party closure is imminent for Party City
party closure is imminent for Party City
Boss Barry Litwin addressed staffers on a virtual meeting on Friday, communicating that Party City would be halting activities immediately and that it marked their last working day. Litwin acknowledged the gravity of this announcement, stating it was the toughest message he had ever had to convey. Despite its best efforts, Party City's financial struggles proved insurmountable, ultimately leading to the company's downfall.
Litwin expressed regret, emphasizing that every feasible measure was implemented to prevent this outcome. Regrettably, initiating a wind-down process became unavoidable.
Party City did not offer a statement in response to CNN's request for comment.
Bankruptcy and demise
As the most substantial party supplies shop in America, Party City emerged from bankruptcy in September 2023. This process included the cancellation of around $1 billion in debt, the liquidation of its shares, and keeping over 800 of its 800 U.S. retail locations operational.
Although Party City successfully avoided collapsing like Bed Bath & Beyond and 99 Cents Only Stores in the short term, it had an outstanding debt of over $800 million to manage, which impacted earnings this year.
The company closed more than 80 stores between the end of 2022 and August 2024, as per its financial statements.
Party City mentioned earlier that it had renegotiated various leases and shut down less profitable locations, which kept many of its employees in employment. The company had a workforce of around 6,400 full-time and 10,100 part-time employees as of 2021.
Party City filed for bankruptcy in January 2023 due to its inability to meet its $1.7 billion debt obligations. Consequently, it was also removed from the New York Stock Exchange.
Litwin took charge as Party City's CEO only four months prior to this report. In a LinkedIn post, he acknowledged that the company's primary focus was to enhance its financial stability, and there was significant work ahead.
Net sales for Party City plummeted to $407 million during the three months concluding in September 2023, as opposed to $502 million during the same period in 2022, as per its financial reports.
The company, known for offering balloons, Halloween costumes, and other celebration items, has faced fierce competition from e-commerce platforms and seasonal retailers such as Spirit Halloween. Competition from prominent retailers like Amazon, Walmart, Costco, and others also undermined smaller chains.
Party City also grappled with rising expenses during the pandemic and a helium deficiency, which adversely affected its balloon division.
The company becomes one of the many retailers declaring bankruptcy in 2023, as customers scaled back on luxury expenditures due to escalating living costs. Notably, Big Lots announced on Thursday that it would initiate "going out of business" sales at all locations after rescue plans from a private equity firm for the bankrupt retailer fell through.
Major retailers are projected to shutter the most significant number of stores in 2024 since 2020, as revealed by Coresight Research.
Litwin mentioned that implementing every feasible measure to prevent Party City's bankruptcy was a priority, but the initiative to wind down operations became necessary due to the company's financial struggles. Despite emerging from bankruptcy in 2023 and renegotiating leases to keep many employees, Party City's business faced intense competition from e-commerce platforms and significant retailers, leading to its eventual demise.