Michelle Obama's $3 billion fashion 'effect'

Talk about an economic stimulus package. According to a new study, First Lady Michelle Obama is having a profound and profitable effect on some lucky clothing retailers. (Watch an AP report about Michelle Obama's fashion.) Here, a brief guide to the findings:

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.

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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."

Are any other celebrities having a similar effect?

"None that I can find," says Yermack. "Once in a while there is someone in politics, Princess Diana, Jacqueline Onassis, come to mind, who just build a very big allegiance among the public and they get celebrated for their sense of style and fashion." France's First Lady, Carla Bruni Sarkozy, is also iconic and stylish, but she only wears one designer: Dior.

What is it about Michelle Obama?

Part of Obama's appeal, and the strength of her effect, is that she mixes high and low fashion, carrying off J. Crew and couture equally well. "She has very consciously tried to wear garments from mid-market retail chains where many voters also would have shopped, and she's talked about that very openly," Yermack says. She's also "recognized by consumers as authentic" — unlike a starlet who might be known to have an endorsement deal or get freebies from a certain designer. And, theorizes Naomi Attwood at Grazia Daily, there's her body type. While she's "gorgeous," Obama "doesn't look like a typical fashion plate, waify clothes horse, therefore people identify with her and believe 'if it works on her..."

What might this mean for investors?

Yermack doesn't offer any investing advice based on his findings, but others have previously suggested ways to cash in on the "Michelle Obama Effect". In 2009, Jamie Dlugosch at Investor Place suggested buying stock in J. Crew, Chico's, Talbots, and Nordstrom, among others.

Sources: Harvard Business Review, BBC World Service, NBC New York, Grazia Daily, The Independent, Investor Place