Ultra Letter to Vendors

16 to 1, thinking out side the box is a wonderful concept if you can actually execute it correctly. Unfortunately Ultra like most other small mom&

Fun analogies. My two key suppliers selected to move into consignment to keep the inventory they had on hand in our display shelves. We still purchase key items that move well whereas the memo items are purely at the descretion of the supplier. We have had long and successful relationships with both suppliers we have made this arrangement with, relationships which we all hope to keep active long after this current ordeal. These times require out of the box thinking. If suppliers and retailers can put their heads together for inovative and creative ways to keep stock moving, we all benefit. These were proposals presented to us over some fun and inovative meetings together on how to weather the current situation. We all hope it is short term, but are ready with even more off the wall ideas if it turns into a much longer affair. You probably won't approve much of those ideas either, but, our suppliers and our retail shop all plan on living through this crisis in fairly good shape. All the traditional thinking must go the way side until things settle. And who knows what wild and crazy ideas will be generated from these brain storming meetings between suppliers and retailers. Let me add that this type of working together and colaborating on inovative ideas might not be sutable for everyone. The retailer and suppiers must have a historically successful working relationship and be willing to go out of the box for each other. Trust is a key element with inplimentation of inovative ideas and procedures from both sides.

I'm thinking of sending a similar letter to my credit card companies, my mortgage company, and also trying to negotiate memo terms with the electric, gas, and water companies, as well as my favorite grocery store. I'm thinking that hanging on to my cash is a good idea too, so I don't want to pay my bills or pay for anything going forward. Yep, I'm thinking this is the best way for me to survive too!! Maybe Obama will help bail me out too!!!

Dear 16-1, I'm sure the retailers' customers love being overwhelmed with miniature pictures of your capital on display - another example of too much indiscriminate choice (just super size me !). But the fundamental problems remain that: the retailers absolve themselves of marketing responsibility by not taking responsibility for the goods that they (ahem) "order"; there is far too much of your and your fellow consignors' capital tied up in long inventory turns and admittedly poor profits. Remove large scale consignment from the d&j business & total bank financing falls by 50% or more - now that's a savings we all share.

As we all are well aware, this is a time unlike any in our working history. I can't dissagree more with the observations that working with memo is not responsible business practive. We have developed great working relationships with our key suppliers over that past 15+ years. They have come to us with the request of moving more of their merchandise to memo therefor placing more product in our cases on display giving the consumer more options and opening the door for sales that might not exist if our cases were slimmed down and more restricted. Yes, we work on Memo with these suppliers, on their request as we had begun to scale down purchases in response to the economy. We have found this has worked well for all of us including our customers who are most appreciative that we still carry a full compliment of jewelry they can browse through.

KQ ---It is finally time for the retail sector to bare the responsibility for their purchases and also expect concessions to lengthy payment terms and returns. This is a time to survive not to be taken advantage of from clients. Both retail and manufacturers need to finally understand their businesses and act like responsible bussiness people. Lower inventories and less expensive materials to comprise a manufacturers line. And retailers must pay closes attention to turn if they are going to be able to survive in what I anticipate to be a new era in our business's. Retail must focus and downsize inventory levels, institute more aggressive reorder programs that will work on an as need basis, and improve product training for everytone at the store levels. Drop the BS and create service policies that are meaningful and memorable. I have seen it all during the past thirty years and have often wondered when the fan would be overloaded and fall.

Any updates with regard to Finlay/BB&

Another company to closely watch for bankruptcy...are they sending this letter in an effort to beg their vendors to not start legal action on them like what happened with Friedman's? Ultra is EXTREMELY similar to Friedman's in target customer, merchandise mix, and (lackluster) stores. The Ultra store in a local outlet mall that competed directly with Crescent is hurting from a new Kay Outlet and aggressive prices at the Zales Outlet...plus the liquidation of the (formerly top-performing for Friedman's) Crescent/Whitehall.

We've seen this episode before. Why do "smart" businessmen continue to believe in fairy tales ? Retailers who continue to rely on memo, and vendors who continue to "lend" or sell to under-capitalized companies will (a) continue to devalue the value chain, (b) lose money, (c) excuse the retailer from his responsibility managing owned and paid for inventory and (d) ultimately damage the livelihood of all of us who work in this industry. Who's next? Oh, not polite to mention names, but we all know at least three other problematic retailers & others ? The banks, especially one gold bank with foreign ownership, are reportedly leaving the industry. Who will remain to finance the gold (memo) inventory as other gold lenders circle the wagon ? Is this the last hurrah for memo for retailers - finally ? We can only hope.