Party City files for Chapter 11 bankruptcy protection
Party City has filed for bankruptcy protection in an attempt to restructure the company's debt, becoming the latest national retailer to confirm its financial struggles as consumer spending tightens.
Driving the news: The company announced it filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas and entered into a restructuring agreement late Tuesday.
- Party City Holdco Inc. said it is asking the court to "maintain business-as-usual operations" to keep its 800-plus stores open, pay wages and benefits, and "honor customer programs and policies."
- The company said it has secured $150 million in debtor-in-possession financing from an ad hoc group that needs to be approved by the court.
What they're saying: Debt is not the only factor for Party City, GlobalData retail analyst Neil Saunders said Wednesday.
- “A downswing in demand for party products has also put pressure on the business,” Saunders said. “Much of this is down to two factors: increased competition and a more constrained consumer.”
- "There is likely still something of a role for Party City, but the company needs to financially restructure and to rethink its approach,” Saunders said, adding many of its stores are in "sub-optimal locations which are poor at driving passing trade."
Flashback: The New Jersey-based party supplies company has been struggling before the pandemic and announced store closings in 2019.
- The retailer has also been dealing with an ongoing global helium shortage.
Inflation has tightened consumer budgets, a trend reflected in the financial health of other big box retailers. Bed Bath & Beyond recently warned that it could file for bankruptcy protection and announced a new round of store closings last week.
Editor's note: This story has been updated with additional information.
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