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By Anuja Bharat Mistry

May 7 (Reuters) - Coach parent Tapestry TPR.N on Thursday raised its annual forecasts for a third time, banking on resilient demand from younger shoppers for its sought-after Tabby handbags.

Investments in its Tabby handbags and other fashion-led innovations have driven demand steadily higher for the affordable luxury retailer, which helped it beat third-quarter profit and revenue estimates, despite a broader slowdown in the luxury market.

Luxury brands worldwide have taken a hit in Dubai and Abu Dhabi due to the Iran conflict. Recently, Hermes HRMS.PA, Kering PRTP.PA and LVMH LVMH.PA reported weak demand in the Middle East and Europe.

Tapestry said it has not been affected by the ongoing conflict, but is monitoring potential impact on consumer sentiment.

It recorded a 31% jump in third-quarter revenue on a reported basis in Europe from the year-ago period, and 20% growth in North America, its biggest market.

However, the company's shares fell about 9% in early trading.

Tapestry forecast low-teens revenue growth at Coach this quarter, and a high-single-digit decline at Kate Spade, with higher marketing spend pressuring margins and disappointing investors, said David Swartz, analyst at Morningstar.

Kate Spade saw 10% decline on a reported basis in third-quarter revenue, while at Coach it was up about 31%.

For fiscal 2026, Tapestry expects revenue of about $7.95 billion, compared with its prior forecast of more than $7.75 billion.

It sees earnings per share of $6.95, above its previous range of $6.40 to $6.45.

Tapestry's quarterly revenue of $1.92 billion beat estimates of $1.79 billion, while adjusted profit of $1.66 per share topped expectations of $1.30, according to data compiled by LSEG.