Premium denim might have withstood the recession so far, but those jeans with hundred-dollar price tags are starting to show some signs of wear as the downturn drags on.

Consumers have abandoned everything from that daily latte to designer handbags. But they've seemed reluctant to give up pricey jeans, from companies such as True Religion Apparel Inc. (TRLG), VF Corp.'s (VFC) 7 For All Mankind and Joe's Jeans Inc. (JOEZ), making the $425 million market a relative standout in an otherwise dismal retail universe.

The category outperformed its lower-priced brethren and many other types of apparel last year, even amid an abysmal holiday-sales season.

Unit sales for $100-plus denim in department stores and national chains rose 20% in 2008 to $425.5 million, according to market research firm NPD Group.

Premium denim, whose prices can range from $100 to more than $300, has driven excitement in the approximately $4 billion total denim market for a while, as consumers snapped up the jeans with a celebrity following and flashier back-pocket designs.

But there are some signs that consumers are cutting back on expensive jeans, providing a test for True Religion, 7 and Joe's, the sector's three publicly traded players.

And while all three companies have started to expand into other clothing categories and even operate their own stores -- aiming to become recognized worldwide brands like Guess Inc. (GES), Deisel and Calvin Klein Industries Inc. -- most sales still come from denim. They also sell a lot of their products in specialty department stores like Nordstrom Inc. (JWN) and Saks Inc. (SKS), which have seen sales deteriorate in recent months.

That's largely the reason investors have sold off premium denim names. So far this year, True Religion's shares have lost about a third, and were recently trading around $8.39. Apparel giant VF, which owns True Religion competitor 7 For All Mankind and other labels such as North Face, has lost about 13%, recently changing hands around $47.70. Joe's Jeans shares have fallen further into penny-stock category, down about 19% year-to-date, recently trading around 29 cents.

Still, sales at True Religion, known for a horseshoe-shaped design on its denim back pockets, have held up fairly well. The company, which last week reported a profit that beat analysts' expectations, said revenues at its domestic wholesale division grew about 14%, driven by more shipments to department stores like Nordstrom. But that growth was offset by continued weakness at boutiques, some of which are struggling to survive the downturn.

U.S. department stores and boutiques drive about half of True Religion's sales, while approximately 16% comes from international retailers. Its 42 company-branded stores and Web sales bring in the remaining 34%.

True Religion's management is being realistic about challenges, analysts say. For the year, it expects U.S. wholesale sales to fall between 17% and 19% on continued weak sales at boutiques and a mid-single-digit percentage sales decline to major department stores and off-price retailers.

"We are operating in unchartered territories," said Chief Executive and Chairman Jeffrey Lubell in the company's earnings call. "While True Religion is certainly not immune to these events, we remain acutely attuned to the changes in the macro environment."

True Religion expects to offset expected weaker wholesale sales some with the continued growth of its own stores. The jeans maker plans to add 25 new locations this year and have a total of 80 stores by the end of 2010.

Competing brands are also feeling some pain from the economy. 7 For All Mankind's wholesale business began seeing some softness around October, with consumers opting to buy jeans in the $150 to $200 price range, instead of those costing north of that, said VF's President of Contemporary Brands Coalition, Mike Egeck. In general, shoppers also bought one pair of jeans, instead of the usual two or three, Egeck said.

"Across our distribution channels (including Barneys, Nordstrom and Saks), their businesses have been challenged," Egeck said in an interview, noting retail partners were staying conservative as they aimed to keep inventories lean.

But Egeck said 7's 15 standalone retail outlets were performing in line with the company's expectations, and VF still planned to open nine to 15 new locations this year.

"We're still bullish on the long-term viability of this brand," said Egeck, noting 7 could grow to be a $1 billion business.

The smallest of the three players, Joe's Jeans, also expects 2009 to be "a much more challenging environment," one executive said at a recent Roth Capital Partners analyst conference. The brand, which opened its first full-priced retail outlet last year, is launching a lower-price point jean of $138 this year "to capture a wider market."

-By Kelly Nolan, Dow Jones Newswires; 201-938-4049; kelly.nolan@dowjones.com