Cost cuts help Starbucks' sales

Updated: 11:45 a.m. ET.

More people were buying Starbucks (SBUX) coffee in the past few months, helping to lift the company's sales at stores open at least one year in its most recent quarter.

Same-store sales fell 1% in Starbucks' fiscal fourth quarter, the company said late Thursday, an improvement from the 5% decline it reported in the previous quarter and an 8% drop in the quarter that ended in March. (Watch the CNBC video below for more analysis and insight.)

Starbucks has shuttered more than 900 stores to help cut $580 million in costs in its most recent fiscal year, which ended Sept. 27.

But "the future of the company is not based on cost takeouts," CEO Howard Schultz told Bloomberg News late Thursday. "It's based on innovation and the emotional connection and trust we have with our customers."

Shares were up $1.28, or 6.5%, to $20.97 at 11:45 a.m. ET. That was second-best among stocks in the Nasdaq-100 Index ($NDX.X) and fourth among stocks in the Standard & Poor's 500 Index ($INX). 

A close above $21 would be its first since Dec. 24, 2007.

Starbucks also said it earned $150 million, or 20 cents per share, in the quarter. Excluding items, the company earned 24 cents per share, topping analysts' expectations of 21 cents per share.

Revenue fell 4% to $2.42 billion, but that topped expectations of $2.4 billion.

"We believe sales, margin and buyback assumptions are all conservative and that significant earnings upside remains likely," JPMorgan Chase analalysts wrote in a note to clients. They raised their price target to $23 from $17.

Starbucks has 16,635 stores around the world, with about two-thirds of them in the U.S. The company said it plans to add a net 300 stores in fiscal 2010.

Schultz was hesitant to say that the company has turned around. 

"We have to make sure that none of the hubris and entitlement that was here returns," he told Bloomberg. "There's no sign of victory. One or two quarters doesn't make a victory."

Separately, Starbucks will partner nationally with Subway.

Its Seattle's Best Coffee brand will be in 9,000 Subway stores in the U.S. by the end of this year, and will move into more of the sandwich shops next year, Schultz said during the company's conference call about its with analysts.

Charley Blaine contributed to this report.