According to CNN, top-line Party City, biggest retailer of party supplies in the US, is closing its locations and going out of business.
Important Information
- Reports said that CEO Barry Litwin said in a meeting on Friday that the company will be “winding down” activities immediately and that today will be the last day of work for corporate personnel.
- CNN said that once the company collapses, employees would no longer get severance money and their benefits will terminate.
- According to CNN, which cited anonymous sources, workers were frustrated by the lack of communication because management failed to bring up possible financial difficulties during recent meetings (Litwin allegedly apologized for the lack of communication at the Friday meeting).
- According to CNN, store managers were informed that Party City locations would close on February 1.
- It is reportedly after instructing the company’s product development team to go back home immediately two weeks ago while they were in their annual trip with the vendors, that rumors about its collapse have been going around for a few weeks.
Important Background
The party supply store has faced financial problems for years. In 2019, it was compelled to shut down 45 locations when a helium shortage led balloon sales, one of the most profitable services and the backbone of its business, to decline by 1.4%. The company’s market share has also been compromised by growing pandemic-related expenses and intensified competition from other large retail chains and online retailers including Spirit Halloween, Walmart, and Target. The business has been suffering losses each year since 2019, and this year it filed for bankruptcy in January 2023.
An Important Quotation
According to reports, Litwin said at the conference that company’s “very best efforts have not been enough to overcome” financial difficulties as inflation made consumers spend less even though expenditures rose, according to reports.
The big number
$1.7 billion. The company said it had $150 million in funds to keep its stores open, but that was the amount of debt it had when it filed for bankruptcy. The corporation declared bankruptcy even though it closed more than 80 sites in the last two years, wiping out $1 billion in debt.
