A very busy day in Brick-and-Mortar Fiasco Land.
Neiman Marcus, the Texas-based luxury retailer with 42 stores around the country and two Bergdorf Goodman stores in Manhattan, is in no immediate risk of bankruptcy, the sources told Reuters on Friday, though it has hired investment bank Lazard Ltd to help restructuring its nearly $5 billion in debt.
When this news emerged, Neiman Marcus unsecured bonds due in 2021 plunged 7% to 54 cents on the dollar, according to Thomson Reuters, and its $3 billion term loan fell 5% to 77 cents on the dollar.
Earlier this year, Neiman Marcus scrapped its IPO entirely, after having delayed it in 2015 when its difficulties could no longer be swept under the rug. In December that year, it reported its first quarterly sales decline since 2009, with same-store sales dropping 5.6%. There was plenty of red ink. And layoffs commenced.
At the time, CEO Karen Katz blamed the oil and gas bust in which wealthy shoppers in Texas were tangled up. She also blamed the “strong dollar” that prevented foreign tourists from splurging at its stores in the gateway cities Honolulu, San Francisco, Las Vegas, New York, Washington, and Miami.
As so many times in the brick-and-mortar retail fiasco, there’s a private-equity firm behind it: In 2005, Neiman Marcus was subject of a leveraged buyout. It’s now owned by Ares Capital and the Canadian Pension Plan Investment Board. Their hopes of an elegant exit via an IPO have been scrapped.
But the Neiman Marcus restructuring news wasn’t enough for just a regular brick-and-mortar Friday.
“People with knowledge of the matter” told Bloomberg on Friday that appliances and electronics retailer HHGregg – which had announced on Thursday that it would close 88 of its 220 stores, shutter three distribution centers, and shed 1,500 jobs – is preparing to file for Chapter 11 bankruptcy.
It too needs to restructure its debt. Inventory will be sold off over the next few weeks, and the stores will be shuttered by mid-April.
In January, HHGregg had hired two restructuring advisory firms, Stifel, Nicolaus and Miller Buckfire. Hiring restructuring advisors is a sign that bankruptcy is one of the options being contemplated – regardless of how energetically Neiman Marcus might be denying it
In theory, this would be enough for a productive week in the collapse of brick-and-mortar retail, but no.
BCBG, the California-based fashion retailer that had acquired fashion design firm Herve Leger in 1998, and that once had more than 570 boutiques globally, including 175 in the US, and whose cocktail dresses and handbags were shown off by celebrities, filed for bankruptcy on Wednesday.
It is buckling under $459 million of debt. It has 4,800 employees. Layoffs have already started. More layoffs and other cost cuts are planned, according to court documents, cited by Bloomberg. It started closing 120 of its stores in January. It wants to sell itself at a court-supervised auction. If that fails, it wants to negotiate a debt-for-equity swap with junior lenders owed $289 million.
This is the company’s third effort at restructuring. Guggenheim Partners arranged a $200 million loan for BCBG in 2006. In 2015, Guggenheim affiliates took equity in exchange for reducing debt. In August 2016, founder Max Azria surrendered his majority equity stake as part of a second debt restructuring and departed, according to the court papers.
And this is how bad it is: On Friday still, Reuters, citing “people familiar with the matter,” reported that the acquisition of Macy’s by Canadian department-store chain, Hudson’s Bay Co, which owns the Lord & Taylor and Saks Fifth Avenue chains, is going nowhere because financing cannot be lined up to back a credible offer.
Hudson’s Bay, burdened with about $4.5 billion in debt, has a market value of C$2.2 billion (US$1.6 billion). It wants to swallow Macy’s, which has a market capitalization of $10 billion. Both of them have been suffering from disappointing sales. Reuters:
Macy’s is skeptical that Hudson’s Bay can raise the necessary financing for its bid, and it is not currently engaged in any negotiations about a possible deal, the sources said this week.
Hudson’s Bay’s existing equity partners, including mall operator Simon Property Group Inc., have been reluctant to back Hudson’s Bay’s bid for Macy’s, which would require them to invest more money in mall real estate, even as consumers continue to abandon them in favor of internet shopping, the sources added.
However, the setback with Macy’s illustrates the limits of financial engineering. Retailers with a reliance on malls across the United States, including Macy’s, Sears Holdings Corp and J.C. Penney Co Inc., have suffered as shopper traffic in several malls has declined.
