Party City is closing 55 stores and says it has nothing to do with the helium shortage that is affecting sales. We visited a store to try and find the real reason.
- Party City is closing another 10 stores in 2019 in addition to the 45 stores it said it would close this year.
- A global helium shortage has impacted the company's balloon sales, CEO Jim Harrison said in an earnings call with investors, but the CEO affirmed in a statement that the company's decision to close 10 more stores is "completely unrelated to the global helium shortage."
- We visited Party City to see if we could find why it added 10 more stores to the list of 2019 closures.
- Visit Business Insider's homepage for more stories.
Party City is closing 10 more stores, the company announced in a recent financial statement.
The news comes after the company said in May that it would close 45 stores in 2019 and amid a global helium shortage that has impacted the retailer's balloon sales. In May, the company said it secured a new source of helium to weather the shortage, but the company reported a negative impact in balloon sales this quarter."Overall, in the second quarter we continued to experience headwinds from direct and indirect impacts of the helium shortages and higher helium costs in many of our markets," CEO Jim Harrison said in the report.
However, the company's decision to close the additional 10 stores for a total of 55 is "completely unrelated to the global helium shortage," Harrison said in a statement. "These are two separate topics. Our decision to close an additional ten stores in Q4, which were originally slated for closure in 2020, is part of our network optimization process, focusing on maximizing store performance on a market basis."
Party City started the year with 870 stores and typically closes 10 to 15 locations a year, Harrison said in May.
Harrison also noted that Party City is working with a provider to gain additional supplies of helium. The company also has plans to work with another provider beginning mid-October.
Party City reported second-quarter revenue growth of 0.5%, growing to $563.9 million, but reported a store sales decrease of 2.1% compared to the previous year. Harrison called out balloons specifically as responsible for some of the decline in sales in stores compared to last year, as well as the kid's birthday category.On its website, Party City has a fact-sheet that explains the global helium shortage and offers alternatives for helium-filled balloons.
We visited a store to try to see why it added another 10 stores to its 2019 closings. Party City has not released a full list of the stores it is planning to close, but has said it is focusing on closing less profitable stores.