Adidas could be in trouble as a 20-year shift towards more casual attire comes to an end

• Bank of America gave Adidas a rare double-downgrade, and now has a "sell" rating on the stock.
• It's a contrarian call, considering the bullishness of the rest of Wall Street.
• BofA says the Adidas brand as a 20-year "casualization" of fashion draws to a close.

We as a society are far more casual than we used to be.

People wear full-on pajamas to the airport. TV hosts regularly wear sneakers with suits on live broadcasts. You might even see a sports commentator wearing a hoodie under their suit.

You can probably get away with wearing jeans to dinner most places these days. Athleisure retailers like Vuori and Alo sell sweatpants for the same price as a nice pair of slacks (or more).

The list goes on.

Bank of America has noticed too, and thinks the trend has peaked. In new research, the firm said we've reached the logical endpoint for a 20-year trend of "casualization," a period that saw sneakers explode from 20% of the footwear market, all the way to 50%.

That's bad news for Adidas, which will see organic sales growth shrink into the single digits as its brand loses luster, according to BofA.

The firm thinks the situation for Adidas is so dire, in fact, that it took the bold step of double-cutting its rating on the company's stock to "underperform," from "buy."

At a time when peers are almost overwhelmingly bullish on shares after a difficult 2025, it decided to zigzag and post the most bearish price target on Wall Street. Shares fell as much as 7% on Tuesday. But analysts on the whole remain quite bullish on Adidas shares following a 29% drop in 2025.

BofA thinks other major players in the sneaker space that have benefited from the same upcycle as Adidas — like Asics and On — will continue to pose as serious competition as consumers pivot more from casual attire towards sporting goods.

And then there's Nike.

The sportswear giant — and recent beneficiary of some viral marketing, courtesy of captured Venezuelan President Maduro — is in the midst of its own turnaround under boomerang CEO Elliott Hill. The company's last earnings report saw strong North American growth drive a sales increase, a key signal for positive future prospects.

And while Nike's stock hasn't exactly been a bright spot, down 14% since the start of 2025, that's still less than half of Adidas' decline over the period.

BofA says a sustained recovery for Nike could come at Adidas' expense, since the two companies have historically seen inverse revenue growth. In other words, if Nike grows, Adidas contracts, and vice versa.

But wait, what about the World Cup? Surely defending champion and Adidas golden boy Lionel Messi will drive massive sales during this summer's tournament?

Not so fast, says BofA. Once the endorphin rush of the World Cup passes, the firm says Adidas will be faced with the same old issues through year-end.

Although BofA expects Adidas' share price to suffer, the company's plight could come with one key silver lining: the end of the sneakers-with-suits epidemic. One can only hope.