CNN has learned that after almost 40 years in business, Party City is closing all of its locations.
In a meeting that CNN watched on Friday, CEO Barry Litwin told corporate staff that Party City is immediately closing its doors and that today is their last day of employment.
Workers were informed that their benefits would terminate when the company went out of business and that they would not be eligible for severance pay.
During the video conference call, Litwin stated, “That is without a doubt the most difficult message that I have ever had to deliver.”
He claimed that despite Party City’s best efforts, the company failed to overcome its financial difficulties, leading to its death. According to Litwin, the business found it difficult to control inflation, which raised expenses and decreased consumer spending.
Litwin advised you that it’s crucial that you understand that we have taken every precaution to attempt to prevent this outcome. Regretfully, a winddown procedure must be started right now.
Additionally, on Friday, several Party City retail employees received letters warning them that they would lose their jobs when the company closed its stores on February 28.
The letter states, “We regret that we have had to take this step and thank you for your valued contributions and service to the company, even though we believe these closings are in the best interest of the company.”
CNN reached out to Party City for comment, but they did not reply.
Bankruptcy and collapse
Just four months ago, Litwin was appointed the company’s new CEO. He stated on LinkedIn after being hired that improving the company’s financial situation is its top priority and that there is still work to be done.
Litwin’s arrival brought Party City out of bankruptcy a month later. In January 2023, it filed for bankruptcy. By filing for bankruptcy, the corporation, which had been struggling to pay off its $1.7 billion debt load, was able to eliminate nearly $1 billion in debt.
According to its most current financial documents, it also closed more than 80 stores between the end of 2022 and August 2024, but it was still able to maintain most of its more than 800 stores operating.
Its earnings this year were hindered by the fact that it still owed over $800 million.
An emotional ending
Over the past few weeks, corporate employees have been aware of the company’s imminent demise.
Two weeks ago, the company’s product development team was called back from its yearly vendor trip and instructed to head back home right once, according to a former Party City corporate office employee who asked not to be named because they were not permitted to speak to the media.
The team was told that because Party City had ceased paying its vendors, the corporation believed the trip constituted a safety risk.
On December 10, all corporate workers were sent home. The front entrance was secured by corporate security. Employees were notified via email on December 11 by the company’s security team that they would need to give a day’s notice in order to enter the building. They were also told not to let anyone enter the building by tailgating in order to prevent those without badge access from entering.
In internal Microsoft Teams exchanges released with CNN on Thursday, workers were incensed over the lack of communication as word spread about the recalled product development personnel.
Others found that store managers had received notifications that all Party City locations would close in February.
Because management had not brought up any possible financial issues in recent town hall meetings, employees were taken by surprise. According to the worker, management had high hopes for Party City’s overall performance.
On Friday, Litwin called a staff meeting and apologized for the communication breakdown.
Litwin told reporters, “We acknowledge that the communication flow has not been how we normally handle sensitive matters like this.”
Party City’s chief human resources officer, Karen McGowan, broke down in tears multiple times during the brief video conference call as they talked about severance and corporate employee benefits.
I am aware that this is a lot to process. McGowan paused to shed a tear. I’m sorry.
Party s over
The largest retailer of party supplies in the US is called Party City. The corporation had 10,100 part-time employees and 6,400 full-time employees as of 2021.
The business, which offers Halloween costumes, balloons, and other party materials, has had trouble competing with pop-up shops like Spirit Halloween and e-commerce websites. Additionally, big-box stores like Costco, Walmart, Amazon, and others have smashed smaller chains.
Its crucial balloon business was also negatively impacted by a helium scarcity and increased expenses during the pandemic.
As consumers cut back on discretionary spending as a result of mounting living expenses, the chain joins an increasing number of stores that have filed for bankruptcy this year.
Notably, a private equity firm’s attempt to save the bankrupt shop failed, and Big Lots declared on Thursday that it will start running out of business sales at all of its locations.
Major chains are expected to close more locations in 2024 than in any previous year since 2020, according to Coresight Research.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.