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Krispy Kreme (NYSE:KKD) was once known for long lines and melt-in-your-mouth doughnuts. Krispy Kreme has fallen from those highs after running into several issues that were caused by a quick expansion. KKD was forced to close several stores and cut costs in an effort to save the company. KKD has been working hard to turn the company around and is now starting to see the benefits.

Here are some things that KKD is doing right. It saw revenues increase in the second quarter 11.4%, to $98 million. This is compared to revenues of $87.9 million in the same quarter the previous year. Corporate-owned locations saw same store sales increase 2.5%. This marks the 11th consecutive quarterly increase. KKD has about 88 corporate locations and 581 franchised locations system wide. Net income increased to $8.8 million compared to $2.2 million in the same quarter the previous year. KKD saw double digit earnings growth even after excluding a nonrecurring gain.

The company lowered interest expense by 75% to $410,000 from $1.6 million, mainly due to lower interest rates after refinancing corporate debt early this year. International franchisee revenue increased 33.5% to $5.4 million from $4 million. This revenue increase was mainly due to changes in foreign exchange rates. Almost half of the locations in the system are located internationally. This could be a huge benefit for KKD if the dollar were to continue to deteriorate.

Green Mountain Coffee (NASDAQ:GMCR) founder Robert Stiller has increased his position in Krispy Kreme to 11%. Many are speculating that this increases the possibility of a deal which may include a partnership with Green Mountain Coffee or a possible buyout.

I'm bullish on Krispy Kreme and feel that this company is heading in the right direction. The company has successfully been able to pass on cost increases due to supply costs. KKD also looks to benefit from a declining dollar due to its large amount of international locations. KKD has seen a big run up in shares so pullbacks should be great opportunities to get in.

Source: Krispy Kreme: Turnaround That's Making Shareholder Profits