New York CNN — Party City is closing all of its locations after nearly 40 years in operation, CNN has learned.
CEO Barry Litwin informed corporate employees in a meeting viewed by CNN on Friday that Party City is “winding down” operations immediately and that today is their last day of work. Employees were told they would not receive severance compensation and that their benefits would expire when the company went out of business.
“That is without a doubt the most difficult message that I have ever had to deliver,” Litwin remarked at the meeting, which was held by video conference call.
Party City’s “very best efforts have not been enough to overcome” its financial issues, he said, resulting in the company’s demise. Litwin stated that the corporation struggled to deal with inflation, which increased prices and reduced consumer spending.
“It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” Litwin told you. “Unfortunately, it’s necessary to commence a winddown process immediately.”
Also on Friday, several Party City retail employees received letters informing them that the company would close its stores on February 28, at which point their jobs would be terminated.
“Although Party City believes these closings are in the best interest of the company, we regret that we have had to take this step and thank you for your valued contributions and service to the company,” according to the letter.
Bankruptcy and collapse
Litwin was named the company’s new CEO only four months ago. When he was hired, he posted on LinkedIn that the company’s “main priority is to strengthen our financial health, and there is work ahead of us.”
A month after Litwin arrived, Party City was able to depart bankruptcy. It has declared bankruptcy in January 2023.
The company had struggled to pay off its $1.7 billion debt load until declaring bankruptcy, which allowed it to eliminate nearly $1 billion in debt. It also managed to maintain the majority of its over 800 stores operating, despite closing more than 80 locations between the end of 2022 and August 2024, according to its most current financial papers.
However, it still owed more than $800 million, which weighed on earnings this year.
An emotional ending
Over the last few weeks, word of the company’s impending collapse began to spread among its corporate staff.
According to a former Party City corporate office employee who wishes to remain anonymous because they were not authorized to speak to the media, the company’s product development team was recalled from its annual trip with vendors two weeks ago and told to return home immediately.
The team was informed that the company believed the trip posed a safety risk because Party City had stopped paying its vendors.
On December 10, corporate employees were all sent home. Security at corporate headquarters secured the front entrance.
In an email sent to employees on December 11, the company’s security team told them they needed to give a one-day notice to gain access to the building, and they were instructed: “Do not allow anyone to tailgate when entering the building” to avoid letting people in who did not have badge access.
Employees expressed fury at the lack of communication in internal Microsoft Teams chats shared with CNN on Thursday as news of the recalled product development staff spread. Others discovered that notifications were sent to store managers informing them that all Party City locations would close their doors in February.
Employees were taken off guard because management had not mentioned any potential financial problems at recent town hall meetings. According to the employee, management has expressed optimism about Party City’s overall business.
Litwin apologized for the lack of communication during Friday’s staff call.
“We recognize the flow of communication has not been how we typically handle sensitive matters like this,” Litwin disclosed.
Karen McGowan, Party City’s Chief Human Resources Officer, burst into tears several times during the brief video conference call while discussing corporate employee benefits and severance.
“I certainly know this is a lot to take in,” McGowan said, pausing and crying. “My apologies.”
Party’s over
Party City is the biggest party supply store in the United States. As of 2021, the company employed approximately 6,400 full-time and 10,100 part-time workers.
The company, which sells balloons, Halloween costumes, and other party supplies, has struggled in the face of increased competition from e-commerce sites and pop-up stores such as Spirit Halloween. Big-box retailers such as Amazon, Walmart, Costco, and others have also crushed smaller chains.
It also had to deal with rising costs during the pandemic and a helium shortage, which harmed its vital balloon business.
The chain joins a growing list of retailers that have gone bankrupt this year as customers reduce discretionary spending due to rising living costs. Notably, Big Lots announced Thursday that it would begin “going out of business” sales at all of its locations after a private equity firm’s plan to rescue the bankrupt retailer failed.
According to Coresight Research, major chains are on track to close more stores in 2024 than any other year since 2020.
