The sweatpants-and-sneakers boom that defined wardrobes over the past two decades is running out of steam. After years of riding work-from-home habits and pandemic demand, the casualization trend looks largely tapped out. Growth is slowing, competition is tougher, and brands can no longer count on the category to carry them.

The golden era fades: Casualization pushed sneakers from roughly 20% of footwear sales in 2005 to about half the market by COVID-19, when lockdowns turned athleisure into everyday wear. Bank of America now believes that the expansion phase is over, slapping a rare double-downgrade on AdidasADDYY

and declaring the casualization trend — the shift that lifted athletic footwear to 50% market share — essentially complete. Analysts led by Thierry Cota say the transition has run its course, leaving brands searching for their next growth engine.

• The industry downcycle began in Q2 2023 and should be ending by historical standards, but KPIs from brand traction to supplier sales still point to sluggish growth ahead.
• US sports participation, which accounts for more than 40% of sector revenue, is no longer rising, removing a key lever brands relied on to counter market saturation.

Comfort Hits Resistance

The casualization slowdown is hitting more than just Adidas. LululemonLULU

saw its stock sink more than 40% in 2025 as the brand lost momentum against faster-moving rivals. Founder Chip Wilson argues the company lacks the creative leadership needed to compete and that the goal should be to rebuild “a brand of enduring strength.” But they’re not the only ones:

• Deckers OutdoorDECK
  plunged 48% in 2025, while On HoldingONON
  slid 10% and NikeNKE
  fell 9% over the past 12 months.
• Adidas said lifestyle growth — driven by Gazelles and Sambas — slowed to 10% in Q3 from 13% in Q2, a clear sign the category is cooling.

The uncomfortable reality: Comfort stopped being a differentiator the moment everyone sold it. Lululemon is now drifting into what GlobalData’s Neil Saunders calls “junkification territory,” weighed down by heavily branded hoodies and tops that no longer reflect the finesse or quality the brand was built on. Nike may have caught a short-term bid from insider buying, but even Bank of America warned that a Nike turnaround alone won’t reset the sector’s cycle. The promise was endless growth through ease — the reality is a saturated market discovering that even elastic waistbands have limits.