SimplexDiam Inc.

MAKE MONEY ON THE MARKET

2009-04-02T16:04:00.000-07:00

THE PROBLEM:

The true value of diamonds has been dropping for months. Everyone hears about the economy tanking, the mortgage crisis, imminent auto manufacturer bankruptcies, factories closing down, and more.

Then why when you call suppliers for a stone, do they only give you a nominal discount?

It’s not so simple to explain what I think happened, but it is important to understand the situation. So here goes…

The crisis led to the greatest single drop in the demand for diamonds in decades. Supplies hit record highs. Factories stopped cutting. Suppliers sold off their most attractive stones quickly to generate cash to run their businesses. Without the replenishment of new goods, they got left with off-sizes, odd cuts, and unattractive qualities.

This led to very low inventories of the most attractive stones, but very high inventories of the ones that sell slowly or not at all.

Most calls retailers make are for the more attractive product and that’s why they give a price that isn’t so very exciting.

THE PLAN:

When you call for a diamond, don’t ask for the specific stone you want immediately. Ask your supplier what they are trying to get rid of. Let them send you a list. Search Rapnet, Blue Nile, IDEX and every other resource you can to get a reading on each stone. Then fight, fight, fight.

Now here’s the hard part…I know it’s hard because I do it with retailers all day long. And eventually they thank me for it.

You have to sell your customer on what you can get and not on what he or she wants. Explain to them that the best way to get the biggest, cleanest, most colorless stone is to keep an open mind. That instead of selling them an impulse stone, you want to sell them an investment stone. Save them money, give them a better stone, and make some extra for yourself. Everybody wins and you have a customer for life.

Email me: neel@simplexdiam.com I’d love to hear your opinion.

The rest of my info’s on our site.

Warmest,

News: Robbins Brothers Files Chapter 11

2009-03-04T12:29:00.000-08:00

Robbins brothers filed chapter 11 today. It is expected that they will be split into two parts, each sold off. Consensus Advisers will be financial adviser to the creditors. Another one down. There has to be a record in there somewhere.

Sparkle Week

2009-03-04T12:27:00.000-08:00

Finally we have a week for Jewelry in New York. Mayor Bloomberg will be issuing a proclamation that April 20-26th will be considered "Sparkle Week." Department stores, jewelry retailers, and others are expected to promote aggressively and help build this into a major event.

Simplex Keeps Winning

2009-02-23T15:59:00.000-08:00

Ok so this is our chance to boast.

After we won the Friedman's deal: Click Here

We went on to win the Whitehall deal: Click Here

Wish us luck. We're working on another closeout jewelry deal.

We are the asset recovery specialists. We work on straight purchases of excess inventory and we also manage GOB and Event sales in the fine jewelry industry.

Call us or email us:

212 883 0888 Ext 1004 (Neel)

sales@simplexdiam.com

Fortunes

2009-02-11T15:22:00.000-08:00

I've started hearing good things again. As some customers are seeing more and more difficult times, others have turned the corner. Today, the call of the day was from a customer in the South. In the last ten days he sold ten stones over 1 carat. That's impressive.

Another customer forecasts growth this year, and yet another might double his sales. Internet customers are also growing leaps and bounds while others are failing.

I am trying to gauge what this comes down to. I think at the end of the day its price. Each and every one of these customers has one thing in common: they buy the product that I wish I'd priced a bit more expensive. They buy the pieces that I wonder why nobody has seen the value of. They buy the pieces that I make mistakes on. Yes SimplexDiam Inc. makes mistakes.

So the trick is to sit, and look, and work the inventory your vendors show you to find the true values, the perceived values, and the diamonds in the rough...I think.

If you've not seen our press release it is available below or at PRWeb.com

Enjoy.

N

Diamonds Forever?

2009-02-05T15:22:00.001-08:00

I was sitting in the train a few days back listening in on a conversation. Riders beware, this is a regular event.

One passenger said to another passenger, "I'm embarassed to be carrying this phone, it's two years old and look at it! Just look at it! I want a new one. I need one so my friends stop making fun of me."

