

McDonald’s faces challenges in other markets. In Japan it named a new chief executive last August in an attempt to reverse falling sales and profits. It has shuffled its menu items, introducing free extra condiments, new breakfast plates and cheaper hamburger options. In its home market, the burger chain acknowledged in November that U.S. customers were rebelling against long wait times and menus that changed too often.

Chief Executive Don Thompson told investors in January that the company has emphasized value offerings in China and that “given the opportunities inherent in a growing, more prosperous middle-class, we also continue to grow through expansion in China. We opened 275 restaurants last year.”

McDonald’s has said it plans to open another 300 restaurants in China this year, adding to its nearly 2,000 in the country.

With new store designs incorporating wood and brick patterns pulled from China’s dynastic era, and a menu that added green tea ice cream this year and rice dishes last year, McDonald’s is signaling an attempt to look more Chinese. New commercials zero in on reaching customers who aspire to own a car and buy a house.

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Chobani revamps product line-up, mulls IPO

Chobani Inc. is venturing beyond the basic yogurt cups that made it famous, with plans to launch an array of new Greek yogurt products this year including desserts and savory dips.

The top seller of Greek yogurt in the U.S. is hoping the products will allow it to gain traction with consumers “beyond breakfast” to help continue its rapid growth, Chobani marketing chief Peter McGuinness said in an interview.

Chobani previously has strayed little from the fruit-infused, single-serving portions that largely ignited the Greek yogurt craze in the U.S. about eight years ago. The new products, which Chobani plans to start selling this summer and fall, include pudding-like desserts that it hopes will compete with ice cream. It also will sell yogurt dips in savory flavors to woo fans of hummus, guacamole and Greek tzatziki. Chobani hasn’t provided details of the dips.

Chobani’s plans also coincide with the company’s exploration of options to raise capital-such as by selling a stake to a private investor or taking it public. People familiar with the situation have said such a deal could value the company around $5 billion.

Founded by Turkey-born entrepreneur Hamdi Ulukaya, Chobani upended the yogurt business in the U.S. with a product that is higher in protein, lower in sugar, and thicker and creamier than typical yogurt. The company’s revenue soared 32% last year, and it expects to beat that growth rate this year, with about $1.5 billion in sales.

Chobani’s market share has dipped slightly in the last couple years, but it still holds the top spot with about 38% of total Greek yogurt sales, according to data from market-research company Nielsen.

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Vaporin Inc – VAPO

Vaporin – The Premier Electronic Cigarette

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Chipotle profit rises on stronger sales, traffic

Chipotle Mexican Grill Inc. said first-quarter income improved 8.5% as the burrito chain continued to post strong same-store sales growth amid higher traffic.

The restaurant chain boosted its expected growth in same-store sales for the year, now predicting a rise in the high single digit range, from its prior view of a low to mid-single digit range improvement.

Shares jumped about 5% premarket after the company easily beat revenue estimates, though earnings were below market expectations.

The restaurant chain has been able to post strong earnings growth in recent quarters despite higher food costs, thanks to rising traffic and sales. The company–part of the growing “fast casual” segment in the restaurant industry that includes Potbelly Corp. and Panera Bread Co. — has been working to strip out genetically modified ingredients from its menu, recently substituting a non-GMO sunflower oil for a genetically modified soybean oil it had been using.

Chipotle said same-store sales, or sales at locations opened at least 13 months, rose 13% in the latest quarter, driven by heavier traffic.

Overall, Chipotle reported a profit of $83.1 million, or $2.64 a share, up from $76.6 million, or $2.45 a share, a year earlier. Revenue jumped 24% to $904.2 million.

Analysts polled by Thomson Reuters forecast a profit of $2.86 a share on revenue of $874 million.

Food, beverage and packaging costs rose 30%, and food costs accounted for 34.5% of total revenue, up from 33% a year earlier. The increase was driven by inflationary pressures in beef, avocados and cheese prices, the company said.

The company’s board also approved a $100 million increase in Chipotle’s stock buyback plan, adding to the $77 million already authorized as of March 31.

Chipotle had mulled a round of price increases at some point last summer but ended up declining to raise prices, saying food inflation had stabilized. In January, it said it would likely raise menu prices in the third quarter.

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Barnes & Noble chairman Leonard Riggio cuts stake

Barnes & Noble Inc.’s chairman and largest shareholder, Leonard Riggio, again trimmed his holdings in the struggling book retailer, selling about $64 million in the stock Wednesday.

Mr. Riggio sold 3.7 million shares at $17.30 each in a privately negotiated block trade. Shares closed Wednesday at $18.60 and slid about 4% premarket.

Mr. Riggio, who remains the company’s largest shareholder with a 20% stake, said the sale was made for “long-term financial and estate planning,” adding that he has no plans to sell more stock in 2014.

The sale comes after Mr. Riggio sold about two million shares in the company in December. At the time, he said in an interview he was making the sale to offset gains from other investments for tax purposes and didn’t have “any intentions of selling more shares.”

“After this sale I remain the company’s largest shareholder, a position I feel very good about,” Mr. Riggio said in a statement on Thursday. “I love this company and I believe in its future as I do in all of the wonderful people who work here.”

Earlier this month, Liberty Media Corp. also agreed to reduce its stake in Barnes & Noble. John Malone’s media company said it would retain about 10% of its stake and Liberty Chief Executive Greg Maffei has left the company’s board.

The company’s shareholders have been hurt by the transformation of the traditional bookselling market in recent years. Barnes & Noble’s shares have plummeted in recent years, as Inc. has fortified its position in bookselling, including through the emergence of e-books.

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Endurance Specialty Holdings Ltd.

Endurance Specialty Holdings Ltd. made public its $3.2 billion bid to acquire Aspen Insurance Holdings Ltd., after being rebuffed by the property and casualty insurer.

Endurance is offering stockholders $47.50 a share in cash or stock, or a combination of the two, representing a 21% premium to Friday’s close and a 15% premium to Aspen’s all-time high of $41.43 on Dec. 31.

“Despite our repeated attempts since late January to engage in confidential and friendly discussions, Aspen’s board and management have rebuffed our proposal and refused to engage with us, thereby denying Aspen’s shareholders the ability to understand and attain the clear financial, operational and strategic benefits of this transaction,” Chairman and Chief Executive John Charman said in a statement Monday.

An Aspen spokesman wasn’t immediately available to comment.

Mr. Charman said the companies’ specialized businesses, “such as Endurance’s market-leading agriculture insurance business and Aspen’s Lloyd’s operations, are highly complementary.”

Endurance expects the combined company would generate annual cost savings of more than $100 million, leading to per-share earnings growth in 2015.

Mr. Charman also plans to purchase $25 million of Endurance shares in connection with the proposed acquisition, in addition to the $30 million of personal capital he said he has already invested in the company.

The cash portion of the offer would be funded from Endurance’s cash resources and $1.05 billion of newly issued common shares to investors led by funds advised by CVC Capital Partners Advisory (U.S.) Inc.

The offer will be subject to proration to achieve a mix of 40% cash and 60% Endurance stock.

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