Party City, the largest party supply store in the United States, is shutting down all its locations, a move driven by rising inflation, crippling debt, and fierce competition.
The company, which had been in operation for nearly four decades, announced its immediate winddown on Friday, with CEO Barry Litwin breaking the news to corporate employees during a video conference.
“This is without question the most difficult message that I’ve ever had to deliver,” Litwin said, noting that staff will not receive severance pay, and benefits will cease immediately.
He attributed the company’s collapse to inflation, which raised operational costs while reducing consumer spending. “Our very best efforts have not been enough to overcome” these challenges, he explained.
Party City’s financial struggles were longstanding. The company exited bankruptcy just months ago after cancelling nearly $1 billion in debt.
However, its $800 million remaining debt continued to strain operations, forcing the closure of over 80 stores between late 2022 and mid-2024.
Despite these efforts, Party City was unable to recover from a combination of pandemic-related cost increases, a helium shortage impacting its balloon sales, and fierce competition from retailers like Amazon, Walmart, and Spirit Halloween.
Employees expressed shock and anger at the lack of communication from management. According to internal chats shared with CNN, corporate staff were unaware of the financial troubles, as recent town halls had conveyed optimism.
The uncertainty reached its peak two weeks ago when the company abruptly recalled its product development team from an annual vendor trip, citing safety concerns due to unpaid suppliers.
All corporate employees were sent home on December 10, and access to the New Jersey headquarters was restricted. Letters sent to store employees confirmed the stores would close by February 28, with termination notices issued to staff.
Litwin, who had taken over as CEO just four months ago, had initially expressed hope for stabilising the company. “Our main priority is to strengthen our financial health,” he wrote in a LinkedIn post upon his hiring.
However, by Friday, he admitted that “everything possible” had been done to avoid this outcome, and a winddown was the only remaining option.
Party City’s closure is part of a broader trend in the retail sector, with major chains like Big Lots also succumbing to bankruptcy this year.
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