Chile, it sounds like Friday (December 20) was a TOUGH day at Party City headquarters after a bombshell announcement. With the holidays just days away, CEO Barry Litwin let go of all the company’s corporate workers without severance pay. Why? After 40 years as the largest party supply store in the United States, Party City is closing all of its stores.
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Here’s Why Party City Is Closing
According to CNN, in a crushing video call, Party City’s CEO said the company is “winding down.” Operations, in particular, were shut down immediately. Along with the layoffs, CEO Litwin informed the corporate staff that their benefits would run out as the company went out of business. The Chief HR Officer reportedly broke down in tears while explaining that part.
Despite “best efforts,” Litwin said Party City wasn’t able to swerve financial problems. As a result, the company has collapsed and is no longer sustainable. This reportedly happened as the business tried to combat inflation with higher prices. However, the higher pricing reduced customer spending.
“It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” Litwin said. “Unfortunately, it’s necessary to commence a winddown process immediately.”
As mentioned, money has been PC’s biggest issue. Litwin joined the company as its CEO four months ago, and a month after the business exited bankruptcy after declaring in January 2023. At the time, Party City had about $1.7 billion in debt, and bankruptcy status took care of about $1 billion of it. However, the remaining $800 million-plus debt put a dent in their earnings for 2024.
Employees Suspected Trouble After THESE Moves By The Company
CNN suggested that employees began to suspect something was brewing! Two weeks ago, Party City ordered its product development team to return home for safety reasons. The company had allegedly stopped paying its overseas suppliers.
Additionally, all corporate employees were ordered to go home on December 10. The next day, Party City said in an email that employees would need to give a one-day notice to visit the office moving forward.
Ultimately, though, employees are reportedly claiming that PC left them in the dark about the company’s financial status. CEO Litwin addressed that on the video call. “We recognize the flow of communication has not been how we typically handle sensitive matters like this,” Litwin said.
What’s Next For Store Employees?
CEO Litwin told CNN that the bombshell message was the “most difficult” he’s ever had to give.
Corporate employees weren’t the only ones gagged on Friday by the news, though. CNN reports that some store employees also received letters about the company closure. Party City reportedly plans to shut all stores down and let go of those employees on February 28. Between 2022 and August 2024, the company shut down over 80 store locations. Still, before this announcement, it had managed to keep more than 800 stores open.
“Although Party City believes these closings are in the best interest of the company, we regret that we have had to take this step and thank you for your valued contributions and service to the company,” the letter reportedly said.
This week, another major retailer, Big Lots, announced that it’ll also be closing over 900 stores.
