Party City filed for bankruptcy protection on Tuesday after years of losses and weak sales.
The largest chain of party supplies and Halloween specialties in the United States said in a regulatory filing that it reached an agreement with debt holders to reduce its $1.7 billion debt load.
The company said it secured $150 million in financing that will allow it to keep stores open and operations underway. As of October, the company had a total of 761 Party City (PRTY) stores and 149 temporary Halloween City stores. In 2021, Party City (PRTY) had more than 16,000 full-time and part-time employees.
For years, Party City has fought against competition for party supplies and decorations from big box chains and online stores. The rise of Spirit Halloween, a pop-up store model, also cut into Party City’s sales during the prime Halloween season.
The company also had to contend with rising costs during the pandemic and helium shortages, which hurt balloon sales. Balloons are a “focal point of our growth strategy and are a key driver of our differentiated brand experience,” the company said in a regulatory filing.
Between 2017 and 2021, Party City’s sales fell 8% to $2.2 billion. The company projects that sales will remain flat in 2022. The company also lost money every year between 2019 and 2021 and said it was on track to lose up to $199 million in 2022.
Party City said in December that it was at risk of a delisting from the New York Stock Exchange because its stock fell below an average of $1 a share for 30 trading days.
Other struggling retailers are also at increased risk of bankruptcy in 2023 as consumers pull back on spending.
Bed Bath & Beyon this month gave a gloomy message about the future, warning that a bankruptcy filing is a possible outcome for the company.
There is “substantial doubt about the company’s ability to continue” due to the deteriorating financial situation.