Could that conversation ever happen about diamond jewelry? It's the same price point on average for fashion jewelry and for a phone - $50-$500. A phone lasts for less time and has less intrinsic value although it does have the benefit of utility. Is this an unfair comparison?

The average length of ownership for jewelry? Over 25 years? Generations? There is no way to gauge. A piece of diamond jewelry doesn't fall apart often for decades. It is not a replacement product...yet.

As an industry, what we need to understand is that there are only two rational marketing structures for a jeweler:

A. Jewelry as an investment
B. Jewelry as an accessory

$4,000 to $10,000 wholesale diamond investments, although weak, are still selling at retail for between $5,999 and $12,000, and have reasonable demand when at the right value. This is what I call the "investment" product.

During this recession, Simplex is having difficulty maintaining its stock of sub $100 product. To be clear, we never have enough of it. $21 silver circles, $40 dollar bracelets, and $25 sterling russian eggs are hot tickets. The $200 to $500 sell or $399 to $999 retail, on the other hand, is in trouble. This is what I categorize as the accessory business.

How does a retailer reconcile the fact that they need to sell impulse, "accessory," items alongside planned "investment," items?

The investment item branding should communicate to a customer: "This will last forever. It is a solid investment that retains value and even increases in value. It represents love and committment and will be passed down through the generations in my family."

The accessory item branding should communicate to a customer: "This defines who I am right now. It's beautiful, and it shows people I am powerful. Men will find me more attractive because of it and women will envy me. As importantly, I love it, and I want it because I deserve it."

The investment store brand should be reflected with marble, copper, oak and mahogany. Salespeople should be sharply dressed, refined, and wear Ascot or Aquescutim.

The next, the accessory brand should reflect the whims of the times. All white, sharp lines, sexy young salespeople, alongside either refinement or trendiness depending on the price point. The salespeople should wear Dolce & Gabbana, Armani, or Fendi.

The lighting should be bright in one store with heavy yellows whereas in the other it should be dim with reds and blues. One store should have classical music playing whereas the next should have jazz, blues, rock, or indy bands. One should have friendly, yet refined service, whereas in the other the service should be aloof or oppositely extremely friendly and emotive. One should carry timeless inventory adding new styles with control and care whereas the next should turnover styles at least three times a year maintaining a similar feeling but a transformed look. (Of course there should be mainstays but 50% of the inventory at least should be updated regularly.)

Perhaps the one company exempt from this typefied model would be Tiffany's. Maybe it's the movie that is its namesake, maybe the strong management, but eventually, the movie will be old and boring to a new generation and the company will have to change. Just as the British tailors lost their control and were overtaken by the French and thereafter the French by the Italians, and then the Italians by the French, so too will the jewelry industry need brands and have brands that win and lose and win again.

The question remains...how do we reconcile the two parts of one industry sold mostly in the same store. How can refined investments live peaceably with trendy accessories?

SimplexDiam Inc. wins the bulk of $27,000,000 at retail of the residual inventory at the Whitehall court ordered bankruptcy sale.

2009-02-05T15:16:00.000-08:00

News Release – For Immediate Release

Contact: Neel Madhvani (212) 883-0888, email: neel@simplexdiam.com

SimplexDiam Inc. wins the bulk of $27,000,000 at retail of the residual inventory at the Whitehall court ordered bankruptcy sale.

New York, NY – February 5, 2009 SimplexDiam, Inc. announced today acquisitions of over $25,000,000 at retail in the month of January alone, $15,000,000 of which was from Whitehall’s bankruptcy sale.

After winning Friedman’s residual inventory, Simplex has purchased large amounts of closeout and liquidation inventory at other major retailers. Says Chairman & CEO Yogesh Madhvani, “We’re entering a period in which liquidating inventory is essential. We help companies and banks monetize their inventory with the utmost discretion. This gives us a unique advantage. Unless it’s public record, we simply do not name names.”

Only weeks into Barack Obama’s presidency, it is clear that hope alone will not drag us out of this difficulty. All arrows point to a deeper struggle, more bankruptcies, a weakening retail environment, and far more downside in the real estate markets. Banks will have to clamp down. Exponentially greater inventory is going to be available each month as they take control of inventories of clients in technical default.

