Obama Moves Markets

Just not Barack:


How can Mrs. Obama help sell clothes?
By wearing them. David Yermack, a business and finance professor at New York University’s Stern School, looked at 29 clothing companies whose garments Michelle Obama wore in 189 public appearances between November 2008 and December 2009. Their stock prices typically jumped by 2 to 3 percent — and when the first lady wore J. Crew on “The Tonight Show” in October 2008, the company’s stock price climbed 25 percent in the next three days. Such increases that “cannot be attributed to normal market variations,” says Yermack.

How much money do the companies make?
Yermack reckons that, on average, an appearance by Michelle Obama in a company’s clothes is worth $14 million. The total boost for all of the appearances examined in the study — a whopping $2.7 billion. Designer Naeem Khan found out first hand about the first lady’s influence when she wore one of his outfits to a state dinner in February 2009. “My stuff is flying out of stores,” the designer says. “It’s the gift that doesn’t stop giving.”

How does the effect last?
“The stock price gains persist days after an outfit is worn and in some cases even trend slightly higher three weeks later,” says Yermack. Some clothing companies, likes Saks, appear to have experienced long-term gains. And the effect persists regardless of how President Obama is doing. “Her husband’s approval rating appears to have no effect on the returns,” says Yermack. Or, as Marni Katz puts it at NBC New York, “even when his approval ratings are down, Mrs. Obama’s style score soars.”

Posted by on October 28th, 2010 at 11:53 am


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