He didn't mind how he looked to other people, because the nursery magic had made him Real, and when you are Real shabbiness doesn't matter.

“[O]nce you are Real you can't be ugly, except to people who don't understand." …”

“Once you are real you can't become unreal again. It lasts for always.”

“When a child loves you for a long, long time, not just to play with, but REALLY…”

“Real isn't how you are made," said the Skin Horse. "It's a thing that happens t…”