Party City is closing all stores and laying off company employees

Chile, it sounds like Friday (December 20th) was a HARD day Party town Headquarters after a bombshell report. With the holidays just days away, CEO Barry Litwin laid off all of the company’s employees 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

Accordingly CNNIn a devastating video call, Party City’s CEO said the company was being “winded down.” In particular, operations were stopped immediately. Along with the layoffs, CEO Litwin informed the company’s employees that their benefits would expire if the company went out of business. The Chief HR Officer reportedly burst into tears while explaining this part.

Despite its “best efforts,” Litwin said, Party City was unable to overcome its financial problems. As a result, the company collapsed and was no longer viable. This reportedly happened as the company tried to combat inflation with higher prices. However, the higher prices reduced customer spending.

“It’s really important that you know that we did everything possible to prevent this outcome,” Litwin said. “Unfortunately, it is necessary to begin the resolution process immediately.”

As mentioned, money was the PC’s biggest problem. Litwin joined the company as CEO four months ago, and a month after the company filed for bankruptcy in January 2023, Party City had about $1.7 billion in debt, and about $1 billion of it were offset by the insolvency status. However, remaining debt of over $800 million weighed on its 2024 earnings.

Employees suspected problems after THE company took THESE steps

CNN suggested that employees were beginning to suspect something was brewing! Two weeks ago, Party City ordered its product development team to return home for safety reasons. The company had reportedly stopped payments to its suppliers abroad.

In addition, all company employees were ordered to go home on December 10th. The next day, Party City said in an email that moving forward employees would be required to give one day’s notice to visit the office.

Ultimately, however, employees reportedly claim that PC left them in the dark about the company’s financial situation. CEO Litwin addressed this in the video call. “We recognize that the flow of communication was not consistent with our usual approach to sensitive matters such as these.” said Litvin.

What’s next for store associates?

CEO Litwin told CNN that the bombshell message was the “most difficult” he has ever had to deliver.

However, company employees weren’t the only ones silenced by the news on Friday. CNN reports that some store employees also received letters about the company’s closure. Party City reportedly plans to close all stores and lay off these employees on February 28th. Between 2022 and August 2024, the company closed over 80 stores. However, before this announcement, it had managed to keep more than 800 stores open.

“While Party City believes these closures are in the best interest of the company, we regret having to take this step and thank you for your valued contributions and service to the company.” the letter supposedly says.

This week, another major retailer, Big Lots, announced it would also be closing over 900 stores.