UBS Equity Preference List European Consumer Discretionary 2026 08 21

21 August 2026, 11:27 UTC Chief Investment Office GWM Investment Research

European Consumer Discretionary Equity preferences

The European Consumer Discretionary Equity Preference list (EPL) is a list of our highest conviction European Consumer Discretionary stocks. Thomas Parmentier Consumers, UBS Switzerland AG European sector preference: Attractive Please see important disclaimers and Sector view: Price-to-book valuations close to cyclical lows, with the earnings disclosures at the end of this outlook improving, supported by end-demand stabilizing (supportive US policy document. and high savings in EU/China) and corporate self-help (e.g., cost control, restructurings, new product lines).

Our Top Picks: Richemont, LVMH and Inditex

Latest Changes: We have increased the portfolio weight of H&M by 2.0 percentage points (pps). Conversely, we have reduced the portfolio weights of Kering and LVMH Moet Hennessy Louis Vuitton SA by 1.0 ppt each.

Benchmark: European Consumer Discretionary - 2025

Most Preferred Company Changes* Currency Weight

adidas AG EUR 9.5% Amadeus EUR 10.0% Compagnie Financiere Richemont SA CHF 11.0% Compass Group GBP 13.0% H&M Weighting SEK 11.0% Hermès International SCA EUR 8.0% Inditex SA EUR 12.0% Kering Weighting EUR 4.0% LVMH Moet Hennessy Louis Vuitton SA Weighting EUR 11.0% Prosus NV EUR 10.5%

Source: UBS, Consider potential trading restrictions, all figures are rounded *Changes since the last publication

Positioning and key trends 2026 should see a rebound in luxury spending after two years of adjustment, driven by newness, higher volumes, and a resilient high-end consumer. The recovery is still in its early stages and could take time. However, the first impression of the 1Q26 reporting season shows resilient underlying trends with the US cluster continuing to perform well thanks to wealth effects, despite US tariffs. China is also showing signs of stabilization and could see some growth this year after several years of slowdown. In Europe, domestic consumer numbers remain resilient. The impact of the Middle East conflict and the increasing drag of tourism has been a drag on 1Q26 earnings

In the current market environment, we prefer hard luxury (jewelry) over soft luxury (leather goods). The jewelry sector has undergone several structural changes in recent years, supporting more sustained, multi-year demand. Unlike leather goods,

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European Consumer Discretionary

jewelry has seen only modest price increases, narrowing the price gap and making it more accessible. Brands have shifted their product mix toward contemporary, recognizable designs and expanded offerings at entry and mid-price points, making jewelry more appealing as an everyday accessory—especially for self- purchasing women and younger, brand-conscious consumers. Visibility for jewelry has increased, with more prominent marketing, innovative campaigns, and global exhibitions. Communication strategies have evolved, moving from a focus on gifting to celebrating self-purchase and personal milestones. Behavioral factors also play a role: More time spent on video calls and social media has made visible accessories like jewelry more desirable, while the rise of reliable second-hand platforms supports categories that retain value over time.

After a period marked by frequent price hikes and creative stagnation, the luxury fashion sector is undergoing a dynamic transformation. An unprecedented wave of new creative directors is revitalizing top brands, injecting fresh ideas, and sparking renewed interest in upcoming collections. This creative shift is lifting industry sentiment, with early indications that the long-standing trend of “quiet luxury” and minimalism may be giving way to a resurgence of bold, expressive styles. If this move toward maximalism gains momentum, it could favor volume growth in the coming quarters.

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