Recession has curbed all but essential spending for many families, but still the fur business manages to thrive. In fact, August sales of furs here were up as much as 60 percent over a year ago with the higher priced, fresh-looking styles selling best.

When it comes to fur, the masters in inventive design and craftsmanship are the five Fendi sisters from Rome.

Yoko Ono owns more than 20 Fendi furs. Jacqueline Onassis and Jacqueline Bisset, Barbra Streisand and Farah Diba all have Fendi labels in their closets. A woman in Texas has collected more than 20, "more to look at them than to wear them," according to David Wolfe, Neiman-Marcus vice president who buys the collection.

While the Fendis use such luxury furs as sable -- a Russian sable coat, which will sell for more than $100,000, was snapped up by Bergdorf-Goodman at the last show -- the signature of the house is the lowly squirrel. Catherine Deneuve sat cuddled in a squirrel sweater at a Fendi show in Milan. "It's so light and silky," says Deneuve, who owns several. "It is like sleeping on silk sheets," adds Carla Fendi.

The Fendis, the first to dye furs, ingeniously cut, knit, stitch, stencil, quilt, intricately seam, paint and even punch holes in fur to the point that the skins are sometimes unrecognizable. "They will take furs and fur pieces that others might disregard and turn them into works of art," says Wolfe, who could not identify a cape made of squirrel bellies in the most recent Fendi show. "I'd never seen anything quite like it," he said, as a model whisked by.

The designer of Fendi Furs, Karl Lagerfeld, thinks the Fendi success comes from the camaraderie of a family that has grown beyond the five sisters to include four of their children, and because "it is Italy, where everything is done so artistically." Italy must import all furs except mole, so Italian furriers rely on workmanship for distinction. Adds Wolfe, "The Fendi women have such determination I think they could turn straw into silk."

The Fendi fur business started with the sisters' parents in 1925. It was a conservative business, mostly in minks, and employed a designer who is now a priest. Carla Fendi was the first of the sisters to go into the business, dropping out of school in 1954 at the age of 17 to join her mother, Adele, when her father became ill. Other sisters came into the business as they got out of school, and eventually some of the husbands and children joined the firm.

Carla, affectionately called Il Duce, is essentially the boss and coordinates the whole effort; Paola, the oldest sister, buys the skins and works on the technical side, a skill she learned from her mother; Franca concentrates on the leather handbags and luggage, all marked with the double F, a signature as recognizable, coveted and expensive as Gucci's double G and the LV of Louis Vuitton. Last year the Fendis started making handbags and suitcases in black rubber. Says Carla Fendi, "With the abuse luggage takes from the airlines one needs something sturdier than leather." Besides, she adds, the price of leather has gotten out of hand.

Franca also heads the posh Fendi boutique on the Via Borgognona in Rome where the leather goods and furs are sold. Each night when the sisters meet at about 8 o'clock to discuss business for three hours before going to their respective homes for dinner, Franca passes along hot sales news: The red bags are selling fast . . . The wide belts are preferred . . .

Alda concentrates on the international customers for furs and Anna works with designer Lagerfeld and coordinates the design effort for both furs and ready-to-wear items. "She's the creative mind," says Carla, admiringly.

"There are five insights adding up to one big power," says Lagerfeld, who has designed the collection for 16 years. He had been the designer for Chloe' and Krizia when the Fendi sisters decided to woo an international clientele and tapped him to help. He submitted 12 designs, including a battle jacket and ski clothes in fur, and other furs, including chinchilla, styled to be worn during the day -- unheard-of ideas at the time. Now Lagerfeld designs the ready-to-wear as well as the furs, usually with a similar scheme running through the two collections. This season, for example, the same electrocardiogram-like seaming used on the furs shows up as well in leather and wool.

Lagerfeld says that by now the whole thing "just comes together" and he isn't sure what happens first in the design process. But according to Carla Fendi, the collection begins with a group discussion including the sisters and the designer in Rome, followed by sketches of abstract body shapes for coats sent by the designer from Paris. The sisters literally vote on each design. Franca objected to a coat with huge sleeves last season. She dubbed it "the kleptomaniac's sleeve," and complained that anyone wearing it into the boutique could hide two handbags in it. She was overruled and the coat was put in the line.

Lagerfeld returns to Rome shortly before the collection is shown to the press to make final adjustments. Until this year he has been totally behind the scenes but last April he skipped down the runway with the five sisters after the show, the first public identification of Lagerfeld with the Fendi collection.

Even with the huge success of Fendi furs in the United States and Japan, Italians are still the biggest fur customers. At an opening at La Scala last spring, many women wore furs and more than a dozen were in furs easily identified as Fendis.

Carla Fendi is hardly her own best customer. As a young girl she had a fur-lined coat because she was frequently sick, she says, but now it seems to make little difference to her whether she wears fur or cloth. She doesn't recall her mother ever wearing fur. "And when she finally did order one, a client would come in and say, 'If Mrs. Fendi ordered that coat it must be the best. I must have it,' " and the coat would be quickly sold.

To the increasing number of people who question how the Fendis or others can kill an animal for a coat, Carla Fendi has an answer she and her sisters are comfortable with: They use only ranch-raised animals in their coats. "The day I can't use animals that are raised for the purpose of making fur coats, I'll find a new profession," she says.