Party City closing all stores immediately shocks employees
- Party City announced the closure of nearly 700 stores due to financial struggles.
- The company filed for Chapter 11 bankruptcy protection for the second time amid inflation and declining consumer spending.
- The closures will result in mass layoffs but 95% of employees will be retained during the winding down process.
In the United States, Party City has announced plans to close nearly 700 stores nationwide after filing for Chapter 11 bankruptcy protection for the second time in less than two years. The retailer, which has operated for nearly 40 years, informed its employees of mass layoffs at its headquarters in New Jersey as part of its winding down process. This decision comes amid significant inflationary pressures affecting costs and a notable decline in consumer spending. The financial struggles of Party City intensified despite previous efforts to restructure its operations and eliminate nearly $1 billion in debt following its first bankruptcy filing in January 2023. Competition has also heightened from major retailers like Walmart and Target, as well as from pop-up shops such as Spirit Halloween, which has encroached on Party City's market share during key seasonal events. The ongoing economic challenges and changing consumer behavior significantly impacted Party City's sales and profitability. In an internal communication, CEO Barry Litwin expressed regret over the company's inability to recover from its $800 million debt, stating that all options had been exhausted to avoid this outcome. The company plans to conduct going-out-of-business sales until stores officially close by February 28, focusing on maximizing value for stakeholders. Despite the impending closures, Party City has pledged to retain about 95% of its staff to assist in the winding down process. As Party City prepares to close its doors, it signifies the end of an era for a retailer that had been a staple for party supplies and celebrations. Employees and customers alike are expected to experience the impact of these closures, as Party City has been the go-to destination for a variety of festive occasions. The long-term implications of this bankruptcy filing will likely resonate throughout the retail industry, reflecting broader economic trends and the continuing evolution of consumer spending habits.