Taiwan's Gourmet Master, the company behind the 85°C bakery-cafe chain, turned in its strongest quarter of profit in five years as it shrank its troubled China business.

• Second-quarter earnings per share hit a five-year high, and first-half earnings jumped over 70% from a year ago.
• Revenue is actually down about 11% for the year so far, so the gain came from cutting costs, not selling more.
• The company closed a wave of weak stores in China, dropping below 300 there and cutting China to just 22% of sales.
• The US is now the growth engine at 58% of sales, with the store count heading toward 100 by year end.
• Remaining China stores are selling more per day than last year, a sign the cleanup is working.

Outlook: Expect the US to keep taking share of the business while China shrinks further, with profits improving even as total sales stay soft.