As a result, the underlying real estate of these mall-based department stores is less financially attractive to the investors that Hudson’s Bay has traditionally relied on to help extract cash from its properties or raise financing for acquisitions.
Investors, when seeing an “opportunity” to back buyouts related to malls are getting cold feet – even when it involves still profitable retailers, such as Macy’s.
This displeasure has infected retail-sector junk bonds and leveraged loans, even though overall junk bonds and leveraged loans have been in nirvana with prices at near-peak-credit-bubble levels.
The share of loans issued by retailers (not including food and drug retailers) that are trading below 80 cents on the dollar – the benchmark for distress – has jumped from 10.5% in January to 16.6% in February. According to LCD/S&P Global Market Intelligence, that’s the highest percentage since August 2009. See the Neiman Marcus loan above, trading at 77 cents on the dollar.
The share of retail-sector loans trading below 70 cents on the dollar – an indicator of potential default – has reached the Financial-Crisis level of 9.3%, up from about 0% before June 2015!
The painstaking and relentless collapse of brick-and-mortar retail, one retailer at a time. Read… So What Are We Going to Do with the Retail Malls?
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If even Neiman’s affluent customers are cutting back, can a recession be far away?
When did we get out of the last one?
What….. you are not buying the D.C. and main street media Propaganda? But I remember the last 7 years being told ;we have recovered”. Just never knew who “WE” was. I do now, and it was not me or you.
Propaganda is “information, especially of a biased or misleading nature, used to promote a political cause or point of view”.
it s been so miraculous that Ben Bernanke even wrote a book congratulating himself on the extraordinary rescue of the American, and of course, the entire World economy
WOW
it was so great he now works for the Citadel Group that profits on big defense and other geo strategic events as if they somehow knew about them in advance bunch of geniuses -anazing!
If the title of the book is “True Confessions: how an arsonists became a firefighter”, I am buying.
Might I suggest reading .. ” Propaganda : the Formation of Mens Attitudes ” by Jacques Ellul .
Suffice it to say your definition although accurate is but small and insignificant aspect of the mechanics of propaganda
Right!
“When did we get out of the last one?”
(laughing joyfully)
It depends how you define far away. Definitely 2019-2020 appears to be a dangerous period to look forward to in terms of a recession.
I can’t see any problems arising before then.
Life is good at the moment.
Each persons personal reality is what he assumes is reality for the whole world as Julian has just shown us.
Then in the blink of an eye their reality changes, at which point they think the worlds reality changed.
Such is the plight of the myopic, self centered man. Same as it ever was.
The truly affluent don’t buy a Chanel handbag from Neiman’s…instead they go to a Chanel Boutique (which here in Dallas is right down the street from Neiman’s). Chanel is privately owned and is worth 19 Billion. There are 310 Boutiques worldwide. The uber wealthy do not shop at Department stores.
So this is a case of the upper middle class to rich (considered a net worth of at least a million) feeling the squeeze. The truly wealthy travel around the world to shop, spend all they want and never run out of money.
I have noticed that Nordstroms and Neimans opened too many small venue stores without the pizzaz of their flagship stores. They were just kinda meh. No reason to go there unless it was to return something purchased from the flagships.
Middle to upper middle class is still feeling the recession (that never recovered) and definitely not doing retail therapy.
Absolutely right ! Tis the Middle – Upper Middle and merely Rich either feeling the crunch or if they’re wise as the wife and I are avoiding unnecessary and frivolous spending as well as debt .. while the genuinely wealthy .. defined at least within my circles * as 1) An overall net worth in excess of $100 million .. with an annual income of at least $1 million .. do exactly as they please whenever they please caring about no one other than themselves and their own pleasures
* Full discloser I make no claim to being genuinely wealthy but do circulate within their realms due to my being in the ‘ arts ‘
… but for one very significant exception . Many genuinely wealthy collectors [ cars art etc ] including more than a few celebrities are selling off their collections like there’s no tomorrow not to mention downsizing their homes and/or disposing many of their 2nd and 3rd homes in the process . Ridding themselves of objects and possession they’ve held dear for years having made them part of their overall self image . That … tells me at least that perhaps they know something we do not
In my opinion, it’s not the customers who are the problem, at least partially.
