New York, December 20, 2024 – Party City, a staple in the U.S. party supply industry for nearly four decades, is officially closing its doors. The company, known for selling balloons, costumes, and other festive items, announced that it is “winding down” operations, with all stores expected to close by February 28, 2025. The announcement comes as a major blow to the party goods retailer, which has struggled in recent years amid rising inflation and increased competition from e-commerce giants.
In a video conference held Friday, CEO Barry Litwin informed Party City’s corporate employees that today would be their last day of employment. The announcement was devastating, as staff members were told they would not receive severance pay, and their benefits would be terminated immediately. “That is without question the most difficult message that I’ve ever had to deliver,” Litwin said during the call.
Despite Party City’s best efforts to navigate financial challenges, Litwin explained that inflation and high costs led to an untenable business environment. “It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome. Unfortunately, it’s necessary to commence a winddown process immediately,” he added.
The collapse of Party City signals the end of an era for the beloved brand, which has been a go-to destination for party supplies, especially around holidays like Halloween and Christmas. The company has had a significant presence across the U.S., with more than 800 locations at its peak. However, mounting debt, competition from larger retailers, and market shifts made it increasingly difficult for Party City to survive.
From Bankruptcy to Final Closure
Party City had filed for bankruptcy in January 2023, struggling to manage its $1.7 billion debt load. The bankruptcy allowed the company to restructure, wiping out nearly $1 billion in debt. Despite these efforts, it was clear that the company’s financial troubles were far from over. It still faced more than $800 million in debt, which strained its earnings through 2024.
The company’s woes were compounded by growing competition from e-commerce platforms like Amazon, big-box retailers like Walmart, and seasonal pop-up stores like Spirit Halloween. Additionally, Party City faced operational hurdles, such as the ongoing helium shortage that affected its balloon business, a key revenue driver for the chain.
Litwin’s arrival as CEO in August 2024 had brought hope of recovery. His primary goal, according to a LinkedIn post, was to strengthen Party City’s financial health. However, even his leadership could not turn the tide for the company, and in a stunning twist, Party City began shutting down its operations. The company confirmed that all stores would close by February, with employees receiving letters notifying them of their termination and the end of their benefits.
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A Challenging Year for Retailers
The collapse of Party City is not an isolated incident. It joins a growing list of retail chains that have struggled with rising costs, supply chain disruptions, and changing consumer behavior in 2024. As discretionary spending decreases due to inflation, more companies are feeling the strain. On the same day Party City announced its closure, Big Lots also declared that it would begin “going out of business” sales after a failed rescue deal.
The trend of store closures in 2024 is expected to surpass the number of closures seen in 2020, according to Coresight Research. Retailers that were once considered mainstays in the American shopping landscape are now fighting to stay afloat, and many have been unable to survive the challenging economic conditions.
An Emotional Goodbye
The news of Party City’s imminent closure was met with shock and anger among employees. Many corporate staff were unaware of the severity of the company’s financial situation. Two weeks ago, Party City’s product development team was recalled from an annual trip with suppliers and told to return home immediately, with management citing safety risks. Corporate employees were then sent home on December 10, with security measures put in place at Party City’s headquarters to limit access.
During the emotional video conference call on Friday, Litwin apologized for the lack of communication and expressed regret over the company’s failure to notify employees sooner. Karen McGowan, the company’s Chief Human Resources Officer, also became emotional while explaining the lack of severance and benefits to employees, further underlining the gravity of the situation.
Legacy of Celebrations
Founded in 1986, Party City became the largest party supply retailer in the United States, with approximately 6,400 full-time employees and 10,100 part-time workers at its peak in 2021. Despite its struggles in recent years, Party City was the go-to destination for a wide variety of celebrations, from birthdays to weddings to holiday parties.
Now, as the company winds down, its closure leaves a void in the party supply sector, which is increasingly dominated by online retailers and discount chains. The end of Party City’s retail operations marks a significant moment in the shifting landscape of brick-and-mortar stores, as more and more traditional retailers face the pressure of adapting to new consumer habits.
Looking Ahead
As Party City exits the retail scene, the company’s closure highlights the ongoing challenges faced by traditional brick-and-mortar stores in an increasingly digital world. While the party may be over for Party City, its struggles reflect broader trends in the retail industry, where even established chains are not immune to the pressures of economic instability and changing consumer preferences.
