Party City says more than 800 company-owned and franchised stores across North America will remain open and customers will still be able to shop on the company’s website.
NEW YORK — Party City filed for Chapter 11 bankruptcy protection after struggling with rising prices and falling customer spending.
The Woodcliff Lake, New Jersey-based company said its franchise stores, subsidiaries outside of the United States and its Anagram balloon business are not part of the restructuring and will remain core components of the company’s business.
Party City Holdco Inc., said more than 800 company-owned and franchised stores across North America will remain open and customers will still be able to shop on the company’s website.
The chain is planning an accelerated restructuring that it says will significantly reduce debt and free up cash.
The company received a commitment from the Ad Hoc Group of $150 million in financing for its own debtor. It said the financing, subject to court approval, would provide plenty of cash to continue operations.
Shares were up more than 10% before the market opened on Wednesday.
Party City has for years faced increasing competition from Walmart and Target and increasingly from occasion pop-up stores like Spirit Halloween. That pressure has grown in an age of soaring prices, including for helium used in party balloons, and slowing consumer demand.
“Party City used to be one of the best games in town, but now it’s just a casual functioning game,” said Neil Saunders, managing director of GlobalData Retail. “It is possible that Party City still has some role to play, but the company needs to restructure its finances and rethink its approach.”
Saunders believes Party City should think about how to reach customers, including considering more attractive locations for its stores and enhancing its e-commerce site.
In November, Party City reported its quarterly loss increased, reflecting a 3.2% drop in sales at comparable stores. Overall sales were within expectations, but at a lower level.
In December, the Securities and Exchange Commission warned Party City that it was in danger of being delisted by the New York Stock Exchange for failing to maintain an average share price of $1 per share. within a period of 30 days.
The stock is currently hovering around 40 cents. The company went public in April 2015 at $17 a share and traded as high as $22.60.
The City Party Committee expects the company restructuring to be completed in the second quarter.
https://www.king5.com/article/news/nation-world/party-city-seeks-bankruptcy-protection/507-4671f460-a74b-4b1e-98e2-8ac825ff3a5d Party City files for bankruptcy as prices continue rising