It’s Neiman, it’s Nordstrom’s, it’s Macy’s, it’s department stores in general selling overpriced, gaudy garbage.
The “minimalist” movement is picking up steam, even amongst the affluent. I notice a strong trend of people buying higher quality, lesser quantity– and almost always shunning anything with a brand on it. So you’re seeing a lot of smaller boutique (and often online-only) brands doing well selling their wares, while the big box stores are struggling. Throw in competition from Amazon, where you can still buy most of the stuff sold in the dept. stores, and it’s a recipe for disaster for the big names.
I don’t really buy that the customers who shop at Neiman Marcus are exactly hurting right now. Maybe in isolated locations due to local specifics (e.g. oil economy areas), but not in aggregate– not yet.
So … EACH Neiman-Marcus store is carrying approximately $113 million dollars in debt. Tease out the worth of the land under the stores and accounts receivable and each store is looking at almost $100 million underwater. It could be more if they owe more to suppliers than they are owed by customers.
What were these guys thinking?
(Get mine now and get out before it all caves in … )
Why would customers even own them something? They have circulating capital and that’s it
You got it.
This has nothing to do with operating a business, and everything to do with propping up the system as long as possible.
It is a globally interconnected effort by governments, banks, and corporations.
Doubt this? They cited Hudson’s Bay with 4.5 billion in debt and 2.2 billion of equity.
I live in Canada and see Hudson’s bay stores. They’re ridiculously over supplied, have about 30% of the traffic they used to have, and are not being kept up anywhere near the way they once were.
Who in their right mind would think to take a company like this and buy a 10 billion dollar, over indebted retailer?
This is the level of desperation they have reached. This won’t take years to fall apart, it’s been happening since 2015 and is now at a critical stage.
I LL tell you who….the same genius type mentality that took a bankrupt Kmart and used it to buy Sears and all its real estate.
Now they are forcing Sears (and Kmart) into bankruptcy by sucking management fees and loans out of it, selling assets along the way.
The fund that pulls this Hudbay/Macy’s dealoff pockets the cash while leaving the debt laden carcass to bankruptcy.
RE: They cited Hudson’s Bay with 4.5 billion in debt and 2.2 billion of equity.
=====
IIUC the UK has a statute which prohibits the continued operation of an insolvent business. The major enforcement mechanism seems to be that the officers and directors, even of corporations, become personally liable for losses incurred from continued operation after they become aware of the insolvency.
Anyone know if this is indeed the case and how it has worked in practice? How do the outside auditors fit in?
Seems like this statute might be a good idea in Canada and the US to minimize “fraudulent conveyance” [a “bust-out” in Tony Soprano speak].
George, have you read about Sir Philip Green? Blatant rape and pillage of an 88 year old UK department store chain and it’s pension. So far nothing has happened to him.
Brings to mind that old adage of;
When the debtor owes a million dollars they have a problem.
When the debtor owes a billion dollars its the creditors problem!
Each default adds just that much more pressure, to an already over stressed, stretched to the breaking point credit system.
Just an FYI.
Online sales make up 10% of total retail sales, so the narrative that online is responsible for brick and mortars fall is just a cover for the collapse.
Mick, I agree it is a cover up and excuse. They are in denial about the impending collapse. The US has way too much retail, both Brick and Mortar and solo online players (and too many restaurants) for the dollars circulating.
Just wait and see…Department stores will invest billions in their online presence (because they drank the Kool-aid about Millennials only shopping online) and their sales will continue to crater.
On another note: McDonalds is trying to boost sales by offering delivery. LOL!! It is getting desperate out there if they think this is a viable plan.
Auto sales are responsible for another 21% of retail sales. And they have been hot too over the last few years. Leaves about 69% of retail sales that have been in decline. And companies in the brick-and-mortar sector have too much debt to weather the decline – like Neiman Marcus. Most companies with moderate amounts of debt can handle a sales decline just fine.
Completely off subject (or maybe not so much)… Wolf, I’m wondering what’s taking you so long to comment on the Deutsche Bank announcement on restructuring. I almost bought into their “absolutely, positively” no more equity offering(s) mantra, but your articles suggesting “yea, right” were spot on. So is now the time? Paschi as well?
Forget Deutsche Bank and MPS.
The bull elephant in the room is Italy’s Unicredit.
