In a significant shift for the fashion and retail industry, analysts at Bank of America have declared that the decades-long trend of 'casualisation' in clothing has finally reached its peak. This cultural shift, which saw sneakers explode to claim 50% of the footwear market from just 20%, is now due for a correction. The immediate casualty appears to be sportswear giant Adidas, which faces a challenging road ahead.
The End of an Era: Casual Wear Loses Its Shine
For twenty years, societal dress codes have relaxed dramatically. What began with wearing pyjamas to airports and hoodies to workplaces evolved into jeans and sweatpants being acceptable at most dinner venues. This widespread casualisation fueled an unprecedented boom for sneaker brands. However, Bank of America's latest analysis suggests this trend has now topped out, signaling a need for market adjustment. The financial institution has taken the bold step of double-cutting its rating on Adidas stock from 'buy' to a deliberate 'underperform'.
Adidas in the Line of Fire, Nike Catches a Break
The implications for Adidas are severe. The bank predicts a decline in the brand's organic sales growth as it loses its dominant casual appeal. The market reacted swiftly: Adidas shares fell as much as 7% in a single day following the downgrade. This drop adds to a painful 29% decline in the company's share price since last year. Analysts have grown notably quiet on the stock's prospects.
In contrast, competitors like Nike and Asics are poised to benefit as consumer spending pivots from pure casual attire toward performance-oriented sporting goods. Nike, in particular, recently enjoyed a viral marketing win when detained Venezuelan President Nicolás Maduro was photographed in a Nike Fleece tracksuit, leading to the item selling out within minutes. The company's latest earnings report showed strong sales increases in the crucial North American market, indicating positive momentum. While Nike's stock is also down about 14% since the start of last year, this is less than half of Adidas's decline.
A Silver Lining and a Competitive Reversal
Historically, Adidas and Nike have often seen inverse revenue growth patterns. The current situation appears to be another chapter in that rivalry, where one brand's struggle coincides with the other's resilience. Bank of America's grim outlook for Adidas does come with a potential upside, however. The analysts wryly noted a possible benefit: 'the end of the sneakers-with-suits epidemic'.
As the casual wave recedes, the athletic wear market is entering a new phase. Brands that successfully navigate the shift from everyday casual wear back to technical performance and style innovation are likely to capture the next wave of consumer spending. For now, Adidas faces the urgent task of reinventing its appeal in a post-peak casual world.
