America’s largest party supply retailer has filed for bankruptcy. The first Party City store opened in 1986. The retailer has over 800 locations in North America and has been known as the one-stop shop for all your party needs for decades. With barely any competition, the retailer quickly saw success. However, decades later, Party City has gained plenty of competitors, including Amazon, Walmart, Target, and pop-up stores like Spirit Halloween.
Does this mean Party City is closing for good?
The company announced it filed for bankruptcy Tuesday. However, this is not the end of Party City. The party retailer says filing bankruptcy is its attempt to restructure the company’s debt. The company has entered into a restructuring agreement. However, the deal still needs to be completed. The agreement means a court would allow Party City Holdco Inc. to maintain business-as-usual operations to keep its stores open and pay wages and benefits. Party City has secured $150 million in debtor-in-possession financing from another company, but it has to be approved by U.S Bankruptcy Court.
How did Party City get here?
According to the retailer’s website, it went public in April 2015 at $17 a share. Present-day shares are at an estimated 40 cents. The company has reportedly struggled since 2019 when it announced store closings. For years Party City has had to remain relevant as stores like Spirit Halloween took a lot of its business. Giant retailers like Amazon, Target, and Walmart also gave customers more options, knocking Party City from the only location for all party needs. Other factors contributing to the company’s downfall include the height of the Covid-pandemic when social distancing was the norm and parties significantly declined. Inflation and the threat of a recession have many customers creating tighter budgets with no wiggle room for entertainment such as parties.
Hopefully, the well-known retailer will survive after its restructuring plan is complete. Party City expects its restructuring will be complete by the second quarter.
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