European Equity Strategy: Consumer stocks - what's next after the slump?

Research evidence excerpt

European Equity Strategy: Consumer stocks - what's next after the slump?

Barclays | European Equity Strategy

momentum. Retailing (MW) and Consumer Services (MW) offer a more favourable setup, with

resilient earnings trends alongside valuation compression. Within Staples, fundamentals are

holding up better, but persistent negative EPS revisions, especially in HPC and Food/Bev/

Tob (both UW) continue to constrain performance.

Not much World Cup enthusiasm priced in. The FIFA World Cup (11 June–19 July) should have

spillovers across sportswear, travel & leisure, food & beverages, media, and gaming. We have

created a basket of European stocks most exposed to these themes (BCERWC26). In line with

the broader consumer space, the basket has performed poorly ytd, suggesting little optimism

around the World Cup is priced in.

Views from our Luxury analysts. We expect modest c.3% industry growth in 2026, reflecting

post-COVID normalisation, geopolitical disruption in the Gulf, and persistent inflation pressure

on middle-income consumers. Against this challenging backdrop, we favour names with

exposure to Americas and Jewellery, self-help optionality, clear growth “white space,” and

experiential luxury angles. OW LVMH, Richemont, Burberry, Moncler, Prada.

Views from our Food & HPC analysts. Companies face a shifting cost backdrop, with renewed

input pressures, rising competition, and consumer fatigue driving greater dispersion across the

sector. Fundamentals remain relatively resilient, but execution, portfolio mix, and brand

strength are increasingly key differentiators. We favour high-quality names with strong

positioning and delivery, notably Unilever and L’Oréal, alongside Haleon and Danone.

Views from our Beverages analysts.