Party City goes bankrupt

New York — Party City is closing all of its stores, ending nearly 40 years in business, CNN has learned.

CEO Barry Litwin told the company’s employees Friday in a meeting seen by CNN that Party City is “winding down” operations effective immediately and that today will be their last day of employment.

“It’s without a doubt the most difficult message I’ve ever had to deliver,” Litwin said at the meeting, which was held on a video conference call. Party City’s “very best efforts have not been enough to overcome” its financial challenges, he added, resulting in the company’s collapse.

“It’s really important for you to know that we did everything we could to try to avoid this outcome,” Litwin said. “Unfortunately, it is necessary to begin a liquidation process immediately.”

Party City did not immediately respond to CNN’s request for comment.

Bankruptcy and collapse

The chain is the largest convenience store in the U.S. and recently exited bankruptcy in September 2023. That plan included canceling nearly $1 billion in debt, dissolving its stock and keeping a majority of its 800 U.S. stores open.

Although in the short term Party City managed to avoid the same fate as Bed Bath & Beyond and 99 Cents Only Stores, it still had more than $800 million in debt to overcome, which weighed on earnings this year.

The company had closed more than 80 stores from the end of 2022 to August 2024, according to its latest financial documents.

Party City said in an earlier statement that it had renegotiated many of its leases and exited “less productive locations,” resulting in many of the chain’s workers remaining employed. The company had approximately 6,400 full-time employees and 10,100 part-time employees in 2021.

Party City filed for bankruptcy in January 2023 after struggling to pay its $1.7 billion in debt. As a result, it was also delisted from the New York Stock Exchange.

The New Jersey-based company announced Litwin as its new CEO just four months ago. In a LinkedIn post, he said the company’s “main priority is strengthening our financial health and there is work ahead.”

Net revenue for Party City fell to $407 million for the three months ending in September 2023, compared to $502 million in the same period in 2022, according to the company’s latest financial information.

The company, which sells balloons, Halloween costumes and other party items, 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, Costco and others also crushed smaller chains.

It also had to contend with rising costs during the pandemic and a helium shortage that hurt its crucial balloon business.

The chain joins a growing list of retailer bankruptcies this year as customers cut back on discretionary spending amid the rising cost of living. Notably, Big Lots announced Thursday that it began “exiting” sales at all of its locations after a plan by a private equity firm to rescue the bankrupt retailer failed.

Major chains are on track to close the highest number of stores in 2024 than in any year since 2020, according to Coresight Research.

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