Dec. 25 (Bloomberg) -- Mitch Reily, a retired medical researcher, was so impressed with the latest styles of fur coats that he recently bought two: a full-length $3,500 mink coat as a gift for his wife and a $2,000 mink bomber jacket for himself.

``People look at you and say, `Look at that!''' said Reily, 55, after buying the coats at Richard-Donald Furs Inc. in Wilmington, Delaware. ``It's well accepted now. Years ago, people were frowning at you.''

Sales of furs, which plunged by a third in the 10 years ending in 1995 amid animal-rights protests, will climb about 15 percent to a record $2.1 billion this year, according to Fernandina Beach, Florida-based research firm Southwick Associates. Federated Department Stores Inc. and Neiman Marcus Group Inc. are adding designer accessories, and chains including Sears, Roebuck & Co. and J.C. Penney Co. are getting higher sales from fur or faux fur.

Fur sales account for roughly 2 percent of sales at department stores, said Richard Hastings, a retailing analyst with Bernard Sands LLC in Charlotte, North Carolina.

``If you are fashion aware, you'd like to have an item with some fur on it this season,'' said Lori Wachs, who helps manage about $110 billion at Delaware Investments in Philadelphia, including Federated Department Stores shares.

This year's holiday fur selection, including ponchos, pants and purses, appeals to buyers in their 20s and is boosting sales at a wide range of retailers, she said.

``We have seen an increase in considerably younger customers,'' said designer Dennis Basso, who operates Manhattan and Aspen, Colorado, stores under his name and sells at Saks Fifth Avenue. ``Fur has become a mainstream part of fashion.''

$50,000 Sable Poncho

Neiman Marcus, which caters to people with average annual incomes of about $190,000, posted a 8.4 percent comparable sales gain in November, helped by rising fur sales including $50,000 sable ponchos.

``They are up,'' said Terry Thornton, vice president who oversees merchandise for bridal, coats and furs at Neiman Marcus. ``We have seen an increase in the business.''

Neiman Marcus Chief Executive Burt Tansky said in a Dec. 1 conference call with investors that ``ponchos and fur-trimmed accessories are selling very well.''

Bloomingdale's, owned by Federated, is selling $2,000 beaver jackets with fox-fur collars and $500 Andrew Marc down jackets with fur collars.

``The customer that's coming into our store really looks to us for fashion and quality,'' said Denise Filchner, vice president for fashion merchandising at Federated Merchandising Group in New York.

`Love Affair With Fur'

Less-pricey chains such as Sears are promoting furs and faux furs to last-minute holiday shoppers. Sears said cardigans with fur collars are selling well and J.C. Penney expanded its fur selection to include a $70 rabbit fur poncho.

``It's a love affair with fur,'' said Juanita Fields, fashion director for Sears, in an interview. ``You can get great faux fur that looks like the real thing.''

Shares of Dallas-based Neiman Marcus fell 27 cents to $72.55 in New York Stock Exchange composite trading on Dec. 23. They've risen 35 percent this year. Cincinnati-based Federated fell $1.58 to $55.24, Hoffman-Estates, Illinois-based Sears fell 80 cents to $51.50 and Plano, Texas-based J.C. Penney fell 90 cents to $40.

Luxury retailers are posting bigger sales gains during the holiday season than discounters, whose results have been hurt by slow job growth and rising energy prices. Wal-Mart Stores Inc., whose average customer earns $40,000 a year, had a less-than- forecast 0.7 percent gain in November.

Cindy Crawford

The International Council of Shopping Centers forecasts same- store sales in November and December will rise up to 3 percent. That's lower than the gain of 4 percent a year earlier.

While full-length mink coats a decade ago were bought mainly for women over 40, designers such as Michael Kors and Chado Ralph Rucci are also appealing to women in their 20s and 30s with items like mink flower pins and rabbit handbags.

``Every major designer has used fur in their accessories,'' said Thornton at Neiman Marcus. ``The customer has become interested in it. They see it on the runway, and they visualize it on themselves.''

Models including Cindy Crawford have appeared this year in advertisements in W and Vogue magazines promoting furs, with Crawford in August promoting Blackglama minks.

Fur sales overall are rising for a third straight year, led by mink, which accounts for about 60 percent of results, said Rob Southwick, president of Southwick Associates, which surveys retailers for the fur industry's trade group, the Fur Information Council of America.

New Store Openings

Luxury furriers are expanding as sales boom. Basso, a furrier since 1983, leased space to add a 4,000-square-foot store in Chicago scheduled to open next year after debuting a Madison Avenue store in New York in 2003.

Steven Corn Furs opened its first luxury store in three years in September at Short Hills Mall in New Jersey, where department stores Neiman Marcus, Bloomingdale's and Saks also launched fur salons.

Animal-rights groups including People for the Ethical Treatment of Animals, which demonstrate on the streets in front of retailers using props such as photos of decapitated rabbits, said the renewed popularity of fur is only a momentary setback for them. Sales of fur began to decline in about 1988 because of the stock market crash of October 1987, changing fashions and intense media coverage of the protests, said Southwick.

``While there may be spikes in sales, ultimately people will reject an industry that is based on the suffering and death of animals for a completely frivolous product,'' said Pierre Grzybowski, grassroots coordinator for Washington-based The Fund for Animals.

Faux Fur

Fur industry officials said the protests don't get much media coverage and aren't resonating with consumers.

``Fur has come back after being politically incorrect for so long,'' said Pam Danziger, founder of Unity Marketing, a Stevens, Pennsylvania-based consulting firm. Even so, some consumers want to wear fur ``in a subtle way'' with accessories rather than full fur coats.

Furriers including Basso have added faux furs to their collection, recognizing ``there is a significant consumer component that rejects the cruelty of fur outright,'' said Lisa Franzetta, campaign coordinator for PETA.

To contact the reporter on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net