(Bloomberg) -- Party City Holdco Inc. will shut down and lay off its employees just 14 months after the company exited bankruptcy under a plan that had been designed to ensure the retailer’s long-term survival.
Chief Executive Officer Barry Litwin told employees that the costume and party supplier couldn’t overcome pressure from low-spending consumers and high inflation. Going-out-of-business sales began Friday, he said in a video seen by Bloomberg News.
“And as a result we regret to inform everyone that today will be your last day of employment,” Litwin said in the video. “That is without question the most difficult message that I’ve ever had to deliver.” CNN reported the company’s closure plans earlier on Friday.
Brick-and-mortar retailers have long struggled to remain relevant in the age of online shopping. The news came a day after bankrupt retailer Big Lots announced that it failed to complete a sale of its assets and would begin shutting its stores. Leading up to Party City’s announcement on Friday, the company had been preparing to file for bankruptcy protection, Bloomberg News previously reported.
Party City had been running low on cash and was unable to pay rent in some locations. Should the company follow through with its plan to file bankruptcy, it would be the second time in less than two years that Party City has sought court protection from creditors.
At a Party City store near Washington, DC, almost everything was on sale, with discounts ranging from 5% to 50%, including candy and Christmas decorations. The sales were marked by paper signs, taped throughout the store.
The two employees at the store declined to provide their names when approached by a reporter. One said they hadn’t been told about the CEO’s announcement. A sign saying the company was hiring was prominently on display at the entrance to the store.
In the company video, some employees were told that the paycheck they received Friday would be their last and covered their hours from Dec. 1 through today. Their benefits would continue until the end of the month, according to the video.
When retailers shut down in bankruptcy, they often hire a liquidation firm that uses outside workers and current store employees to manage the going-out-of-business sales.
Representatives of the company didn’t return requests for comment. The company has about 700 stores, according to its website.
--With assistance from Natalie Harrison and Jaewon Kang.
(Adds detail about employees’ final day in eighth paragraph.)
©2024 Bloomberg L.P.