Simplex’s work on the LID 363 sale positioned them as a key player in this part of the liquidation process. Their assistance contributed to a significantly higher recovery for the banks than other liquidations of fine jewelry in recent history. Chris Ellis, the President of Consensus Advisers LLC & CRO in the LID Bankruptcy noted, “SimplexDiam played a number of significant roles during the valuation phase and eventual auction of the $70 million of LID inventory. Their efforts contributed to a greater than expected recovery from the sale of the inventory. We value SimplexDiam's input and would readily work again with such an industrious team.”

Even with consistent growth, SimplexDiam is exploring a new business. Their services and consulting division is now providing event sales support and running GOB sales for its customers. They have brought on strong supervisors and industry veterans to manage these sales. Says Vice President Shail Madhvani: “Even strong companies need to close stores. It is our responsibility to maximize their recovery. We sell down their poorly performing assets and only supplement when it is absolutely necessary. This is less profitable for us but we’ll readily trade profit to maintain our integrity.”

Yogesh Madhvani has been an entrepreneur for over 33 years, founding and running companies in markets as diverse as textiles and diamonds. Madhvani was a founding director of the Indian Diamond & Colorstone Association (IDCA) and a founding member of the Indo Argyle Diamond Council (IADC). He is a member of many other trade bodies such as the Jewelers Vigilance Committee (JVC), the Jewelers Board of Trade (JBT), and the American Gem Trade Association (AGTA). He is also a donor to numerous charitable organizations.

For more information on SimplexDiam, or to request a confidential appointment, please call (212) 883-0888, email sales@simplexdiam.com or visit www.SimplexDiam.com.

****End****

India, Armageddon, & Other stories

2009-01-04T10:54:00.000-08:00

I just returned from India after the shortest trip I've had in years. It is impressive what sentiment will do in a third world country. From my ships window, the small portal I have into the larger world, things seem surprisingly okay over there. The markets are flailing, with people suggesting another thousand point drop. The banking industry is tightening its lasso around corporate necks. The mortgage market is very safe but as a result the real estate inventories are astoundingly high. And yet...and yet. Perhaps it's wishful thinking, but I do believe India as a whole is just in a funk whereas New York and America seem to have found a canyon.

India has the largest middle class in the world, more billionaires in Mumbai than New York, and an economy that no longer reeks of the words small and volatile. It hasn't so much as blinked after the most emotionally devastating terrorism since September 11th and it seems to be pushing forward perhaps more in a trot than full gallup, but still, pushing forward.

The diamond industry is another story. We complain incessantly about major American retailers and whine about their almost habitual bankruptcies. We spit venom at poor management but whistle as it walks by and shower those in charge with petals and rice. Perhaps our delusion is a hope for new found fertility on barren plains. Perhaps this is not their fault. They are fighting an uphill battle in an altogether unsupported industry that has expensive raw materials and a declining consumer base. To add to it a recession in which, for the consumer, the first thing to go is what isn't either necessary or can be rationalized as necessary. Perhaps it's time for the vendors to step up and put themselves on the line to build brands.

A question for next time though: Is it helping us that diamonds are forever? A washing machine lasts for 5 years and needs to be replaced. A water heater for 10. How long does a ring last for? Should we be pointing this out?

Mud in the Rough

2008-11-11T10:26:00.000-08:00

For 24 months all we have heard is that rough is more and more and more expensive. Every day one self elected guru or the other would inform me that rough diamond prices and polished prices have not been historically linked. This is like saying that gold coin has nothing to do with gold bullion. I believe the correct word is speculation.

In fact, polished prices have everything to do with rough prices. In times of tight supply, polished prices follow rough prices, albeit with a heavy lag. In times of limited demand, rough prices follow polished prices. (As we have seen recently.)

The difference it seems is that polished speculation is much weaker than rough speculation because of the difference in the players in the market - buying power has a lot more to do with price fluctuations in a speculative market, than does rationale. Rough prices went to far more astronomical highs and have and will continue to come down to far deeper lows.

