The news: Athletic apparel brand Fabletics will launch its first denim collection on Thursday.

The line is designed to appeal to a wide range of consumers and body types, with 11 styles—six for women and five for men—offered across three levels of stretch, seven washes, and three inseam lengths. Women’s sizes range from 23 to 35, while men’s run from 29 to 44.

The denim, which is produced by a manufacturer with facilities in Pakistan and Guatemala, will initially be sold online at fabletics.com and in 17 of Fabletics’ 114 US stores, per WWD.

Why it matters: Fabletics’ expansion into a new category reflects the company’s recognition that even as consumers increase their health and wellness spending across food, skincare, and mental health, growth in athleisure has slowed as more employees return to offices and opt for denim and other structured apparel instead of the pandemic-era leggings, joggers, and hoodies.

As a result, the sports apparel and denim markets are trending in opposite directions; North American sports apparel sales are expected to grow 2.3% this year, down from 3.1% a year earlier, while the denim market is expected to grow 2.1% this year, up from 0.7%.

That shift in spending patterns is evident in the results of some of the most notable, established athleisure brands.

Gap Inc.’s Athleta Q4 sales fell 11% YoY to $354 million, and comparable sales declined 10%, slightly worse than its full-year performance, when sales fell 10% to $1.2 billion and comp sales dropped 9%. The retailer doesn’t expect much improvement in the first half of the year, forecasting mid- to high-single-digit sales declines for Athleta.

Lululemon’s sales have been stagnant or negative for seven straight quarters, and founder Chip Wilson has launched a proxy fight to remake the company’s board. Last week, Wilson unveiled a website that argues the brand “has lost its way” and is “in need of immediate change.”

Against that backdrop and growing competition from upstarts like Vuori and Alo Yoga, Fabletics’ move into denim represents both a diversification strategy and a bet that broader lifestyle categories may offer more growth runway than athleisure.

Implications for Fabletics and other brands: As athleisure growth slows, brands must find new avenues for expansion.

Fabletics has pursued that strategy before with moves into men’s apparel and scrubs. Denim, however, is a more ambitious leap into a crowded category dominated by heritage brands and premium labels with deep technical expertise and strong customer loyalty.

To succeed, Fabletics will need to lean into its strengths—performance fabrics, inclusive sizing, and its subscription model—to clearly differentiate its offering.

That strategy could resonate, but it carries risk. Nike offers a cautionary tale: Under former CEO John Donahoe, the company pushed aggressively into lifestyle and streetwear to drive growth. While the move boosted short-term revenues, it pulled focus from Nike’s innovation-led performance core, contributing to longer-term brand erosion. Fabletics’ success will hinge on whether denim reinforces, rather than dilutes, its athletic identity.