DB is presently offering US $8.5 billion in new stocks. Unicredit is looking forward to raise something like €13 billion in new stocks.
That’s big money, even by modern standards and would mean massive equity diluition on top of the massive drop Unicredit had in 2016.
The DB deal will get done as the ‘known’ exposures are ‘manageable’. The dilution will be ‘acceptable’ (at least initially) and while ANOTHER largish ($5B) raise will need to be forthcoming in the next year (my prediction)…the market perception will be that DB CAN be saved….so it will be (even on the backs of tax-payers if ultimately necessary).
Unibank on the other hand is a zombie…..and absolutely EVERYONE (except gov’t officials) will refuse to throw more good money after the bad. With the Fed set to raise rates again this month….The ECB is further in a pickle….creating even worse conditions for the Italian banking sector and making a bailout even less appealing.
The Dutch, French, and German elections will all effect how these bailout (or lack thereof) are structured and timed.
On top of the impending elections we have;
The Fed threatening to raise rates next week, as the debt ceiling clock stops.
The Treasury 10 year (TNX) now trading above the financial line-in-the-sand of 2.5%
The USD nearing its 14 year high of 103.29
And Snapchat with a stock valuation nearly as large as the profitable eBay?
Bitcoin at parity, or above the price of gold?
The systemic financial/economic pressure continues to build.
It seems Snapchat is already running into some… issues: http://www.nasdaq.com/it/symbol/snap/real-time
The Minneapolis StarTribune has had a couple articles on this recently.
‘As Department Stores Pull Back, Discounters Are Taking Off
http://www.startribune.com/off-price-stores-are-taking-off-in-the-twin-cities/415375144/
‘Downtown Minneapolis Macy’s store sells for $59 million’
http://www.startribune.com/downtown-minneapolis-macy-s-building-sells-for-59-million/415092364/
Target got its start in 1962 as a branch of Dayton’s, and the Macy’s building, which began as Dayton’s in 1902, is considered a landmark by the locals. Minnesota’s governor, and ex-U.S. Senator, is Mark Dayton.
Management loaded up these publicly traded retail chains with debt by using the appreciated real estate holdings as their basis. Well now there is ZERO demand for big box stores that come with hefty property taxes and operating costs. If an established retail chain has AMAZING e-commerce then it might survive. Otherwise the sagging sales will sink them.
There appears to be two main synergistic factors here:
(1) Their basic business model is obsolete, much as occurred with the carriage makers with the introduction of the automobile.
(2) These retail companies have become pawns in a financial “Game of Thrones,” using corporate debt to render out the maximum “profit” (generally in the form of “special” dividends”) before their inevitable bankruptcy. Operationally this is “fraudulent conveyance” or a “bust out scam” on a scale Tony Soprano could only dream about.
The high costs of debt and property taxes keeps their prices high. So much for the benefit of off shoring. Sure didn’t benefit the consumer.
Who needs Macy’s, Nordstrums, JCP, and Sears when you have Big Lots and DollerTree. LOL
Thanks for the fine article Wolf. A cynical man might conclude that Wall Street firms profit regardless of their retail client’s financial success. Layering large petcentages of high coupon debt on businesses with any real cyclicality is a recipe for disaster. Then, as the top line begins to weaken, the same firm that got you in trouble in the first place offers you pricey advisory detvices to restructure the debt you can no longer afford to pay. Is this a great county or what?
Try to not conflate the owners [private equity and venture capital funds] of these companies with the companies.
While these companies have indeed been saddled with huge amounts of debt as their assets [including their reputation] were monetized, none of this debt was used to upgrade existing stores, improve distribution systems, etc, and in most cases any defined benefit pension funds were “re-captured.”
To minimize this abuse of corporate governance and the bankruptcy system it is suggested:
Dividends can only be paid from profits as shown on the corporate income tax returns, i. e. no taxable profit or a net operating loss means no dividends.
(1) Stock “buy-backs” can only be done with profits as shown on the corporate income tax returns, i.e. no taxable profit or a net operating loss means no stock buy-back. Reverse stock splits should still be allowed when needed to meet the minimum stock valuation for exchange listing.
(2) G&A [general and administrative] costs should be capped at some reasonable level of gross sales/income, to prevent skimming.
(3) Given the rapidly increasing level of transnational corporate [re]structuring, particular care will be required to minimize looting by transfer pricing to one of the many tax/regulatory havens.
