Lululemon Athletica (LULU) shares fell more than 4% on Wednesday, a day before the company’s second-quarter earnings report was released, as several analysts cut their price targets and said they expected the apparel maker to lower its internal forecasts for the year.

Analysts expect Lululemon to report a 9% increase in revenue to $2.41 billion when it releases earnings after the market close on Thursday, compared to $2.21 billion a year earlier. Net income is expected to increase nearly 8% to $368.52 million from $341.6 million in the second quarter of 2023.

Analysts expect lower forecast due to declining sales and spending on unnecessary capital

Last month, analysts at JPMorgan cut their price target on Lululemon stock to $338 from $457, citing concerns that a pause in sales of the company’s new “Breezethrough” leggings due to negative customer feedback could impact other planned product releases and sales in the second half of the year.

The price target change and broader concerns about lower discretionary spending sent the stock to its lowest level since May 2020.

In the week leading up to Lululemon’s earnings release on Thursday, several other analysts cut their price targets, including Wedbush Securities (from $400 to $324), Raymond James (from $400 to $350) and UBS (from $385 to $315).

Wedbush analysts said Wednesday that Lululemon’s potential guidance cut in Thursday’s earnings report could prove to be a “clearing event,” allowing investors to refocus on the company’s “compelling growth opportunities” and strong financials after adjusting its revenue expectations for the year.

“Unfavorable” sales development at similar companies

Raymond James analysts said Tuesday that the suspension of Breezethrough products puts “more pressure” on Lululemon’s other new products to beat second-half sales expectations. The analysts also noted “unfavorable” sales trends at companies like Ralph Lauren (RL) and Tapestry (TPR), which also target higher-income customers who make up a large portion of Lululemon’s customer base.

UBS analysts wrote last week that their discussions with investors suggest Lululemon’s second and third quarter U.S. sales performance “looks weak,” while some believe there’s “a good opportunity to buy an exceptional brand on a big dip” given that shares have lost roughly half their value since the start of 2024.