The Casual Dressing Era Is Drawing to a Close—What Does This Mean for Adidas?

A Two-Decade Trend Showing Signs of Reversal

The past 20 years witnessed an unprecedented transformation in global fashion preferences, with casual clothes becoming the dominant choice across all occasions. From business travelers in airport lounges wearing pajamas to news anchors pairing hoodies with formal attire, the casualization of society has been unmistakable. Athleisure brands like Vuori and Alo have thrived, selling sweatpants at premium price points previously reserved for tailored trousers. Sneakers, in particular, have captured an enormous share of the footwear market, rising from 20% to 50% over this period.

However, this extended boom cycle may finally be reaching its plateau.

Bank of America’s Bold Reassessment

In a striking reversal of confidence, Bank of America has downgraded Adidas from “buy” to “underperform,” marking a rare double-downgrade move. The bank’s analysis suggests that the era of casual clothes dominance is drawing to a close, signaling a fundamental shift in consumer preferences back toward more structured, formal dressing norms.

According to BofA’s projections, this transition will disproportionately impact Adidas. The firm predicts that organic sales growth will decelerate to single-digit percentages as the brand’s core appeal—its alignment with the casualwear boom—erodes. The downgrade also came with an exceptionally low price target, the most bearish among major financial institutions.

Market Response and Contrasting Views

The announcement triggered immediate market reaction, with Adidas shares falling as much as 7% following the report. Yet this bearish stance from Bank of America stands largely alone. Most Wall Street analysts maintain optimistic outlooks on Adidas, particularly following the company’s significant recovery potential after a challenging 2025 marked by a 29% stock decline.

This disconnect reveals a fundamental disagreement about whether the shift away from casual clothes represents a permanent structural change or merely a cyclical adjustment.

The Intensifying Competitive Battle

Beyond the trend reversal, Adidas faces mounting pressure from well-positioned competitors. Athletic-focused brands like Asics and On are expected to gain traction as performance and sportswear return to favor. More significantly, Nike—historically an inverse trading partner with Adidas—appears positioned to capitalize on this transition.

Under returning CEO Elliott Hill, Nike has demonstrated strong momentum in North America, and its recent earnings surprised to the upside. While Nike’s stock has declined 14% year-to-date, this performance trails Adidas’ sharper losses. Should Nike’s turnaround continue, market share could flow from Adidas to its larger rival.

The World Cup Factor: A Temporary Boost?

Some observers hope that Adidas’ sponsorship of star player Lionel Messi for the World Cup might provide a significant sales lift. Bank of America, however, dismisses this as insufficient. The bank argues that any tournament-driven surge would be fleeting, leaving Adidas vulnerable throughout the remainder of the year.

The Silver Lining

As consumers begin drawing away from the casual clothes trend and returning to more formal dressing, one potential beneficiary emerges: the end of the jarring practice of pairing sneakers with business suits. Whether this represents genuine fashion evolution or merely cyclical market correction remains to be seen.