Party City Bankruptcy

[Alpha8472]

The company is expected to declare bankruptcy within weeks. Sales were down especially during Halloween. The helium shortage has increased costs for the company.

https://bestlifeonline.com/party-city-bankruptcy-news/

[storewanderer]

Their marketing must have failed pretty badly because a lot of retailers did exceptionally well during Halloween.

I am thinking people who used to go buy the type of disposable party crap this store sells fall into a few groups:
1. Still very concerned about COVID and no longer hosting parties
2. Concerned about environmental impact of single use party crap and not using it/as much of it as in the past
3. Have no spare money left to spend on this crap and realize they can go without most of it and still have their party; all of the party budget goes to buying food since food costs have gone up so much.

I am noticing at Dollar Tree and 99 Only these party item departments look neat, organized, and stocked every time I go in. If those two retailers are having issues moving these items, I can only imagine how a higher priced retailer is doing like Party City.

[ClownLoach]

This is a great example of a retailer that doesn't stay on trend, with the unique addition of a significant portion of the stores being independent franchises. They need to have mass quantities of every item which means deep inventory investment, coupled with limited inventory turns. Their prices are not good to say the least. The nature of the party business, where for example you decide that the color scheme for your 3 year old birthday party is going to be all fire truck colors, lends itself well to Amazon because they can keep deep levels of whatever colors you want in stock without the investment in mass duplication across hundreds of units. A single SKU might sell 100 times a year but it might be only 4 transactions the whole year and an average of 25 units of that SKU per transaction. The dollar stores seem to be able to get the same product in but sell it much cheaper.

The real problem is the franchises. They can basically do whatever they want and absolutely kill the brand. I went into a store about 5 years ago the first week of December and they were still packing up Halloween and Christmas wasn't even halfway set. It was an early year for Hanukkah, I believe it was the 6th or 7th day, and the store had not stocked the Hanukkah fixture - cases of goods were on a pallet next to it. Needless to say this location is now closed, but at what cost to the brand? Anyone who shopped that abomination of a store would never set foot in a Party City again.

[storewanderer]

It appears about 15% of their stores are franchise stores. I didn't know they had franchises.

I assume their store in Reno is a corporate store. It is not impressive. Store is usually a mess, empty of customers, and a lot of the stuff in there feels like it has been there for years.

The space would make a good Dollar Tree.

[ClownLoach]

It appears about 15% of their stores are franchise stores. I didn't know they had franchises.

I assume their store in Reno is a corporate store. It is not impressive. Store is usually a mess, empty of customers, and a lot of the stuff in there feels like it has been there for years.

The space would make a good Dollar Tree.

Sounds like they have lost many of the franchises then. I didn't know about the franchises either until I found out the failure of a store near my old house was one. At that time I read about 40% were franchises.

[norcalriteaidclerk]

Official now.
https://www.cnbc.com/2023/01/18/party-c ... -debt.html
https://www.cnn.com/2023/01/18/business ... index.html

Sent from my SM-G781U using Tapatalk

[ClownLoach]

Interesting to read that they own 770 stores and operate 823 total - so very few are leases. They intend to close about half of the leased stores and said they are considering other closures.

This may be one of those examples of a retailer that survives because they own their real estate. It also sounds like it is a somewhat prepackaged bankruptcy in partnership with their creditors, so as soon as they can handle those lease issues they will emerge from bankruptcy.

I certainly hope that the plan isn't to lease back the real estate however - I can't imagine that they can afford the lease expenses.

[storewanderer]

My suspicion is the "owned" stores count you are seeing refers to the corporate stores. The remainder is the remaining franchise stores. I find it hard to believe they would be bankrupt if they owned that much real estate.

[mbz321]

My suspicion is the "owned" stores count you are seeing refers to the corporate stores. The remainder is the remaining franchise stores. I find it hard to believe they would be bankrupt if they owned that much real estate.

Yes. All the Party City stores I can think of are in leased big box power centers.

[ClownLoach]

My suspicion is the "owned" stores count you are seeing refers to the corporate stores. The remainder is the remaining franchise stores. I find it hard to believe they would be bankrupt if they owned that much real estate.

Yes. All the Party City stores I can think of are in leased big box power centers.

You're correct. I had to pull the bankruptcy paperwork. Terribly written CNBC article. They have a very well written plan to get out of bankruptcy AND remodel or relocate the entire chain in just a few years. And they claim the helium shortage is not really true, there are 300 years of supply from existing sources but much more untapped. Actually looks like a good move to use the court to renegotiate leases and close bad stores then emerge stronger.

https://www.cnbc.com/2023/01/18/party-c ... -debt.html