Party City is closing all of its stores, and corporate employees were told today is their last day of employment
Party City is shutting down all its stores, marking the end of nearly 40 years in business, CNN has learned.
CEO Barry Litwin informed corporate employees in a meeting Friday that operations are “winding down” immediately, and their employment would end that day. Employees were told they would not receive severance pay, and benefits would cease as the company proceeds with its closure.
“This is, without question, the most difficult message I’ve ever had to deliver,” Litwin said during the video conference call. He explained that Party City’s financial challenges, including inflation driving up costs and reducing consumer spending, ultimately led to its downfall.
“We’ve done everything possible to avoid this outcome,” Litwin said. “Unfortunately, it’s necessary to commence a wind-down process immediately.”
Party City did not immediately respond to CNN’s request for comment.
Bankruptcy and Financial Struggles
The New Jersey-based company appointed Litwin as CEO just four months ago. At the time, he emphasized the importance of strengthening the company’s financial health. Party City emerged from bankruptcy shortly after his arrival, having declared bankruptcy in January 2023. By restructuring, it canceled nearly $1 billion of its $1.7 billion debt and managed to keep most of its 800+ stores operational. However, more than 80 locations closed between late 2022 and August 2024. Despite these efforts, the company still carried over $800 million in debt, which strained its earnings this year.
Signs of Trouble
The impending collapse became evident to corporate staff in recent weeks. Two weeks ago, the product development team was abruptly recalled from a vendor trip due to safety concerns after the company stopped paying suppliers. On December 10, all corporate employees were sent home, and the headquarters’ front doors were locked. Staff were instructed to provide advance notice to access the building and to ensure no unauthorized individuals entered.
Internal Microsoft Teams chats revealed employee frustration over the lack of communication. Some learned through store notifications that all Party City locations would close by February 1. This news blindsided many employees, as management had previously expressed optimism about the company’s outlook.
During Friday’s meeting, Litwin apologized for the poor communication. “We recognize the flow of communication has not been how we typically handle sensitive matters like this,” he said.
Chief Human Resources Officer Karen McGowan also addressed the employees during the call, breaking down in tears as she explained severance and benefits. “I know this is a lot to take in,” she said, pausing to collect herself. “My apologies.”
The End of the Party
Party City, once the largest party supply retailer in the U.S., employed approximately 6,400 full-time and 10,100 part-time workers as of 2021. The company, known for balloons, Halloween costumes, and party goods, faced growing competition from e-commerce platforms and pop-up stores like Spirit Halloween. Big-box retailers like Amazon, Walmart, and Costco further pressured the chain, while rising costs during the pandemic and a helium shortage hurt its balloon business.
Party City joins a growing list of retailers that have declared bankruptcy this year as consumers pull back on discretionary spending. Just this week, Big Lots announced “going out of business” sales at all locations after failing to secure a rescue plan. According to Coresight Research, major chains are expected to close more stores in 2024 than in any year since 2020.