[ad_1]
New York
CNN
—
Party City filed for bankruptcy protection on Tuesday, but the competition and years of financial losses were weighing on it.
The largest US party goods and Halloween specialty retail chain said in a regulatory filing that it had reached an agreement with creditors to reduce its debt burden by $1.7 billion.
The company said securing $150 million in funding will allow it to keep its stores open and operating.As of October, the company had a total of 761 Party City (PRTY) stores and 149 temporary Owned a Halloween City store. In 2021, Party City (PRTY) had over 16,000 full-time and part-time employees.
Over the years, Party City has battled competition for party supplies and decorations, especially from large chain stores and online retailers selling a wide variety of merchandise.
GlobalData Retail analyst Neil Saunders said Target, in particular, is increasing its party supplies and special event merchandise.
“This is aimed squarely at the family demographic that traditionally shopped at Party City,” he said.
The emergence of a pop-up store model, Spirit Halloween, also reduced Party City’s sales during the critical Halloween season.
But competition wasn’t the only factor that led to Party City’s demise.
The company has had to contend with rising costs and helium shortages during the pandemic, taking a toll on its all-important balloon business. Balloons are “a focus of our growth strategy and a key driver of our differentiated brand experience,” the company said in a regulatory filing.
Between 2017 and 2021, Party City sales fell 8% to $2.2 billion. The company expects sales to remain flat in 2022. The company also says he’s been losing money every year from 2019 to 2021, and is on track to lose up to $199 million in 2022.
Party City said in December that it was at risk of being delisted from the New York Stock Exchange after its stock averaged below $1 per share over a 30-day trading period.
Party City’s bankruptcy could be a sign of trouble for the retail industry this year.
Retailers had a weak holiday stretch, as December’s retail sales showed, which could cause some businesses to close stores or file for bankruptcy.
Other struggling chains are at increased risk of bankruptcy as consumer spending softens.
Bed Bath & Beyond (BBBY) issued a harsh message this month about the company’s future, warning of possible bankruptcy.
There is “significant doubt about the company’s ability to continue” due to deteriorating financial conditions.
[ad_2]
Source link