Campeau, that hapless Canadian department store fiasco of a prior generation, the poster child for such excesses.
Ivy, I still get angry about all of the great regional department stores that cease to exist because of Campeau.
Annnd it appears none of this generation’s Masters of the Universe read about this in business school.
A New York Times editorial stated: “Any corporate executive can figure out how to file for bankruptcy when the bottom drops out of the business. It took the special genius of Robert Campeau, chairman of the Campeau Corporation, to figure out how to bankrupt more than 250 profitable department stores. The dramatic jolt to Bloomingdale’s, Abraham & Straus, Jordan Marsh and the other proud stores reflects his overreaching grasp and oversized ego.”[5]
I want to cry every time I see what became of Henri Bendels. Someone should hang for that.
Very sad but inevitable for many, if not most, of the non-discounters and some discounters. Same with the malls. In 1980 nobody saw the internet coming. I recently watched a DS9 rerun where they went back in time and used an internet device. When it was first on TV, the concept looked fanciful. 9600 and 56k baud modems were state of the art at that time. And so goes lots of retail.
I don’t know that “inevitable” is the right word. If these companies had not been bought out by PE firms and loaded up with debt, they would have the ability to shrink themselves and still remain profitable. But you can’t do that with a massive fixed debt expense.
And what the hell is the Canadian Investment Pension Plan doing a LBO of Neiman Marcus with a PE fund? Somebody’s getting a kickback there.
Kent: Read some eye opening but scary stuff regarding what all the Canadian Pension Funds are buying. Lots of illiquid assets with borrowed money. Part of the port of Brisbane Australia, trains in the UK, Electric transmission in Chile.
http://business.financialpost.com/news/fp-street/inside-the-risky-strategy-that-made-canadas-biggest-pension-plans-the-new-masters-of-the-universe
Yes these companies are bought out and the first thing that happens is they pay out a special dividend that is done through debt. The buy out firms always win the lenders not so much . Are we ever going to get to the point where the scam is revealed for what it is ? I thought it was going to happen in the last bubble but alas no such thing happened.
Fraud is the business model, and it’s working just fine. The lenders are not lending their money and the buyers are not using their money either, and both are extracting huge payouts. Why are the rest of you buying into the scam, we all know it will end badly, then begin all over again.
Speaking of rinse and repeat scams…The Safeway Albertsons deal is all about unlocking the value of the real estate. The major investor…Cerberus Capital Management.
The Albertsons near me has become an “only when I’m on my last roll of toilette paper store.” It has gone downhill fast. It also seems to favor Heinz/Kraft: last time I looked it had nine flavors/types of Heintz ketchup in 4 different sizes including a gallon size (why?) and did not stock my favorite Annie’s anymore. :-(
Albertsons also recently bought back 36 stores it was forced to sell for the merger. Haggen was the purchaser but then declared bankruptcy.
Bloodbath on aisle nine.
Albertsons is getting competition in my area from local supermarkets which are expanding. The new local supermarkets are very nice. They are paired with more upscale stores like Starbucks and Five Guys.
Albertsons is paired with Dollar Tree.
“… the small business sector is growing rapidly. While corporate America has been “downsizing”, the rate of small business “start-ups” has grown, and the rate for small business failures has declined.”
https://www.sba.gov/managing-business/running-business/energy-efficiency/sustainable-business
This blog is valuable to me, because I get the “big picture” here. But I don’t fit into that – I use the info to devise ways that I (and maybe others in the counter-culture) can duck some of the impact.
For me, a small, rural and independent existentialist way of life works best
They’ve pulled down the page you gave the link to . So is the SBA now under an Executive Gag Order as well ?
As for your life … you have my abject jealousy and envy good sir . But that we could of chosen the same .
“… the small business sector is growing rapidly. While corporate America has been “downsizing”, the rate of small business “start-ups” has grown, and the rate for small business failures has declined.”
Small biz growing rapidly ? According to SBA ? Oh, i see.
Does Forbes suit you better than the SBA?
https://www.forbes.com/sites/sageworks/2016/01/17/the-state-of-u-s-small-businesses-entering-2016/#a9bee8c2f0bf
Thank you for the link. However, i still wholeheartedly believe that most small businesses are treading water at best…. and that is before we encounter this oncoming recession.
