May 7 (Reuters) - Coach parent Tapestry on Thursday raised its annual forecasts for the third time this year and beat quarterly profit and revenue estimates on resilient demand from younger shoppers for its sought-after Tabby handbags and other leather goods.
The affordable luxury retailer's push to invest in fashion innovations, such as bag and book charms, has struck a chord with affluent Gen Z customers, helping its sales rise steadily for six consecutive quarters.
Tapestry now expects fiscal 2026
revenue of about $7.95 billion, compared with its prior forecast of more than $7.75 billion, and analysts' expectation of $7.82 billion, according to data compiled by LSEG.
It sees earnings per share of $6.95, above its previous range of $6.40 to $6.45, and analysts' estimate of $6.52 per share.
Luxury brands worldwide have taken a hit in Dubai and Abu Dhabi from the impact of the Iran conflict, which has disrupted the sector's fastest-growing market.
Birkin bag maker Hermes, Gucci owner Kering as well as French luxury giant LVMH reported weak demand in some of the biggest markets, including the Middle East and Europe.
However, Tapestry managed to buck the trend and recorded a rise of 31% in quarterly revenue on a reported basis in Europe from the year-ago period, and 20% growth in North America - its biggest market.
The consumer continues to be resilient and respond to our brands and the products that we are bringing, CFO Scott Roe told Reuters.
He pointed out latent demand for Kate Spade and strong brand resonance, and said that "gives us confidence and really the conviction to be investing for long-term growth."
"Turnaround takes some time, and in the short term, it is work in progress."
Tapestry's third-quarter revenue of $1.92 billion surpassed analysts' average estimate of $1.79 billion, while adjusted profit of $1.66 per share topped estimates of $1.30.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shinjini Ganguli)
