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CNN
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Party City has closed all its stores, ending a nearly 40-year run, CNN reported.
Chief Executive Officer Barry Litwin told company employees Friday that Party City was “winding down” operations immediately and that today would be their last day of employment during a meeting viewed by CNN. . Employees were told they would not receive severance pay and that their benefits would be discontinued as the company went out of business.
“This is without a doubt the most difficult message I have ever had to convey,” Litwin said during the meeting, which was held via video conference.
He added that Party City’s “best efforts were not sufficient to overcome the financial challenges,” which resulted in the company’s bankruptcy. Litwin said the company has struggled to cope with inflation, which is raising costs for the company and hurting consumer spending.
“It is very important that you know that we have done everything possible to avoid this outcome,” Litwin said. “Unfortunately, we must begin the downsizing process immediately.”
Also Friday, some Party City store employees received a letter stating that the company will be closing its stores on Feb. 28, at which time store staff will be laid off.
“While Party City believes this closure is in the best interest of the company, we regret having to take this action and thank you for your valuable contributions and service to the company.” says the letter.
Party City did not respond to CNN’s request for comment.
bankruptcy and collapse
The New Jersey-based company announced Litwin as its new CEO just four months ago. In a LinkedIn post he wrote when he joined the company, he said the company’s “key priority is strengthening our financial health, and we have work ahead of us.”
Party City emerged from bankruptcy a month after Litwin’s arrival. The company declared bankruptcy in January 2023. The company had been struggling to pay off $1.7 billion in debt, but bankruptcy was able to wipe out nearly $1 billion in debt. The company closed more than 80 stores between the end of 2022 and August 2024, although most of its more than 800 stores managed to stay open, according to its latest financial filings.
But it still had more than $800 million in debt, which weighed on its profits this year.
News of the company’s impending bankruptcy began trickling out among internal staff in recent weeks.
A former Party City headquarters employee said Party City’s product development team was called back from an annual vendor trip two weeks ago and told to return home immediately. A former Party City headquarters employee requested anonymity because he was not authorized to speak to the media. The team was told that the company believed the trip posed a safety risk because Party City had stopped paying its suppliers.
All employees were sent home on December 10, and headquarters security locked the front door. In an email sent to employees on Dec. 11, the company’s security team reminded employees that a one-day alert was required to access the building, stating, “Please do not allow anyone to enter the building. Please do not let me tailgate you.” This is to prevent people without badges from entering the door.
In an internal Microsoft Teams chat shared with CNN on Thursday, employees expressed anger at the lack of communication as news spread that product development staff had been recalled. Some people learned that store managers had been notified that all Party City stores would be closing in February.
Employees were caught off guard when management failed to mention potential financial issues during a recent town hall meeting. The employee said management is optimistic about Party City’s overall business.
In a call with staff Friday, Litwin apologized for the lack of communication.
“We recognize that the flow of communications is not the normal way to handle sensitive matters like this,” Litwin said.
Karen McGowan, Party City’s chief human resources officer, broke down in tears several times during a brief video conference as she detailed corporate employee benefits and retirement benefits.
“I certainly know this is a lot to take in,” McGowan said, before stopping and crying. “very sorry.”
Party City is the largest party supply store in the United States. The company has approximately 6,400 full-time employees and 10,100 part-time employees as of 2021.
The company, which sells balloons, Halloween costumes and other party supplies, has stumbled in the face of increasing competition from e-commerce sites and pop-up concepts like Spirit Halloween. Competition from big retailers like Amazon, Walmart, and Costco has also decimated smaller chains.
It also had to deal with rising costs and helium shortages during the pandemic, which hurt its vital balloon business.
The chain joins a growing list of retailer bankruptcies this year as customers cut back on discretionary spending amid rising costs of living. Notably, Big Lots announced Thursday that it would begin “going out of business” sales at all of its stores after a private equity firm’s plan to rescue the bankrupt retailer failed.
Major chains are expected to close more stores in 2024 than in any year since 2020, according to Coresight Research.