My point is that the trend toward local business is symptomatic of the times – a reaction (as is my own) in part to the situation presented in this article.
Small business feels relatively good about itself –
http://www.nfib.com/assets/SBET-December-2016.pdf
– as it (and I) avoid the international corporatocracy swamp.
So Richard Thompson in his lyrics asked the question ;
” Who’ll Bring Down this House of Cards ? ”
With my now asking you Wolf .. understanding that in these perilous ludicrous and upside/downside up times even the most accurate , viable and well founded prognostications can ultimately prove to be wrong to no fault of the one giving the prognostication .
Who do you think will be the linch pin /card in bringing down this house of cards – facade of the Potemkin Village – or if you prefer reveal that the Emperor’s new cloths in fact do not exist ?
On my out and about today I stopped in at BCBG. No sign of trouble anywhere in the store. It was full of nice new spring outfits at full retail and only a few clearance racks. It looked like the staff didn’t have a clue. Of course, I didn’t buy anything.
Petunia, they got a 45M DIP loan to keep the remaining stores open until bankruptcy winds down in 6 months. I can’t find out who is loaning the money but it has to be somebody who wants the licensing rights.
http://www.zerohedge.com/news/2017-03-01/bcbg-max-azria-files-bankruptcy
From what I understand, some of the current creditors will provide the DIP loan, pending court approval.
Take a look at the mind bending drugs people are on, I bet they can’t even find the mall. https://www.cchrint.org/psychiatric-drugs/people-taking-psychiatric-drugs/
… then toss in the rampant use/abuse of opioids both prescribed and illegal including heroin along with the legalization of 420 in many states as well as the rising use of hard core psychedelics among professionals and business people and you’ve got yourself an impending ‘ Soma ‘ situation straight out of Huxley’s ” Brave New World “
Wolf, I hope that retail story will make you laugh a bit:http://www.businessinsider.com/virginia-mall-replaces-storefronts-with-vending-machines-2017-3
Gordmans, a discount department store with 99 locations in 22 states, just declared bankruptcy. Same old story of too much debt. So it is not just the higher end stores going out of business. And I’m sure you saw Payless Shoes is struggling with it’s debt load and will close 1,000 stores to try to restructure debt or consider bankruptcy.
This is really becoming a relentless litany of bankruptcies.
I don’t even consider buying an item of clothing unless the discount is 50%+ and I have to justify its use. I think I am typical these days and even better off than many.
Last Saturday, my millennial and I went to a multi house garage sale in our area, at 7 a.m. it was busy and selling out. He got up early just for this and scored some cheap video games. The buyers and sellers are younger than in the good old days, 20-40 mostly. This is the new retail reality. Younger people are by far the biggest demographic in thrift stores and garage sales.
I think you can expect more bankruptcies and less retail because the incomes aren’t there to sustain it.
For what its worth Wolf Hallmark is closing down the majority of its stores here on the Front Range and from what I’ve been able to gather across the Nation as well . So though not bankruptcies a definite downsizing .
TJ, Most Hallmark stores are independently owned and operated. From what I am seeing most are closing due to retirement of the owners. Recently Hallmark bought out Crown Media which owned the Hallmark Channel to make it private again. I don’t see big growth market owning a Hallmark franchise because the cards are sold everywhere else already. Smart move on the media purchase since it focuses on family values which has become popular again. :-)
I knew someone in the discount greeting card business, the ones they sell in discount stores. Even 10 years ago that business was dying, nobody sends cards anymore. He diversified into counterfeit logo items.
And yet despite the carnage Simon Property Group, the world’s largest mall landlord, is still trading at 30x.
But Simon has some really high profile malls (Houston Galleria as an example), Regional malls, and is investing heavily in Outlet malls. It has spun off a subsidiary for it’s smaller malls…the ones we all know are doomed. Looks like they are positioning themselves for the coming shopping patterns.
Strange, muppets are continuing to spend: http://www.zerohedge.com/news/2017-03-07/us-consumer-spending-highest-2008-economic-confidence-hits-record-high-gallup
Perhaps it’s just incompetence?
You’re conflating “consumer confidence” as established by surveys with actual spending at brick-and-mortar retailers. For example, consumer confidence peaked just before the onset of the official Great Recession during which consumers went on a buyers’ strike.