Party City, America's largest party supply store, is closing all of its locations, a move driven by rising inflation, crippling debt and fierce competition.
The company, which had been in operation for nearly four decades, announced its immediate closure on Friday, with CEO Barry Litwin breaking the news to company employees during a video conference.
“This is without a doubt the most difficult message I have ever had to convey,” Litwin said, noting that staff will not receive severance pay and benefits will cease immediately.
He attributed the company's collapse to inflation, which raised operating costs and reduced consumer spending. “Our best efforts have not been enough to overcome” these challenges, he explained.
Party City's financial struggles were longstanding. The company emerged from bankruptcy just a few months ago after paying off nearly $1 billion in debt.
However, its remaining debt of $800 million continued to put pressure on operations, forcing the closure of more than 80 stores between late 2022 and mid-2024.
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Despite these efforts, Party City was unable to recover from a combination of pandemic-related cost increases, a helium shortage that affected its balloon sales, and fierce competition from retailers such as Amazon, Walmart and Spirit Halloween.
Employees expressed shock and anger at the lack of communication from management. According to internal chats shared with CNN, corporate staff were unaware of the financial problems, as recent town halls had conveyed optimism.
Uncertainty peaked two weeks ago when the company abruptly pulled its product development team from an annual supplier trip, citing security concerns due to unpaid suppliers.
All corporate employees were sent home on December 10 and access to the New Jersey headquarters was restricted. Letters sent to store employees confirmed that stores would close on February 28 and layoff notices would be sent to staff.
Litwin, who had taken over as CEO just four months ago, had initially expressed hope to stabilize the company. “Our top priority is strengthening our financial health,” he wrote in a LinkedIn post upon his hiring.
However, on Friday he admitted that “everything possible” had been done to avoid this outcome and that the only remaining option was a liquidation.
Party City's closure is part of a broader trend in the retail sector, with big chains like Big Lots also succumbing to bankruptcy this year.
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