The stock prices of the leading fitness pants and sports shoes companies are bleak, and the leading jeans company just took a dive as well

New products are emerging in the sportswear market, how will the giants break through?

Due to lower-than-expected revenue in the fourth quarter and a downward revision of performance guidance, sportswear giant Nike's stock price plummeted nearly 12% after hours on Thursday.

Nike stated in its financial report that the reason for lowering the performance guidance for the next fiscal year is due to a decrease in sales in its stores and online, a decline in classic shoe businesses such as Air Force 1, and "uneven consumer trends" in various markets globally.

On the same day, another major jeans manufacturer Levi's saw its stock price continue to decline by 15% to the lowest point in eleven weeks due to lower-than-expected revenue in the second quarter.

So far this year, the stock performance of sportswear brand lululemon has been very poor, with a cumulative decline of nearly 40%, becoming the worst-performing stock in the S&P 500 at one point. In its previously released Q1 financial report, lululemon mentioned that sales in its U.S. stores began to decline and lowered its full-year revenue guidance.

New Trend Impacting the Sportswear Market: Shifting from "Tight" to "Loose"

At this point, industry giants in the fields of fitness pants, sports shoes, and jeans are all facing the dilemma of declining sales. Is there a common trend behind this?

Levi's provided a clue—according to company CEO Michelle Gass's statement during the second-quarter conference call, sales of loose-fit jeans increased by 21%:

"The trend around loose and wide-leg jeans is resonating, and the primary consumer group is very excited."

For sportswear brands like Nike and lululemon, the consumer preference for loose-fit styles poses a potential risk, which may explain why their market performance has been below expectations.

Jefferies analyst Randal J. Konik pointed out:

"Management's comments (from Levi's) support our view that the sportswear market is becoming more normalized in growth, with a shift towards denim/loose-fit styles, which could impact sportswear retailers like lululemon."

Konik mentioned that this year, interest in "wide-leg pants" has grown by 9%, while interest in "bell-bottom pants" and "tight pants" has decreased by approximately 13% and 16% respectively Konik further pointed out that lululemon may be more significantly impacted than Nike, as its main consumer group is women, and the shift towards loose preferences may contradict its brand values and core products.

New products emerge, sportswear giants struggle to transform

As the CEO of Levi's mentioned, the sportswear market is recovering, but the performance of Nike and lululemon, the two largest sportswear brands globally, has disappointed the market.

This seems to indicate that behind the shift towards loose preferences, the sportswear market is facing a deeper crisis, which is first reflected in the performance of industry giants with a broader market foundation.

Some believe that sportswear products combine both "sport" and "fashion" attributes, so brands often focus on two points: improving performance and innovating in products.

Both of these imply high costs in research and development and marketing, and under rapidly changing fashion trends, brands are constantly facing new product impacts.

Analysts believe that Nike's sportswear sales have long relied on a few classic styles, with mediocre marketing results leading to a gradual decline in sales. In yesterday's financial report, Nike also emphasized the need to accelerate the pace of innovation transformation going forward.

lululemon, on the other hand, faces the opposite dilemma, focusing too much on product innovation and lacking core competitiveness.

Therefore, despite continuously launching so-called stronger and more eco-friendly product categories, consumers do not seem to be buying it:

"The question is whether this is what consumers really want, or whether the leisure sports concept of lululemon has completely taken root in people's hearts."