Veggienomics: A new study suggests designer's company may get a multi-million dollar stock boost, from First Lady wearing boots that cost more than the initial cash investment in the Kitchen Garden...
First Lady Michelle Obama wore designer Tory Burch's Connell boots on Wednesday, when she hosted DC school kids and superstar chefs for the 2010 Fall Harvest of the Kitchen Garden. Burch loved the idea of Mrs. Obama stomping through the spinach rows in her $495.00 black leather, knobby-soled, chain mail-decorated boots so much that she posted a photo of the Harvest on her blog, in the "Who Wore It" category. (Above: The screenshot from Burch's blog; the caption reads "First Lady Michelle Obama looks fall-perfect picking pumpkins with school children in the White House Kitchen Garden. She's wearing Tory's Connell boots with chain detail.")
Although the Harvest was the latest edible theater set piece for the First Lady's signature Let's Move! campaign to end childhood obesity, it could also provide a big stimulus package for Burch's company. This week, the New York Times ran a story on the salutary economic impact of the First Lady's clothing choices, reporting on economist David Yermack's study in The Harvard Business Review. Yermack found that when Mrs. Obama wears an apparel item, the company that makes the clothing often experiences a "healthy" jump in its stock value, in (often correct) anticipation that the item will become The Next Big Thing.
An average $14 million stock boost; original investment for Kitchen Garden was $175
Yermack found that the stock prices of 27 public companies, whose clothes Mrs. Obama wore in a total of 189 public appearances from November 2008 to December 2009, experienced abnormally high returns. He estimated that the average value generated by any given appearance by Mrs. Obama was $14 million.
Yermack noted that Mrs. Obama has generated $2.7 billion in “cumulative abnormal returns” for the brands she has worn. All in all, a Michelle Obama fashion portfolio would have been a very good bet for investors: ”For 18 major appearances, the abnormal returns were 2.3%. Compare that to a 0.5% average gain when a company announces a new celebrity endorser. For one European tour, an index made up of stocks associated with her wardrobe gained 16.3%, trouncing the S+P 500’s 6.1% gain in the same period,” Yermack wrote. (Above: The Connell boots, as Mrs. Obama spoke about the value of community and school gardens, and healthy eating)
In an interesting commentary on food access and affordability, the $495.00 Connell boots cost more than what Mrs. Obama has said were the start-up costs for the Kitchen Garden.
“To grow all this food cost less than two hundred dollars. It was about $120 to make sure the soil was fine and good, and $55 for the seeds," Mrs. Obama announced at last year's Fall Harvest, on Oct. 29, 2009.
To some extent, the stock price gains when Mrs. Obama wears a certain designer came at the expense of other retail companies’ stocks, which experienced a loss of about 0.4% in value, Yermack noted, and he also found that other first ladies, such as Carla Bruni-Sarkozy of France, and other "professional endorsers" do not seem to have nearly the same stock-boosting effect on the brands they wear.
The Fall Kitchen Garden Harvest was not the first time Mrs. Obama has worn an item of Burch apparel. Burch was also among the designers invited to the Smithsonian Museum of American History last March, for the donation ceremony for Mrs. Obama's Inaugural Ball Gown (designed by Jason Wu). Wu has experienced dramatic growth in his apparel company since the Inauguration.
*Top photo is screenshot from Tory Burch blog; second by EGK/Obama Foodorama