Party City filed for bankruptcy protection Tuesday, weighed down by competition and years of financial losses.
The largest party supplies and Halloween specialty retail chain in the U.S. said in a filing Filing It reached an agreement with creditors to reduce its $1.7 billion debt load.
The company said it secured $150 million in financing, which will allow its stores to open and operate. As of October, the company had a total of 761 Party Cities
(PRTY) stores and 149 temporary Halloween town stores. In 2021, Party City
(PRTY) It had more than 16,000 full and part-time employees.
Party City has faced competition for party supplies and decorations for years, especially from big-box chains and online retailers that sell a wide variety of items.
Target in particular increased its party supplies and special events inventory, said Neil Sanders, analyst at Global Data Retail.
“It’s aimed at the family demographic that traditionally shops Party City,” he said.
The appearance of Spirit HalloweenA pop-up store model also undercuts Party City’s sales during the key Halloween season.
However, competition is not the only cause of Party City’s downfall.
The company had to contend with rising costs during the pandemic Lack of helium, which affected its most important balloon business. Balloons are “a focal point 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’s sales fell 8% to $2.2 billion. The company predicts that sales will remain flat in 2022. The company lost money every year between 2019 and 2021 and said it was on track to lose up to $199 million in 2022.
In December, Party City said it was at risk of delisting from the New York Stock Exchange after its stock fell to an average of $1 a share for 30 trading days.
Party City’s bankruptcy could be a sign of trouble for the retail industry this year.
Retailers are a Weak holiday extensionDecember retail sales showed, and that could force some companies to close stores or file for bankruptcy.
There are other struggling chains Increased risk of bankruptcy Consumer spending softens.
Bed Bath & Beyond
(PPBY) This month it issued a bleak message about its future, warning that a bankruptcy filing was a possible outcome for the company.
Due to its poor financial condition, there is “substantial doubt as to the company’s ability to continue”.