Business
Why is Party City closing? Over 800 stores in 46 states going out of business
After 40 years, the well-known party essentials chain is to be no more, with various reasons leading to the slow, then sudden, demise.
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The lights are going out at Party City. The iconic chain, known for its balloons, costumes, and party essentials, has announced it is shutting down all its stores after nearly 40 years of business. For anyone who’s scrambled to throw together a last-minute birthday or Halloween celebration, this news might feel like the end of an era – or at least the end of one’s go-to spot for helium balloons and themed tableware.
The company confirmed the closures in a video call with employees, stating that operations would cease immediately. CEO Barry Litwin described the decision as “the most difficult message” he’s ever had to deliver, while also noting that employees’ benefits would end and severance pay would not be provided. On Friday, some store employees received letters confirming that February 28 would be their last day on the job.
Party City’s financial missteps and bad timing
Party City’s downfall didn’t happen overnight. It first declared bankruptcy in January 2023, citing a debt load of $1.7 billion. The company’s attempt to restructure - which included closing more than 80 stores - helped cancel nearly $1 billion in debt. But that still left more than $800 million unpaid, a burden it couldn’t shake. Rising inflation only made matters worse, increasing costs while discouraging consumers from splurging on discretionary purchases like party supplies.
CEO Barry Litwin, who took the reins in September 2023, vowed to stabilize the company’s financial health. Unfortunately, just a few months later, it was clear the plan had failed. Party City quietly exited bankruptcy in late 2023, but with sales dwindling and debt mounting, the writing was on the wall.
Bigger competitors and a helium hiccup
Party City also fell victim to the double whammy of e-commerce giants and pop-up shops. Chains like Amazon and Walmart undercut prices, while seasonal retailers like Spirit Halloween swooped in during the critical fall season, offering convenience and novelty. Additionally, a helium shortage – the backbone of its balloon business – deflated one of Party City’s key revenue streams. The covid-19 pandemic years exacerbated these challenges.
Party City’s chaotic and emotional closure
The company’s collapse unfolded with a surprising lack of transparency. Corporate employees learned of the shutdown just two weeks ago, when product development teams were abruptly called back from a vendor trip and told to head home for safety reasons. It later emerged that Party City had stopped paying its suppliers. Security staff locked the doors of its corporate headquarters on December 10, leaving employees to scramble for answers.
By December 15, the final hammer fell. On a hastily arranged video call, Litwin apologized for the poor communication. Karen McGowan, the company’s Chief Human Resources Officer, broke down in tears while explaining the loss of benefits and severance packages. “I certainly know this is a lot to take in,” she said, visibly emotional. For many employees, the abrupt end was not just a professional blow but a personal one.
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