Shares of Canada’s Lululemon Athletica (LULU) fell 9% and hit their lowest level in four years on news that the company has halted sales of a new product line that it had just launched.
The Vancouver-based company said that it has paused sales of its Breezethrough yoga wear so that it can adjust and deliver the best possible product to consumers.
The move immediately prompted downgrades of the company’s stock among analysts and led to a sharp plunge in the share price.
JPMorgan Chase (JPM) removed Lululemon from its list of “top stock picks.” Citigroup (C) downgraded its rating on Lululemon’s stock to “neutral” from “buy” previously.
The halt to sales of the Breezethrough line of clothing is the latest setback for Lululemon, which is struggling with declining sales of its athletic wear following the Covid-19 pandemic.
Earlier this year, management had said that they expected revenue to accelerate in the second half, helped by “upcoming product launches.” That forecast now seems in doubt.
The stock of Lululemon has fallen 51% this year and is one of the worst performing stocks in the benchmark S&P 500 index. The company’s shares currently trade at $247.32 U.S.
