MC Lvmh Moet Hennessy Louis Vuitton SE

By Manuela Mesco 

ROME -- Fendi, the Italian fashion house that shot to fame and fortune on the Baguette bag only to be laid low by mismanagement, is hot again. And it is thanks to pompoms and shoulder straps.

The Rome-based house has regained its buzz with new products conceived by chief designer Karl Lagerfeld and Silvia Venturini Fendi, creative director of accessories. One is interchangeable straps that customers can use to personalize their Fendi purses or even other brands' bags. The straps -- made in python, suede, fur or leather and costing as much as $2,400 each -- are geared toward shoppers tired of cookie-cutter accessories.

Mr. Lagerfeld also is offering colorful pompoms to adorn bags. One pompom made of fur and leather costs $900; another is adorned with a cartoonish image of Mr. Lagerfeld himself. Fendi is courting cost-conscious customers with straps as low as $500 and bag charms costing $350. Olivia Palermo and Jessica Alba are among the celebrities often photographed with Fendi straps or bag charms.

"Who...would have thought a customer would spend thousands adorning their bag in straps and pompoms?" said Josie Gardner, Selfridges' buying manager for accessories.

Analysts say the new accessories are catching on. "Fendi is getting a great traction with consumers and has consistently posted double-digit growth in the last quarters," said Mario Ortelli, an analyst at Bernstein.

Fendi has struck a sweet spot many fashion houses are betting on: customization. Other brands such as Gucci, Prada and Burberry are now offering a range of products that can be personalized. Gucci, for instance, has started offering shoppers the option to have a Gucci emblem or their initials stitched on bags or shoes.

"[Customization] serves a double function" by appealing both to shoppers who are new to the brand and fashionistas who can't yet afford the house's pricier products, says Fendi Chief Executive Pietro Beccari.

Such products are helping some houses combat a slowdown in luxury-good sales that will likely make this year the worst for the sector since 2009, analysts say. "There is new purchase behavior" now, said Carlo Alberto Beretta, chief client and marketing officer at Kering SA, owner of Gucci. "Millennials are more individualistic. They want unique things, not mass products."

Founded in 1925, Fendi became known for bags and fur coats worn by celebrities such as Jacqueline Kennedy and Sophia Loren. In the 1990s, Ms. Fendi, the founder's granddaughter, invented the Baguette bag, a global success that spurred the brand's popularity and also figured in a plotline on "Sex and the City."

In 1999, LVMH Moët Hennessy Louis Vuitton SE and Prada SpA bought a majority stake in Fendi, valuing it at about EUR1 billion ($1.06 billion), which analysts at the time considered rich for a business of Fendi's size.

The new owners wanted to make it the next Prada, but the popularity of the Baguette soon cooled and other products struggled to take off. In the 2000s, the Roman brand repeatedly struggled to deliver goods to stores on time and opened several shops in a short time, many of which were soon closed. As four CEOs headed the firm in as many years, the company lacked continuity.

LVMH later bought out Prada and proceeded to broaden the firm's store network, production systems and product lineup.

Fendi has gained momentum and buzz since Mr. Beccari took over in 2012, after his predecessor Michael Burke streamlined the supply chain and improved financials, in part by playing down its logos as customers tired of megabrands. Mr. Beccari also changed the design and introduced on-site made-to-measure services.

The chief executive struck on a winning digital strategy. For example, it reached the highest engagement rate in 2016 with its Instagram followers and increased popularity on Snapchat by making content -- which would normally disappear soon after being posted -- always available on its website. The company is now working to offer one-day delivery service and is pushing shop assistants to also suggest that customers place online orders while in the store.

"I came at a time when Instagram and Snapchat were exploding," says Mr. Beccari. "The brand needed to speak to a younger audience but at the same time become more sophisticated."

All this helped push Fendi's revenue last year up more than 50% from 2012, according to an HSBC estimate.

LVMH now is heavily investing in Fendi to squeeze out even more growth, people familiar with the matter say. Analysts expect Fendi to reach EUR1 billion in annual revenue this year.

"It's not El Dorado anymore," says Mr. Beccari. "Everyone is fighting very hard."

Write to Manuela Mesco at manuela.mesco@wsj.com

(END) Dow Jones Newswires

January 14, 2017 07:14 ET (12:14 GMT)

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