America's biggest party goods store has filed for Chapter 11 bankruptcy protection after struggling with rising prices and a pullback in customer spending. Party City, based in Woodcliff Lake, New Jersey, is planning an expedited restructuring that it said would substantially lower its debt and free up cash, reports the AP. The company says it has secured a commitment for $150 million in financing (which is subject to court approval) that will give it enough cash to keep running.
Party City said its more than 800 company-owned and franchise stores throughout North America will remain open, and customers can still shop on the company website. Party City for years has faced growing competition from stores like Walmart and Target, and CNBC notes that "instead of growing its digital business, the company burned cash keeping" its stores open. That pressure has intensified in an era of rising prices, including for helium used in party balloons, and slowing consumer demand.
CNN reports Party City's sales fell 8% between 2017 and 2021, to $2.2 billion, and were expected to remain flat in 2022. In December, the SEC warned Party City that it was at risk for being delisted by the New York Stock Exchange for failing to maintain an average $1 per share stock price over a 30-day period. Shares are currently hovering around 40 cents. The company went public in April 2015 at $17 a share, and traded as high as $22.60.
"Party City used to be one of the best games in town, but it is now something of an also-ran operation," said Neil Saunders, managing director of GlobalData Retail. "There is likely still something of a role for Party City, but the company needs to financially restructure and to rethink its approach." Saunders believes Party City should think about how it reaches customers including looking at more attractive locations for its stores and beefing up its e-commerce site. (Read more Chapter 11 stories.)