RETAILING: Rags to Riches (Really)

It is a select group of commodities that gain value with age and use: Rolls-Royces, Tiffany lamps−and now blue jeans. Faded Levi's, adorned with embroidery or applique, are commanding designer-original prices at stores across the country. Manhattan's Lord & Taylor sells recycled and decorated jeans for $26 the pair, with matching jackets for $32; when new, the jeans cost no more than $10 each. A Manhattan boutique offers scraps of old Levi's fashioned into a bikini for $20, and next fall will sell a trench coat for $185. Saks Fifth Avenue stores in Atlanta, Beverly Hills, Boston and Chicago have sold out their initial stocks of $26 faded denim jackets, $26 shirts and $17 pants. Says Ben Sampson, a vice president at Cone Mills, a major producer of denim: "The washed-out look is here to stay."

Couture mavens began sporting bleached bleu-jean jacket-and-pants outfits in St. Tropez, and the craze spread. Today mills in France, Britain, Yugoslavia and Hong Kong as well as the U.S. are turning out prefaded denim. They commonly send standard indigo-dyed fabric to a laundry for as many as four washings until the antique shade is obtained.

The highest prices are tagged to genuine used denim tempered by years of wear and spruced up with colorful embroidery. Many of the old jeans are acquired by scrap-clothes dealers and sold to boutiques. In the past year, the price of old denim has tripled and even Levi Strauss & Co., which introduced denim a century ago, is marketing secondhand wear. Last month the firm sold 7,000 pairs of Levi's that had been returned by dissatisfied customers to Abraham & Straus and other retailers. Within weeks, almost the entire batch was bought. The company plans another sale−as soon as enough rejects pile up.