Party City files for bankruptcy

Party City files for bankruptcy


NY
CNN

Party City filed for bankruptcy Tuesday, overwhelmed by competition and years of financial loss.

The largest U.S. specialty Halloween and party supply retailer said in a regulatory filing that it has reached an agreement with debt holders to reduce its $1.7 billion debt load.

The company said it has secured $150 million in financing that will allow it to keep its stores open and operations running. As of October, the Company had 761 total Party City (PRTY) stores and 149 temporary Halloween City stores. As of 2021, Party City (PRTY) had more than 16,000 full-time and part-time employees.

For years, Party City has battled competition for party supplies and decorations, especially from the larger chains and online retailers that carry a wider variety of products.

Target, in particular, has increased its products for parties and special events, said Neil Saunders, an analyst at GlobalData Retail.

“This is aimed squarely at the family demographic that traditionally shopped at Party City,” he said.

The rise of Spirit Halloween, a pop-up store model, also reduced Party City’s sales during the key Halloween season.

However, competition is not the only factor that led to Party City’s collapse.

The company had to deal with rising costs during the pandemic and helium shortages, which affected its critically critical balloon business. The balloons are a “focal point of our growth strategy and are a key driver of our differentiated brand experience,” the company said in a regulatory filing.

Between 2017 and 2021, Party City’s sales fell 8% to $2.2 billion. The company projected that sales would be flat in 2022. The company also lost money every year between 2019 and 2021 and said it was on track to lose as much as $199 million in 2022.

Party City said in December that it was at risk of being delisted from the New York Stock Exchange because its shares fell below an average of $1 per share over 30 trading days.

The Party City bankruptcy may be a sign of trouble for the retail industry this year.

Retailers had a weak holiday streak, December retail sales showed, and that could force some businesses to close stores or file for bankruptcy.

Other struggling chains are at greater risk of bankruptcy as consumer spending declines.

Bed Bath & Beyond (BBBY) this month issued a grim message about its future, warning that a bankruptcy filing is a possible outcome for the company.

There are “substantial doubts about the company’s ability to continue” due to its worsening financial situation.

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