Party City files for bankruptcy for the second time amid retail déjà vu

(Bloomberg) — Party City Holdco Inc. plunged into bankruptcy for the second time in two years and said it would begin closing its roughly 700 stores after sales stalled under pressure from stubborn inflation.

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The New Jersey-based party supplies retailer has filed for Chapter 11 bankruptcy in Texas, court documents show.

The retailer said in a separate statement that it would retain over 95% of its 12,000 employees to support the wind-down process.

By the time Party City emerged from its first bankruptcy in October 2023, the company had reduced its debt by nearly $1 billion and downsized to about 800 stores nationwide. But that wasn’t enough. Party City’s problems resurfaced after the company was hit by a triple effect of inflationary pressures on consumers, rising wages and competition from online sellers.

The company, which sells everything from costumes to birthday cake toppers, posted a net loss of $91 million in the third quarter of 2023, according to its last public filing. A group of secured bondholders took the company private after the restructuring.

Party City is not alone. Some discount or so-called “extreme value” retailers, including Big Lots Inc. and the operator of Dirt Cheap, also filed for bankruptcy in 2024.

Anagram Holdings, Party City’s balloon-making subsidiary, filed for bankruptcy in 2023. A group of Anagram lenders agreed to take over the balloon business in exchange for about $168 million in debt relief.

(Information about the settlement process added in the body and in the 3rd paragraph)

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