(Reuters) -Tapestry raised its annual earnings forecast and surpassed first-quarter estimates on Thursday, as the Coach parent benefited from full-prices sales of its popular Tabby handbags and sending its shares up 5% before the bell.

Shoppers, particularly in the middle- and upper-middle income category, have splurged on trendy apparel and accessories even as they pared back on most non-essential purchases in the face of sticky inflation this year.

Tapestry's Tabby bags, which sell for as much as $750, have been a customer favorite for several years, garnering appeal among younger customers.

Sales at Coach, which houses Tabby and accounts for more than a third of Tapestry's total revenue, rose 2% in constant currency.

Robust demand in Europe, indicated from a 27% jump in sales during the quarter, also helped the company weather a 5% drop in revenue in its key market of Greater China.

In contrast, European luxury giant LVMH missed its quarterly sales expectations in October, hurt by weak demand in key markets of China and Japan as consumer confidence weakened.

Tapestry, whose pending $8.5 billion merger with Michael Kors parent Capri was blocked by a U.S. judge last month, now expects its 2025 earnings per share to be between $4.50 and $4.55, compared with the $4.45 to $4.50 forecast earlier.

Tight cost control and more full-price sales have also helped the company's gross margins expand for eight straight quarters. They were up 280 basis points in the three months ended Sept. 28.

Tapestry's first-quarter revenue of $1.51 billion beat analysts' estimate of $1.47 billion, according to data compiled by LSEG. Its adjusted earnings per share of $1.02 also topped expectations.

The company had said earlier it plans to appeal against U.S. District Judge Jennifer Rochon's decision to block its merger with peer Capri.

Separately, in the day, pricey parkas maker Canada Goose also beat revenue expectations. Capri is scheduled to report its second-quarter results after markets close.