Vin Lee, the self-made billionaire CEO of Grand Metropolitan of USA, is popular as the 'King of Luxury'. The Beverly Hills family office 'Grand Metropolitan' is a $7 billion AUM privately held luxury goods holding company with a 60-brand portfolio.
Grand Metropolitan also owns Pushkin Caviar, Gallery Rodeo, The Beverly Hills Cigar Club, and Beverly Hills Sports Car; participates in charity auctions, celebrity events, and red-carpet functions including the Cannes Film Festival, Oscars, Grammys, Emmys, and Independent Spirit Awards, and many more.
The Group specializes in distressed debt assets of luxury brands. Finlay Fine Jewelers is one of the largest private jeweler groups in North America. Heilig-Meyers is also one of the largest private furniture retailers in the United States.
Vin Lee spends his time between the Gulf Coast, Florida & Southern California.
In this exclusive interview with Rough & Polished, Vin Lee not only paints the US jewellery market as it is today but lightens one's mood with his sardonic comments as well ...
Some excerpts ...
What is the current situation in your companies in terms of growth, revenue, profit etc.? How did you manage the latest slowdown in jewellery sales on the whole?
Just a short background, Finlay Enterprises for over a century was the primary leased department store jeweler in the world having generated over $100 billion in total revenue from 1,200 doors.
Today we have a substantial free standing footprint including 40 of the top 50 banners in North America doubling those previous numbers. On March 13, 2020 we shut down our entire person to person retail operation and began "continuing" our pursuit onto our digital platforms.
As a privately-held entity in the US we do not give exact numbers on our performance. But in the last 3 years we have recovered our sales strength and have been operating at a profit. What did happen during that period and subsequent slowdown was that our staff was able to stay safe both medically (as much as possible) and financially, as Grand Metropolitan was committed to full compensation and healthcare to all of our staff.
As for reputed block chain complications and shipping delays that our competitors broadcasted as excuses for continued poor performances, we always maintain deep inventories from decades worth of acquisitions of distressed debt inventories around the globe.
If you try to be all things to everyone, you end up being nothing to no one. Focusing your offerings to your customer base is key. Chasing trends like "fake' diamonds just because your competitors are doing it is a sure path to bankruptcy. And then as a jeweler that is when you will get a call from my office.
Jewelry sales have been hit due to the economic slowdown in the USA, say media reports. How is your business holding up and what steps are you taking?
We never really pulled completely out of the global economic climate created because of COVID-19. Although if you look at many sector financials and stock performance you would imagine that we had and then run into other newer downturns in consumer spending.
From my perspective within the luxury markets, people simply were tired of going without at the top of the food chain. This signaled to the middle class that it was OK to borrow again to spend on lavish extravagances. This certainly didn't assist the overall financial climate as it proceeded to elevate the entire interest rate infrastructure.
Depending on which side of the fence the media happens to hang its hat politically in America, we are either doing exceptionally well or headed into another pandemic-driven depression. My business model is multi-faceted. When sales weaken it often hits the luxury markets quickly as people cut back on high expenditures in lieu of protecting necessities.
This decimates our over-leveraged/mismanaged competitors allowing us to pick the prettiest flowers in the desert for our own portfolios. At a time of great retail prosperity our brands often perform very well with no debt service and limited exposure to shifts in overhead. This allows us to allocate more capital for customer service experience and invest in our team.
With OFAC not clarifying sanction regulations of ALROSA's rough diamonds that are cut outside of Russia, US traders do not know what diamonds they can legally buy. Your views on this situation?
This is a significant source of contention for me going back as far as when DeBeers renegotiated their diamond purchase agreement with the Russian concerns prior to the Obama administration started in the United States.
It has been my intention since the turn of the century to become the significant importer of Russian produced diamonds into North America. This is the purpose behind our quickly expanded footprint and interest in acquiring Signet prior to their investment in "fake" diamonds and $1.5 billion spent on websites.
When President Obama first suggested sanctions against Putin in response to Ukraine aggression it started putting the brakes on a $100 billion deal. I even went to Moscow for G20 and met with participating parties during the ALROSA IPO to demonstrate our commitment to a superior product with a rich history.
This political crack or chink in the armor of world diamond distribution is what assisted in subsequently creating the "fake" diamond industry. The marketing pattern itself upon the ignorance of the consumer willing to drive coal-charged electric vehicles and eat plant based cheeseburgers.
How does the future for real diamonds look to you, having been a dealer & a strong supporter of natural diamond jewelry?
As a comparison to other "climate" based products, I still haven't seen a single gas-station go out of business despite 20 years of politically motivated marketing and brainwashing. And I am pretty sure my cage-free bananas are still not being fed plant-based Whoppers from Burger King.
The real indicators I use for long term trends vs fads are the tertiary markets. The price of both diamonds and "fake" material have gone in opposite directions after the "divorce equation" participates in the world-wide matrix. Helzberg and Signet Brands may be able to ratchet "socially-responsible" prices on to the plastic futures of the younger generation. But so did the purveyors of paste, cubic zirconia, and moissanite.
And it doesn't matter how much hype you post on MySpace, I mean, Yahoo, nope AOL, actually Twitter? No, it's Facebook now, right? Or is it Instagram, Periscope, Tik-Tok? or Sup? This too shall fall out of favor and in the immortal words of Harry Openheimer's best marketing campaign 'Diamonds are Forever".
Natural diamond prices are said to have dipped in recent months, which is attributed to the competition from LGDs. Do you think LGDs will have a have a longtime negative effect on mined diamonds?
People in the electric car industry are bouncing their base-prices by the thousands month to month to try and move product. Diamond prices are not a mystery like crypto. Take a step back and a breather.
On the street dealers and retailers have bills to pay and whether Pandora hires Pam Anderson to represent their "fake" diamonds or the new Queen of England is suited with some "fake" diamonds for an event, in the end the strongest in class will always survive and prosper.
When you can introduce me to another billionaire in the industry but who's fortune is based on LGDs, I might take them as a serious long-term threat and simply make space for them in my display case. Otherwise its nothing more to me than another "woke" product that is meant to disrupt the livelihoods of millions of hard working people around the globe.
Meanwhile, prices of LGD are also dipping due to over-production. So, what challenges and opportunities lay ahead before the world diamond & jewellery market in general, as well as the US jewelry market in particular?
I am a big supporter of the arts as well as a gallerist (Gallery Rodeo, Beverly Hills). As a kid I always wanted a Farrah Faucet poster on my bedroom wall. The one of her in the red bathing suit? Well they pumped out tens of millions of those since the 1970s. I was never allowed to hang that kind of thing on my parents walls. But buying one today doesn't mean I get to brag about sleeping with her. As long as you can churn out an endless supply of a product and the consumer swallows it at any level of quality there will be a marketplace, but it is not luxury. It is certainly not aspirational. By the way, I have a goldish tone Rolx President watch for sale for $59, if you know anyone interested. Cash only!
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
