Investors have seen plenty of signs of stress on Carnival (CCL 0.88%) lately, which have culminated in two consecutive 2019 outlook downgrades by the cruise ship giant. Conditions haven't improved over the last few months. In fact, Carnival said this past week that a range of economic challenges in places ranging from the U.K. to the Arabian Gulf are pressuring growth for the industry and for Carnival in particular.

In a conference call with analysts, CEO Arnold Donald and his team said the company is making the necessary changes to respond to these issues, including moving ships out of underperforming regions to better utilize its fleet capacity. Still, Carnival is bracing for more headwinds continuing into 2020.

Let's look at management's key takeaways from the third-quarter results.

Two couples in front of a cruise ship.

Image source: Getty Images.

Struggles in Europe

Our Continental European team performed very well, especially given the environment, and our growth in these markets has continued to outpace general travel. However, growing into a contracting travel markets does impact ticket prices.

-- Donald

Carnival's net revenue yields, a core industry growth metric, slipped into negative territory this quarter, marking a significant slowdown from last year's 4% increase. The biggest drag came from the company's European cruises, which saw weak demand in places like Germany, the U.K., and southern Europe.

Management was able to keep these voyages full, but not without giving ground on prices. Average ticket prices declined by 3.5% in the Europe and Asia segment, executives said.

Navigating recessions

We assume every ship will see more than one recession in its 30-year life.

-- Donald

The European economic issues have worsened to the point that management doesn't see the industry rebounding anytime soon. Thus, executives are moving capacity out of some markets and removing exotic itineraries to focus on more-affordable voyages.

Carnival expressed optimism that these ship assets will remain productive even if economic growth keeps slowing in key markets around Europe and Asia. "We believe our cruise brands will continue to be recession-resilient," Donald said.

Lowering the outlook

Our adjusted EPS [outlook] for 2019 is $4.23 to $4.27 versus $4.26 for 2018. The midpoint of our September guidance is $0.05 lower than the midpoint of our June guidance.

-- CFO David Bernstein

Carnival lowered its earnings outlook for a third consecutive time, and its latest prediction leaves the door open for adjusted earnings to come in below last year's $4.26 per share. The weaker ticket prices in parts of Europe join several other financial pressures -- including disruptions from Hurricane Dorian, geopolitical challenges in the Arabian Gulf, and the loss of Cuba as a destination -- in hurting the consumer discretionary stock's short-term earnings prospects.

The company still believes its U.S. sailings will grow while the Europe and Asia segment contracts. But trends in both regions are slightly worse than management noted back in July.

Aiming for better momentum

During the fourth quarter, you will see a step-up versus prior year in our promotional activity focused on 2020 bookings.

-- Bernstein

Carnival plans a large marketing boost in the current quarter, which helps explain why management lowered its earnings outlook despite this past quarter's outperformance. The extra advertising is aimed at supporting 2020 bookings, which to date have been a bit weak in volume and pricing.

The company is expecting to have 7% higher capacity in place for the year, and its success in filling those cabins with vacation commitments over the next few months will determine whether Carnival gets any help from increasing revenue yields or instead has to rely solely on capacity growth to deliver the modest sales gains it is targeting in 2020.