Party City files for bankruptcy after struggling with rising prices and competition from big stores

Party City files for bankruptcy after struggling with rising prices and competition from big stores

party over? Party City files for bankruptcy after struggling with soaring prices and competition from big department stores — the Party retailer trades for 40 cents on the stock market after once touching $22.60 a share

  • Party City filed for Chapter 11 bankruptcy protection Tuesday
  • The New Jersey-based company said its franchise stores, subsidiaries outside the US and its foil balloon Anagram business are not part of the reorganization
  • The company has been hit hard during the pandemic as celebrations slowed due to COVID-19 restrictions, as well as the supply chain crisis and inflation
  • It secured a $150 million commitment to a debtor-owned financing plan that is expected to close by the second quarter
  • The SEC also threatened to delist the company from the NYSE in December after the stock price stayed below $1 for more than 30 days
  • It is currently trading at around 40 cents, a far cry from its 2015 peak of $22.60

Party City has filed for Chapter 11 bankruptcy protection after struggling with soaring prices and a drop in customer spending as the festive retailer trades at 40 cents in the stock market after once hitting nearly $23.

The Woodcliff Lake, NJ-based company said its franchise stores, subsidiaries outside the US and its foil balloon Anagram business were not part of the restructuring and would remain core components of its business.

Party City Holdco Inc. said its more than 800 company-owned and franchised stores across North America will remain open and customers can continue to shop on the company’s website.

The company was hit hard during the pandemic, when celebrations slacked off due to COVID-19 restrictions, and has since been hit by the global supply chain crisis and rising inflation, causing American households to start saving money.

To combat its ailing economy — with the company’s stock currently trading at less than 40 cents — it has filed for bankruptcy and committed to a $150 million self-financing plan with the ad hoc group.

Party City filed for Chapter 11 bankruptcy protection Tuesday. The New Jersey-based company said its franchise stores, subsidiaries outside the US and its foil balloon Anagram business are not part of the reorganization

1674102530 393 Party City files for bankruptcy after struggling with rising prices

The company has been hit hard during the pandemic as celebrations slowed due to COVID-19 restrictions, as well as the supply chain crisis and inflation. It secured a $150 million commitment to a debtor-owned financing plan that is expected to close by the second quarter

The chain plan is an accelerated restructuring that was said to significantly reduce its debt and free up cash. The funding, which requires court approval, would provide enough money to continue operations, it said.

Shares were up more than 10 percent before the market opened on Wednesday.

“Today’s move to strengthen PCHI’s balance sheet will strengthen our ability to continue driving our strategic priorities and continue to innovate and improve customer experiences,” CEO Brad Weston said in a statement.

‘As we take this important step to put our business on a stronger financial footing for the future, we remain committed to inspiring joy by making it easy for our customers to create unforgettable memories.’

Additionally, Party City has faced growing competition from Walmart and Target for years, and increasingly from occasional pop-up stores like Spirt Halloween. These pressures have intensified at a time of rising prices, including for helium, which is used in party balloons, and slowing consumer demand.

Global Data Retail chief executive Neil Saunders believes the company will need to “financially restructure and reassess its approach” to survive after filing for bankruptcy.

“Party City used to be one of the best games in town, but now it’s kind of a sideline,” Saunders said. “There’s probably still a role for Party City.”

Saunders believes Party City should rethink how it reaches customers, including finding more attractive locations for its stores and improving its e-commerce site.

The company is in dire need of positive development as the Securities and Exchange Commission warned Party City it could be delisted from the New York Stock Exchange for failing to maintain a $1-per-share average share price over a 30-day period in December .

The SEC also threatened to delist the company from the NYSE in December after the stock price stayed below $1 for more than 30 days

The SEC also threatened to delist the company from the NYSE in December after the stock price stayed below $1 for more than 30 days

It is currently trading at around 40 cents, a far cry from its 2015 peak of $22.60

It is currently trading at around 40 cents, a far cry from its 2015 peak of $22.60

A month earlier, Party City reported that its quarterly losses had widened, reflecting a 3.2 percent decline in comparable store sales. Overall sales were in line with expectations, but on the low end.

The stock is currently hovering around 40 cents. In the trailing 12-month period, the company’s high share price was $5.40 exactly a year ago, before taking a gigantic plunge to $3.21 in early May. It saw a small increase in August and October before falling below one dollar in November and December.

The company went public in April 2015 at a price of $17 per share and was trading at $22.60 in April 2015.

Party City expects to complete its corporate restructuring in the second quarter.