UPDATE: Bank of America has just announced a significant double-downgrade for Adidas, marking a dramatic shift in the company’s outlook. The financial giant now holds a “sell” rating on Adidas shares, forecasting a troubling end to the 20-year era of casual fashion.
As society embraces more relaxed attire—think pajamas at airports and sneakers paired with suits—BofA warns that this trend has reached its peak. The casualization of fashion, which saw sneakers rise from 20% to 50% of the footwear market, is now showing signs of stagnation. Analysts predict that Adidas will suffer, with organic sales growth expected to dwindle into single digits as its brand appeal fades.
In a bold move, BofA cut its rating on Adidas from “buy” to “underperform,” defying the overall optimism among Wall Street analysts, who remain bullish following a challenging 2025. On Tuesday, shares of Adidas plummeted by as much as 7%, reflecting investor concerns over the brand’s diminishing strength.
BofA’s research suggests that competing brands like Asics and On, which have also benefited from the casualization trend, will continue to challenge Adidas as consumers shift their spending toward more activewear and sporting goods. Nike, a major player in the sportswear industry, is positioned to capitalize on this trend, especially following a strong earnings report that indicated robust growth in North America.
Amid these developments, the upcoming FIFA World Cup, where Adidas’ star athlete, Lionel Messi, is expected to draw attention, may not provide the boost the brand hopes for. BofA cautions that once the excitement of the tournament fades, Adidas will still face persistent challenges through the end of the year.
As the sneaker-with-suits trend potentially comes to an end, consumers may experience a shift back towards more traditional attire, suggesting that the fashion landscape is evolving yet again. The implications for Adidas are serious: a sustained downturn could lead to significant market repositioning and loss of brand loyalty.
Investors and fashion enthusiasts alike are closely monitoring these developments as Adidas grapples with its identity in a rapidly changing market. The next few months will be critical for the brand as it navigates these challenges and tries to reclaim its position within the fashion industry.
