Party City was forced to close its 22 stores in February and has put its many stores up for auction. Yes! We are as surprised as you are right now as the largest party supply store in the U.S., Party City, is tangled in the headlines saying, “Is Party City Going Out Of Business?”
Party City is an American retail chain of party stores. The company is the largest retailer of party goods in Canada, Mexico, and the United States. So, how can it close so many of its stores? What happened?
In this guide, we’ve compiled all the information about Party City, which will help better understand whether Party City is going out of business in 2023 or it’s all just hot air.
About Party City
Part City Holdco Inc. is an American publicly traded retailer of party stores. It was founded in 1986 by Steve Mandell.
He recognized that the market for party goods was favorably fragmented; a large number of retailers only carried limited supplies, and no big players dominated the party market.
This gave rise to Party City, which topped the annual revenue of $2.4 million in 1993, with the net profits approaching $235,000.
Soon, the company became the largest retailer of party goods in Canada, Mexico, and the United States, operating over 750 company-owned and franchised outlets.
Is Party City Going Out Of Business 2023?
Party City filed for bankruptcy in January of 2023 after struggling to pay off its debt load of $1.4 billion. But before filing for Chapter 11 bankruptcy, Party City already closed and vacated 28 stores in 13 states.
However, recently, it exited bankruptcy after a U.S. judge signed the retailer’s plan of reorganization. This indicates that Party City is not going out of business 2023.
The plan that the U.S. judge signed cancels the $1 billion debt of Party City. According to the company, nearly 800 stores in the U.S. will remain closed due to the bankruptcy agreement, while the majority will remain open.
This implies that many of Party City’s employees will remain employed in the company. Moreover, in a regulatory filing, the company stated that it is planning to go private post-bankruptcy.
What Are The Settlements Of Party City?
Party City’s bankruptcy agreement states that the company’s outstanding stocks will be wiped out, and the shareholders will not be reimbursed.
The plan will help it convert the $1 billion debt into equity shares and allow it to emerge from bankruptcy with a new $562 million loan, which is backed by its lenders.
The company will also sell its new equity shares of $75 million, which will help it raise additional cash.
Regarding the settlements, Party City’s small creditors, which include unpaid trade vendors, will receive the company’s shares of $5.3 billion class action settlement plus $3.5 million in cash.
Why Is Party City Going Out Of Business?
After the COVID-19 pandemic, when every organization in the world was struggling to survive, Party City was no exception.
The pandemic impacted the company in such a way that the company went into debt and ultimately filed for bankruptcy.
In 2019, the company’s revenue reported $2.35 billion. But as the pandemic hit, most people canceled in-person celebrations, gatherings, and events, impacting the sales and revenue of Party City.
The pandemic cost $174 million in EBITDA in 2020.
According to the company, the disruptions in the supply chain due to the pandemic and the mandatory store closures all consumed vital liquidity, resulting in limiting the company’s ability to fund critical growth initiatives.
Furthermore, the growing competition from the e-commerce sites and pop-up concepts also contributed to the decline of Party City.
List Of Party City Stores Closing In 2023
|New Jersey||West Paterson|
What Is The Net Worth Of Party City?
What Is The Financial Position Of Party City?
The below-mentioned table is the income statement of Party City, which will help better understand the position of the company:
|Total Operating Expenses||520.45||453.03||694.51||488.68|
|Net Income Before Taxes||-178.12||-43.24||-20.91||-2.4|
|Net Income After Taxes||-372.99||-26.89||-19.49||-2.79|
What Is The Future Of Party City?
As the reduced debt has breathed new life into Party City, the company is all set to move forward.
One of the growth initiatives of the company includes the strategy to modernize its stores. These stores will feature category store-in-store, with a balloon shop and customer engagement as the epicenter.
The company also said that it has already opened or renovated 186 next-generation stores.
So, in conclusion to “Is Party City going out of business 2023?” the outcome of all the data and facts states that Party City is not going out of business.
Despite all the struggles due to the pandemic, it has managed to cancel its debt load of $1 billion and plans to convert this debt into equity shares and add additional cash.
Moreover, in a statement, the CEO of the company, Brad Weston, stated that now that the debt has been reduced, the company will emerge better positioned to continue to innovate, elevate the consumer experience, and pursue new growth opportunities.
So, overall, Party City is not another company that is going out of business, such as Tupperware. Instead, Party City is all set to conquer the market with its new strategy.
Who bought Party City?
Advent International, Berkshire Partners LLC, and Western Presidio sold the majority of stakes to Thomas H Lee Partners in 2012. Then, in 2015, Party City Holdco Inc. went public, with Thomas H Lee Partners retaining 55%.
Is Party City making money?
According to the financial reports of the company, its current revenue is $2.16 billion.
Who are the biggest competitors of Party City?
The biggest competitors of Party City include Walmart, Target, Amazon, Wayfair, and Macy’s.