Sales for the first quarter of the year have fallen short for US party retail chain Party City, which announced its Q1 results yesterday (Thursday 9 May), while also revealing that it planned to close 45 of its branches throughout 2019.
Party City reported a net loss of $26.6 million for the quarter ended 31 March 2019, compared to earnings of $4.1 million in the previous year.
Total revenue rose by just 1% to $513.1 million (from $507.8 million) falling well short of the projected $522.6 million. Retail sales increased 4%, driven primarily by square footage growth from store acquisitions. Same-store sales fell by 1.4%.
Ceo James Harrison stated that the Q1 results were impacted by the ongoing helium shortage, which has had a negative affect on balloon sales. However, he also reported that Party City has secured a new helium source which will boost availability from this summer and 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,” James explained.
Talking about the store closures, he continued: “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. 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.”
There are currently 870 Party City branches across the US and Canada, with the sales representing roughly 5% of the portfolio.