This Starbucks brand isn't immune to slowing mall foot traffic

Key Points
  • Starbucks said that many of its Teavana mall stores are having a negative impact on the company.
  • Starbucks locations remain "largely unaffected" by slowing mall traffic
  • Teavana iced teas continue to add sales to Starbucks locations
Teavana will suffer as mall traffic consolidates: Howard Schultz

It seems retailers aren't the only ones feeling the pressure from slowing mall foot traffic.

Coffee giant Starbucks said that many of its Teavana mall stores are a drag on its results.

"Because Starbucks is a customer destination, profitability in our Starbucks stores have been largely unaffected," Scott Maw, Starbucks' CFO, said during an earnings conference call Thursday. "But the Teavana mall stores have not been immune, reporting negative comps and operating losses for sometime."

Maw said that 350 of its Teavana mall stores have been hurt by reduced foot traffic and that the company has begun a review process to "take clear action" to improve its Teavana portfolio.

"The seismic change that we talked about a number of years ago, with regards to compression in terms of mall traffic and street traffic, has certainly accelerated," Howard Schultz, former Starbucks CEO and current executive chairman, said Friday on CNBC's "Squawk on the Street."

Despite the slowing mall traffic, Schultz said that there is still a "meaningful subset" of profitable Teavana mall stores and that the brand's iced tea beverages have brought "significant levels of incrementality" to Starbucks locations.

The company said that Teavana has added 1 point of comp in the U.S. in just about every quarter since it was launched three years ago in Starbucks cafes.