Europe’s luxury market is heading into next year with a bit more confidence. UBS says the sector looks “less cautious” after two years of weaker earnings. The shift comes as Chinese demand begins to steady and organic sales are expected to return to growth.
UBS has picked two companies as its top choices for 2026. These are Richemont and LVMH. Both have buy ratings. UBS says jewellery strength and strong brand strategies make these two stand out in a luxury market that is still uneven across regions and product categories.
Richemont remains one of UBS’s favourite names. The bank says Richemont has been gaining market share in jewellery. Jewellery has been one of the most solid parts of the entire luxury sector. UBS says this category has helped Richemont stay more resilient than many rivals over the last two years. Sales data also shows Richemont performing strongly. In Europe, retail sales grew more than twenty percent, then mid teens, then high teens across the first three quarters of 2025. Richemont’s share price was around one hundred 69 francs in late November. UBS has a 12 month price target of 176 euro. The bank expects Richemont’s 2026 sales to be almost 24 billion euros, up around one percent from the year before.
LVMH is UBS’s other top pick. The bank recently upgraded it to buy. UBS says LVMH is benefiting from brand focused moves that help it stand out while the luxury market slowly recovers. LVMH’s growth has been steadier but slower than Richemont in many regions. In Europe, its fashion and leather goods business grew at low to mid single digit rates through the first three quarters of twenty twenty five. UBS expects LVMH to report sales of a little over eighty billion euros this year, which is roughly in line with market expectations.
Looking ahead, UBS thinks the whole luxury sector could see more than five percent organic sales growth in twenty twenty six after a flat twenty twenty five. The bank believes improving demand from China and the United States will play a big part in lifting sales across the industry.