PARTY CITY is going, going, gone… Out Of Business or… restructure?

Well, yea. I’m shocked they stayed alive this entire time.  Their prices are sky high…. Really, who wants to pay $5 to $20 USD for a single Balloon? Retail space rental costs are high; I’m shocked they didn’t push to own real estate.  RUMOR HAS IT, employees were told, today is there last day….. Either way, it’s official, they are going out of business OR going to restructure!

Party City, the leading party supply retailer in the United States, is closing all its stores and ending nearly four decades in business. CEO Barry Litwin informed corporate employees in a Friday meeting that operations would cease immediately, marking December 20 as their final day of employment. Employees were told they would not receive severance pay, and benefits would end as the company winds down.

“This is without question the most difficult message I’ve ever had to deliver,” Litwin said during a video conference call, noting the company’s financial struggles proved insurmountable despite its best efforts. Inflation, rising costs, and reduced consumer spending significantly impacted the company, ultimately leading to its collapse.

“It’s really important for you to know that we’ve done everything possible to try to avoid this outcome,” Litwin added.

A History of Struggles

Party City’s troubles have been mounting for years. The New Jersey-based retailer declared bankruptcy in January 2023 with $1.7 billion in debt. While the company managed to cancel nearly $1 billion of its debt through the bankruptcy process and exited bankruptcy in mid-2024, it remained burdened by over $800 million in debt. Efforts to keep the company afloat included closing more than 80 of its 800+ stores between late 2022 and August 2024.

Litwin, who became CEO just four months ago, had expressed hope for financial recovery, calling strengthening the company’s financial health his top priority. However, these efforts were not enough to overcome mounting competition from e-commerce platforms like Amazon and big-box retailers such as Walmart and Costco. Additionally, Party City faced challenges from seasonal competitors like Spirit Halloween and rising costs during the pandemic, including a helium shortage that hurt its crucial balloon business.

A Shocking End

The news of the company’s closure began to circulate among corporate staff in recent weeks. Employees were caught off guard as management had recently expressed optimism about the company’s future during town hall meetings. However, signs of trouble became evident when the product development team was abruptly recalled from a vendor trip, reportedly due to safety concerns stemming from unpaid suppliers.

Corporate employees were sent home on December 10, with security measures put in place to restrict access to the headquarters. Internal communications revealed growing frustration among staff as rumors spread about the company’s closure. Notifications were reportedly sent to store managers that all locations would close by February 1.

During the Friday meeting, Litwin apologized for the lack of communication, and Party City’s Chief Human Resources Officer Karen McGowan, visibly emotional, struggled to deliver details about severance and benefits.

“I know this is a lot to take in,” McGowan said tearfully during the brief call.

Retail Challenges and Broader Trends

Party City’s collapse is part of a broader wave of retail bankruptcies and closures as customers reduce discretionary spending amid rising living costs. The company joins other struggling chains, such as Big Lots, which recently announced “going out of business” sales after a failed rescue plan.

Coresight Research predicts 2024 will see the highest number of store closures since 2020, signaling continued challenges for traditional retailers in an increasingly digital and competitive marketplace.

For Party City, the closure marks the end of an era for a company that once dominated the party supply industry, employing approximately 6,400 full-time and 10,100 part-time workers as of 2021.

Author: Ryan Bridglal, 12/20/2024