Tepid store traffic.
"U.S. traffic remains challenged," said veteran Wells Fargo analyst Bonnie Herzog on Wednesday after meeting with Starbucks investor relations. "While morning traffic has been positive, some of this has likely come at the expense of afternoon traffic, which remains weak and where most of the work still needs to be done (but where Starbucks is implementing multiple turnaround initiatives)."
Herzog added that she is encouraged by Starbucks' efforts to jumpstart its traffic, focusing on efforts such as new product introductions and "stepped up" digital initiatives.
Starbucks has battled U.S. traffic challenges for much of 2018 as consumers sidestep sugary frappes and rival chains like Dunkin' Brands (DNKN - Get Report) have offered sharp promotions on iced and drip coffee. The company has also had to deal with more consumers purchasing premium, ready-to-drink coffee from grocery store chains.
Starbucks saw U.S. same-store sales rise a meager 1% in the most recent quarter. Customer transactions, a key insight into traffic trends, dropped 3% while average ticket rose 4%.
The stock has fallen about 7% year to date.