Party City to close 45 stores; Q1 sales miss
Party City’s first-quarter earnings matched the Street even as its sales fell short, impacted by a shortage of helium that deflated balloon sales.
In reporting its results, the party goods retailer also announced it plans to shutter about 45 of its approximately 870 locations in 2019. The closings will occur throughout the year.
“Each year, Party City typically closes 10-15 stores as a part of our prudent network optimization process and in response to ongoing consumer, market and economic changes that naturally arise in the business,” said James M. Harrison, CEO, Party City Holdco. “This year, after careful consideration and evaluation of our store fleet, we’ve made the decision to close more stores than usual in order to help optimize our market-level performance, focus on the most profitable locations and improve the overall health of our store portfolio.”
Party City reported a net loss for the quarter of $26.6 million, or $0.32 cents a share, for the quarter ended March 31, compared to earnings of $4.1 million, or a loss of $0.01 a share, in the year-ago period. Excluding costs related to the company’s “store-optimization program” and other items, adjusted EPS were $.01 cent, matching estimates.
Total revenue rose 1% to $513.1 million from $507.8 million, missing the FactSet consensus of $522.6 million. Retail sales increased 4.0%, driven primarily by square footage growth from store acquisitions. Same-store fell 1.4%.
In comments, Harrison said that the chain’s first quarter results were impacted by a helium shortage, which negatively impacted the sale of its popular latex and metallic balloons. But the retailer has signed a new helium source agreement that will provide it with additional quantities beginning this summer, and continuing for the next two-and-a-half years.
“We believe this new source should substantially eliminate the shortfall we are experiencing at current allocation rates and improve our ability to return to a normal level of latex and metallic balloon sales,” said Harrison.
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