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Distressed Denim: Savior of a Distressed Economy? (Updated)

In order to remain competitive, rival American Eagle Outfitters (AEO) re-launched its most popular jean, the AE Artist. The AE Artist was the best-selling jean in American Eagle's history, and the teen retailer is ramping up its marketing to rehash its prior success. The company is currently offering a free graphic tee shirt to every shopper who buys a pair of jeans.

Even flailing Pacific Sunwear of California (PSUN) has reported that it can't keep its boyfriend fit jeans on the shelves.

In order to take full advantage of the resurgence in denim, PacSun is also including fashion pieces like acid wash jeans, snake-skin prints and colored denim to its girls' assortment. (If only it could get its other merchandise to sell as quickly, maybe it would be back in business.)

But it's not just the value-priced denim that's attracting shoppers. While, for the most part luxury is dead -- or at least in critical condition -- premium denim still has strong legs.

Buckle (BKE), a company that has been largely under the radar, is particularly well-poised to profit from the denim boom.

The Kearney, Nebraska-based company predominantly sells better-priced denim, and even raised its prices this year, a feat deemed nearly impossible for most retailers amid the recession.

Even with higher prices, Buckle has managed to post 22 consecutive months of double-digit same-store sales growth. The key behind this success? Customer service.

Sales associates assist shoppers through every step of the sale, ostensibly improving the odds that the customer will walk out of the store with the best-fitting jeans for their body. Women, especially, value this service as worthy of the higher prices.

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