The first question will of course be whether the big players will sit on their diamond cellars, and wait for the possibility that they will be better use mixed with concrete or whether some reason will enter the market, and everyone will realize that diamonds are not really scarce, and that new mine openings have been happening very aggressively. It's tough out there and it isn't coming to an end soon.

The second question is whether the auction model for dispensing of rough tenders will be grown as it seemed 6 months ago or whether this new reality will diminish it's future potential.

The third question is whether the largest market in the world - older American women, are becoming less interested in Jewelry. We've all seen the reports but we also saw the Fox News polls that said McCain was going to pull through. Polling is as much about who is calling as it is about who is answering the phone.

Either way - this roller coaster will be quite interesting. It has the potential to set patterns in macro economics, and in our sector that can determine the speculation of the future. (Or we'll just forget all about this 5 years from now, run up ridiculous debt again, and enjoy the same punishment.)

And now for the shameless plug: When you buy from diamond closeouts or closeout diamond jewelry from Simplex you are buying at either the lowest prices from 6 months ago or the lowest prices of 6 months from now. We predict market trends and discount accordingly. Our wholesale diamond jewelry is the most aggressively priced anywhere.

http://www.simplexdiam.com

Enjoy!

Simplex Diam Reaches New Milestone in Diamond & Jewelry Purchases

2008-10-27T15:20:00.000-07:00

New York, NY – October 21, 2008 SimplexDiam, Inc. today announced purchases of over $50 million at retail in the month of July 2008 alone, signaling a move into a new growth phase of its liquidation division.

According to Chairman & CEO, Yogesh Madhvani, “This marks the first time we have gone public with the magnitude of business we do, but it is appropriate to let our prospective clients know our capabilities. Our asset recovery and services firm’s specialty is the diamond and jewelry industry, and we plan to expand further in this important arena.”

As financial regulators and the markets struggle to contain the ongoing credit and mortgage crisis, Simplex’s niche business has, among other major acquisitions, included the entire residual inventory of Friedman’s Jewelers, Inc (Formerly NYSE:FRM). Said a Vice President at Friedman’s, "I appreciate the input they gave us in evaluating our inventory in 2005 and 2006 …The mix of product was too wide…and even included a 17 carat plus GIA certified diamond. It would have been difficult to accomplish what we did without their help. In particular, their suggestions on how to best segregate the inventory and on how to structure the sale to get the maximum recovery were most useful.”

SimplexDiam also worked on the much publicized bankruptcy of LID Inc. as a “stalking horse” bidder, so named for setting the minimum reserve price on a bankrupt company's assets.” Chris Ellis, the President of Consensus Advisers LLC & CRO in the LID Bankruptcy noted, “SimplexDiam played a number of significant roles during the valuation phase and eventual auction of the $70 million of LID inventory. Their efforts contributed to a greater than expected recovery from the sale of the inventory. We value SimplexDiam's input and would readily work again with such an industrious team.”

Simplex’s services and consulting division was selected as the sole buying agent in India for a major publicly traded American retailer. Most recently, they have been consulting with the World Jewelry Center. According to Bill Boyajian, former President of GIA and current Managing Director of the WJC project, “We have been working with SimplexDiam and the Madhvani family for some time, and are impressed with their industry knowledge and ability to work on many different creative projects. They are true pioneers and we regard their contributions highly.”

Yogesh Madhvani has been an entrepreneur for over 33 years, founding and running companies in markets as diverse as textiles and the diamond industry. Among his current operations is a manufacturing business that caters to many fine American jewelry retailers. Madhvani was also a founding director of the Indian Diamond & Colorstone Association (IDCA) and a founding member of the Indo Argyle Diamond Council (IADC). He is a member of many other trade bodies such as the Jewelers Vigilance Committee (JVC), the Jewelers Board of Trade (JBT), and the American Gem Trade Association (AGTA). He is also a donor to numerous charitable organizations.

For more information on SimplexDiam, or to request a confidential appointment, please call (212) 883-0888, email sales@simplexdiam.com or visit http://www.SimplexDiam.com.