After Party City Holdings Inc. saw sales remain flat during its pivotal Halloween season, the Woodcliff Lake-based accessories retailer is going into cost-cutting mode.
Announcing the company’s third quarter results Nov. 8, Party City Chief Executive Officer Brad Weston said inflationary pressures are continuing to impact consumers’ ability and willingness to shell out money on celebrations.
“Looking ahead, we anticipated the current macro backdrop to persist and are taking action to best position the business in this environment and for the longer term,” he said. “We will continue on the path of progressing our transformation strategy but will be addressing structural cost opportunities and increasing operating efficiencies given the challenging environment.”
According to Weston, Party City is looking to trim $30 million in costs, savings that it expects to come out of retail store efficiencies, like information technology contracts, marketing expenses, professional services and raw materials.
Additionally, the company will reduce its corporate workforce by 19% through a combination of position eliminations and leaving open positions unfilled, he said.
Weston did not say how many jobs would be impacted.
“We regret the impact on our employees who are affected. Importantly, our execution of these initiatives is deliberate and thoughtful to ensure we make progress toward our profitability targets without compromising our long-term growth potential,” the CEO said.
For the quarter ending Sept. 30, Party City recorded total net sales of $502.2 million, a 1.6% decrease from the third quarter of 2021. Its adjusted loss came in at $1.39 per share, wider than Wall Street analysts’ estimates of $0.10 per share.
Weston described the results as “broadly in line with our expectations against a macro backdrop that has our core customer facing significant inflationary pressures.”
“Despite the transitory cost headwinds that continue to pressure our bottom line, our transformation work is driving improved results versus the pre-pandemic period as we make progress against our product, inventory management, supply chain, and IT systems and infrastructure initiatives,” he said.
The party goods store also revised its business outlook for the third time this year. It now expects full-year revenue of between $2.14 billion to $2.19 billion instead of its previous forecast of $2.15 billion to $2.23 billion.
Founded 36 years ago in East Hanover, Party City is the largest retailer of party goods in the U.S., Canada and Mexico. It operates more than 900 company-owned and franchise outlets under the Party City, Halloween City, Toy City, Factory Card and Party Outlet brands.
Last fall, it became the first company to win an award under the Emerge Program, a $14.5 billion job creation package launched using funding from the New Jersey Economic Recovery Act of 2020. NJBIZ has reached out to the New Jersey Economic Development Authority (NJEDA) for comment.
During the month of October, the company had 761 Party City stores, compared with 754 the prior year period, and 149 temporary Halloween City stores, compared with 90 in 2021.
While Party City said the Halloween pop-ups are “a great complement” to Party City stores, the company remains “bullish” about its ability to grow sales and profitability through the channel and will continue to evolve Halloween City “to drive growth and market share.”s