American party and costume retail chain Party City has announced its financial results for the third quarter ended 30 September 2020, revealing a ‘better than expected’ performance during the key Halloween and October period.
With a net income of $239.7m and total revenue down just 1.2% (to $533.8m) over Q3, Party City has also defied expectations for the 2020 Halloween season, thanks to ‘strong results within décor and better-than-anticipated costume business sales of costumes, despite the challenges of a pandemic-impacted backdrop’.
“We are very pleased with our better than expected third quarter performance, highlighted by the continued strength in our core business,” stated chief executive officer Brad Weston.
“Against a pandemic-impacted environment, we delivered $534 million in sales, including an 8.3% brand comparable sales increase, a stabilisation in our wholesale revenues and an almost threefold increase (187%) in adjusted EBITDA over the prior year period.”
The significant increase in brand comparable sales has been credited to Party City’s strong core business, particularly in the balloon, birthday and entertaining categories. Digital sales were also strong, with an increase of 36% during Q3 and 30% during October – including click-and-collect, curbside pickup, and delivery.
“Our Halloween results were ahead of our expectations, driven by strong results within décor and better than expected sales of costumes, despite the challenges of a pandemic-impacted backdrop,” Brad continued. “We are very proud of our entire Party City team who delivered an exceptional Halloween experience for our customers, despite the backdrop.”
“We are particularly encouraged by the performance of our core categories into October, which demonstrate the strength and resiliency of our business and the traction we are seeing from our strategic initiatives, both of which bode well for our future performance.”
Despite the effects of the pandemic, retail revenue was down by just 16% for the month of October, while brand comparable sales decreased by 2.9%, with Halloween declines partially offset by continued strength in other core categories. The decrease was also partly down to a strategic reduction in store count, with the total number of corporate Party City stores currently at 739, compared to 843 last year.
Party City had also prepared for a smaller Halloween this year by reducing the number of its Halloween City pop-up stores; opening just 25 stores in 2020, compared to 256 in 2019.
“We continue to relentlessly focus on our customers as we work to fulfill our mission of creating joy and making it easy to create unforgettable memories. We look forward to building on our progress as we close out the year in a substantially stronger competitive and financial position,” Brad concluded.
