How can giants break through in the market of new sports fashion products?

Because the revenue in the fourth quarter was lower than expected and the performance guidance was lowered, the stock price of the sport shoe and clothing giant$Nike (NKE.US)$plummeted nearly 12% after the Thursday closing bell.

In the financial report, Nike stated that the reason for the adjustment of its performance guidance for the next fiscal year is due to the decline in sales volume of its stores and online sales, the decline in classic shoe business such as Air Force 1, and "unbalanced consumption trends" in various markets around the world.

On the same day, due to the lower-than-expected revenue in the second quarter, another major jeans manufacturer,$Levi Strauss & Co. (LEVI.US)$fell by 15% to the lowest in eleven weeks.

Since the beginning of this year, the stock performance of sportswear brands$Lululemon Athletica (LULU.US)$has also been very bleak, with a cumulative decline of nearly 40%, becoming the worst-performing stock in the S&P index. In the previously announced Q1 financial report, lululemon had stated that its US store sales began to decline and lowered its full-year revenue guidance.

New trend impacts sportswear market: from "skinny" to "loose".

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

Levi Strauss & Co provided a clue - according to company CEO Michelle Gass's statement in the Q2 conference call, sales of loose-fitting jeans increased by 21%.

The trend of loose and wide-leg jeans is resonating, and the main consumer group is very excited.

For sportswear brands such as Nike and lululemon, the consumer preference for loose-fitting clothing is a potential risk, which may explain why their market performance is not as expected.

Jefferies analyst Randal J. Konik pointed out:

"(Levi Strauss) management's comments support our view that the sports apparel market is becoming more normalized, the fashion trend is shifting towards jeans/loose-fitting styles, and this may have an impact on sports apparel retailers such as lululemon."

Konik said that since the beginning of this year, the interest in "wide-leg pants" has increased by 9%, while the interest in "bell-bottoms" and "skinny pants" has decreased by approximately 13% and 16%, respectively.

Konik further pointed out that lululemon may be more significantly affected than Nike, as its main consumer group is women, and the market shift towards loose preferences may contradict its brand values and core products.

With new products coming out, sportswear giants are struggling with transformation

As Levi Strauss & Co CEO said, the sportswear market is recovering, but Nike and lululemon, the two largest sportswear brands in the world, disappointed the market with their performance.

This seems to mean that behind the shift in loose preference, the sportswear market is facing a deeper crisis, and it is leading the industry giants with a wider market foundation.

Some people believe that sportswear products have both "sports" and "fashion" attributes, so brands often focus on two points: one is to improve professional performance, and the other is to innovate in products.

Both of which mean high cost investment in research and development and marketing, and brands are constantly facing new product shocks in the rapidly changing fashion trends.

The analyst believes that Nike's sportswear sales have long relied on a few classic styles, and the marketing effect is mediocre, leading to a gradual decline in sales. In yesterday's financial report, Nike also emphasized that it will accelerate the pace of innovation and transformation in the future.

Lululemon is facing the opposite dilemma, that is, it pays too much attention to product innovation and lacks core competitiveness.

Therefore, although lululemon continues to launch so-called more powerful and eco-friendly categories, consumers don't seem to buy it:

The problem is whether this is what consumers really want, or whether the leisure and sports concept of lululemon has completely penetrated people's hearts.

Editor/new