In its domestic operations, Krispy Kreme ended the quarter witha net decrease of three locations, for a total of 404 combineddomestic and international stores at the end of the quarter.Company officials discussed the store count and the quarterlyresults Monday in a conference call with financial analysts.

Krispy Kreme "still faces some longstanding challenges" but isturning around, company president and CEO Daryl Brewster said inthe conference call. "During the quarter, we improved our averageweekly sales per company store and slowed the decline in systemwidesales," Brewster said. He noted that the company refinanced itscredit lines to cut costs and made progress in reducing othergeneral and administrative costs. In addition, "Our internationalfranchisees continued to show significant growth," Brewstercommented.

"The majority of our franchisees are growing today," Brewsteradded. He said that, as he explained at the Krispy Kreme annualshareholders' meeting yesterday, the company "has continued to makeprogress on its turnaround." The chain has become current on itsfinancial filings, reduced long-term debt and borrowing costs andhas finished refiling documents required for franchising in certainmarkets.