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Denim’s Return May Spell Doom for Lululemon

Denim is coming back into fashion and those that benefited most during the reign of athleisure may soon find themselves in trouble.

Brokerage firm Canaccord Genuity downgraded stock of Lululemon Athletica on Friday from market Hold to Sell, citing concerns over the return of denim into the marketplace.

“After a strong eight-year cycle, we believe the athleisure apparel trend has peaked,” equity analyst Camilo Lyon wrote to clients on Friday, CNBC reported.

Lululemon, which helped usher in the athleisure era with its trendy yoga pants and athletic wear, is highly exposed to the rise of denim, an area in which the company has virtually no presence.

Lyon believes shoppers are transitioning from athletic wear to denim, a break the denim world has been waiting for since the athletic wear trend began.

Some brands, like Lucy, tried to cope with the market by developing athleisure lines that incorporated denim.

Now, brands like Lululemon might be affected by consumers going back to denim. Shares of the company, which will report its Q3 earnings on Dec. 7, are down nearly 18 percent over the last six months.