The Casualwear Boom May Be Over: Why Bank of America Sees Trouble Ahead for Adidas

A Contrarian Call in a Bullish Market

While most of Wall Street remains optimistic about Adidas after the brand’s turbulent 2024-2025 period, Bank of America has struck a decidedly different tone. The financial giant has reassessed its position on Adidas stock through a rare double downgrade, shifting from a “buy” rating to “sell”—a move that stands in sharp contrast to the prevailing bullish consensus among analysts.

The catalyst behind this bearish pivot? BofA believes a two-decade-long cultural shift in how people dress is finally reversing, and Adidas, having built much of its growth narrative around this trend, is uniquely vulnerable to the fallout.

The Casualization of Society: From Anomaly to Norm

To understand BofA’s thesis, we need to look back at the extraordinary transformation in apparel norms over the past 20 years. What was once considered inappropriate—wearing sneakers to formal events, pairing athleisure pieces with business attire, or sporting casual clothes drawing from loungewear in public spaces—has become mainstream.

The evidence is everywhere. Airport terminals now regularly feature travelers in pajamas. Television personalities casually mix high-end sneakers with tailored blazers. Even corporate environments have quietly accepted denim-and-hoodie combinations. Brands like Vuori and Alo have capitalized on this shift, pricing casual sweatpants at levels that rival or exceed traditional dress pants.

This wasn’t just a fashion fad—it was a fundamental rethinking of what constitutes acceptable public appearance.

The Data Tells a Story of Saturation

BofA’s research provides concrete numbers to support the narrative of trend saturation. Twenty years ago, sneakers represented roughly 20% of the total footwear market. Today, they account for approximately 50%. It’s a remarkable expansion that has fueled the athletic and casual apparel industry’s growth trajectory.

However—and this is where BofA’s argument becomes compelling—the financial institution contends that this expansion phase has reached its plateau. Further growth in sneaker market share seems unlikely, as the category has already captured half the market. At a certain point, saturation becomes inevitable.

What This Means for Adidas

The implications for Adidas are stark according to BofA’s analysis. As the casualwear trend plateaus and potentially reverses, the bank predicts Adidas’ organic sales growth will decelerate into single-digit territory. The brand’s core appeal—rooted in the athleisure and casual movement—risks erosion.

This forecast prompted BofA to downgrade Adidas stock to “underperform” and assign the lowest price target among major research firms. The market response was immediate: Adidas shares fell as much as 7% following the announcement.

A Market Divided: The Outlier Effect

What makes BofA’s call particularly notable is its isolation. The broader analyst community has maintained generally positive sentiment toward Adidas, especially following the stock’s 29% decline in 2024-2025. Many peers view the recent selloff as an opportunity for accumulation.

BofA’s bearish stance appears to rest on a different analytical foundation—not optimism about near-term recovery, but concern about structural headwinds as fashion trends shift.

The Competitive Chessboard

BofA doesn’t view Adidas’ challenge in isolation. The bank notes that other athletic brands—Asics and On among them—stand to face similar pressures as consumer preferences potentially shift away from casual and back toward performance-oriented sportswear.

But the most significant competitive threat may come from Nike. While Nike has experienced a 14% stock decline since the start of 2025, this underperformance trails Adidas’ steeper losses. BofA’s research suggests that Nike, currently navigating a turnaround under newly returned CEO Elliott Hill, could emerge as the relative winner if consumer tastes truly rotate back toward traditional athletic wear.

Historically, Nike and Adidas have exhibited inverse performance patterns—when one gains traction, the other often loses ground. If that pattern holds true during a shift away from casualwear, Nike could be the beneficiary.

The World Cup Wildcard

Some investors have speculated that Adidas’ sponsorship of star player Lionel Messi for the World Cup could provide a revenue tailwind. BofA counters that any such boost would be temporary and event-specific, insufficient to reverse the longer-term headwinds facing the brand.

A Potential Silver Lining

If BofA’s thesis proves correct and casualwear’s dominance wanes, one unexpected group may celebrate: fashion traditionalists who have long lamented the erosion of dress codes in formal settings. The potential end of seeing sneakers paired with business suits could signal a return to more conventional standards of professional appearance—a development some would welcome as a restoration of established norms.

For Adidas, however, such a shift represents not vindication but challenge.