Party City to shutter 9 more locations, preparing for transition to private ownership
In a significant move, Party City, the popular party supplies retailer, has announced its intention to close all approximately 700 of its U.S. stores by February 28, 2025. This decision follows Party City's Chapter 11 bankruptcy filing in January 2022 [1][2].
The company's financial struggles began prior to the bankruptcy, with mandatory store closures, pandemic-related supply chain disruptions, and inflation draining vital liquidity and hindering the company's ability to fund growth initiatives [2]. As a result, Party City has been forced to close more stores as part of its Chapter 11 bankruptcy case, with nine additional closures due to failed negotiations with landlords [2].
As of the filing, Party City had 770 company-owned locations and 53 franchised locations [2]. Among the stores up for auction are locations in Marina, Palmdale and Lodi, California; the Bronx and Staten Island, New York; Noblesville, Indiana; Lancaster, Ohio; Midwest City, Oklahoma; and Walker, Michigan [2].
The retailer, which reached $2.35 billion in revenue in 2019, has been attempting to shed leases as part of its reorganization [2]. A&G Real Estate Partners, the company handling the auctions, stated that Party City is working closely with them to optimize leases and achieve financial metrics for the go-forward fleet [3].
Michaels, another retailer, has acquired four Party City leases in Corpus Christi and Dallas, Texas; Alexandria, Louisiana; and Irondequoit, New York [3]. Five Below also acquired a Party City lease in Alameda, California, in an earlier auction [3].
Despite efforts to avoid this outcome, economic pressures and declining sales in discretionary party supplies have forced Party City into shutting down [1][2][4]. The company's CEO, Barry Litwin, explained that despite attempts to avoid this outcome, economic pressures and declining sales in discretionary party supplies forced the company into shutting down [1][2][4].
It is important to note that Party City is not currently pursuing a strategy to go private or modernize its stores. Instead, the company is executing a complete wind-down and liquidation of its retail presence, with only a few independently owned franchise stores remaining open [1].
References: [1] Associated Press. (2022, January 18). Party City files for bankruptcy protection. ABC News. https://abcnews.go.com/Business/wireStory/party-city-files-bankruptcy-protection-72579325
[2] CNBC. (2022, January 18). Party City files for bankruptcy, plans to close all U.S. stores by 2025. CNBC. https://www.cnbc.com/2022/01/18/party-city-files-for-bankruptcy-plans-to-close-all-us-stores-by-2025.html
[3] GlobeSt.com. (2022, February 2). Party City Stores Up for Auction. GlobeSt.com. https://www.globest.com/news/national-news/retail/party-city-stores-up-for-auction/
[4] NPR. (2022, January 18). Party City files for bankruptcy protection, announces plans to close all U.S. stores. NPR. https://www.npr.org/2022/01/18/1074108874/party-city-files-for-bankruptcy-protection-announces-plans-to-close-all-u-s-stores
- The pandemic-induced disruptions and inflation have been detrimental to various industries, including retail, draining vital liquidity and hindering growth, as seen in the case of Party City.
- As the economy grapples with these pressures, policymakers must consider AI-driven solutions to predict and manage economic fluctuations more effectively, thereby safeguarding business Health.
- In an attempt to alleviate the financial burdens faced by the retail sector, government subsidies could be directed towards enhancing supply chain efficiency and implementing modern technology, such as AI, to improve operations.
- Simultaneously, the government can support the retail sector in its recovery from the pandemic by promoting health and safety measures in physical stores, fostering a sense of trust among consumers and encouraging them to spend on non-essential items like party supplies.
- As Party City's unfortunate closure serves as a reminder, the interplay between war, economy, health, and policy has a significant impact on finance, retail, and other industries, underlining the need for a unified approach to promote sustainable business growth.
