Shares of sportswear maker Lululemon Athletica Inc. (NASDAQ:LULU) have dropped to fresh lows, underperforming the S&P 500 Index amid concerns about the company’s sales growth. On Wednesday, the company was at the bottom of the S&P 500 Index and its stock had further declined by 10% after the departure of the company’s Chief Product Officer Sun Choe. This decline follows a downbeat year for the stock, which is down 41% year-to-date, making it the worst performer in the S&P 500 Index for 2024.

The downturn marks a reversal for Lululemon, which has benefited in recent years from a strong demand for its premium leggings and other sportswear. However, the company’s shares have been weighed down this year by lackluster full-year guidance, indications of softening sales trends in the first quarter, and increasing competition.

Wedbush Securities analyst Tom Nikic believes that Lululemon’s shares may not be worth as much as they have been in the past. Nikic lowered his price target for the stock to $397 from $492, but he still has a positive recommendation on the stock.

The company will report its first-quarter earnings on June 5. According to Evercore ISI analyst Michael Binetti, investors will be looking for updates on Lululemon’s product development and merchandising plans; Binetti said that while he still believes the company имеет потенциал to grow internationally, he removed Lululemon from his top picks list.

Binetti emphasized that Lululemon’s guidance for the second quarter is particularly important, given the recent softness in U.S. sales trends. John Zolidis, the founder of consumer-focused investment adviser Quo Vadis Capital, agreed, saying that he no longer believes Lululemon shares are a good investment and highlighted comments by the company during its March earnings call.

There are other positive signs for Lululemon. Nikic noted that the company has scaled back on discounts in May, which could lead to a stabilization of trends in the current quarter.

Lululemon is not the only sportswear company facing challenges, as consumer spending has decreased. Nike Inc. (NYSE:NKE) shares are down 15% this year as the company seeks to reignite sales growth, while Under Armour Inc. (UAA) shares have fallen by 24% amid a business restructuring. However, On Holding AG and Deckers Outdoor Corp. (DECK) shares have risen in 2024 due to strong demand for their sneakers.

Binetti said that the sportswear industry remains healthy despite the recent softness in sales and pointed to new entrants, such as Deckers’ Hoka sneaker brand and Alo Yoga, as examples of brands that are driving consumer interest in the category.