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Aug 14 (Reuters) - Coach handbag maker Tapestry Inc forecast full-year sales above analysts' expectations on Tuesday after reporting a 31 percent jump in fourth-quarter revenue on strong demand for Kate Spade bags, sending its shares up nearly 5 percent.
Kate Spade's colorful, quirky bags and satchels have been a hit with millennials, helping Tapestry broaden the reach of its handbag business that has traditionally catered to older women.
Analysts say the publicity around the unexpected death of Kate Spade, the designer behind the iconic brand, in early June may have helped sales. The company bought the brand last year.
"In its first year within Tapestry, Kate Spade delivered double digit earnings per share accretion, despite the strategic pullback in online flash and wholesale disposition," Tapestry Chief Executive Officer Victor Luis said.
Tapestry has been pulling back flash sales promotions on Kate Spade's website and limiting inventories at department stores to sell more items at full price, a strategy that helped revive sales of its signature Coach brand.
In the fourth quarter, Kate Spade's comparable-store sales and revenue topped estimates, helping overall sales beat the average analyst estimate.
For the full year, Tapestry forecast sales in the range of $6.1 billion to $6.2 billion for fiscal 2019, beating the average analyst estimate of $6.08 billion, according to Thomson Reuters I/B/E/S. It forecast profit of $2.70 to $2.80 per share for the year, slightly below the average estimate of $2.82 per share.
According to Cowen analyst Oliver Chen, Tapestry has guided below expectations for the past three years, making this its first sales forecast that came in above estimates.
Rivals Michael Kors Holdings Ltd and Ralph Lauren have raised their full-year earnings forecast, signaling a recovery for affordable luxury brands.
Net income rose nearly 40 percent to $211.7 million, or 73 cents per share, in the fourth quarter ended June 30.
Excluding one time items, the fashion house reported a profit of 60 cents, 3 cents more than the polled estimate.
Net sales rose 31 percent to $1.48 billion, edging past the average estimate of $1.47 billion. (Reporting by Nivedita Balu in Bengaluru Editing by Saumyadeb Chakrabarty)