It was a devastating day at Party City headquarters on December 20, as CEO Barry Litwin delivered the unexpected news that all corporate staff members were being laid off without any severance pay. This announcement comes just days before the holiday season, marking a significant turning point for the company that has been a staple in the party supply industry for 40 years. Unfortunately, Party City is set to close all of its stores.
According to CNN, during a heartbreaking video call, CEO Litwin indicated that the company is in the process of “winding down” operations, which have been halted immediately. He informed the corporate team that their benefits would cease as the company prepares to go out of business. Reports suggest that the Chief HR Officer was visibly emotional while conveying this information.
Despite their best attempts, Litwin stated that Party City was unable to overcome persistent financial challenges. The company’s struggle was exacerbated by inflation and rising prices, which ultimately led to decreased customer spending. “We have done everything we could to avoid this situation,” Litwin expressed. “Regrettably, we must commence the wind-down process without delay.”
Financial woes have plagued Party City for some time. Litwin took the helm as CEO just four months ago, following the company’s exit from bankruptcy in January 2023. At that time, Party City was burdened with approximately $1.7 billion in debt, of which bankruptcy proceedings alleviated about $1 billion. However, the remaining debt of over $800 million continued to impact the company’s performance heading into 2024.
Rumors of trouble had begun to circulate among employees. Two weeks prior to the layoffs, Party City instructed its product development team to work from home for safety reasons and allegedly halted payments to overseas suppliers. Additionally, corporate staff were told to work from home starting December 10, with a subsequent email requiring them to provide a one-day notice for office visits.
Employees claimed they were kept in the dark about the company’s financial state, leading to frustration and uncertainty. In response, CEO Litwin acknowledged the poor communication regarding sensitive matters during the video call.
Litwin described delivering the layoff news as the “most challenging” moment of his career. However, corporate employees were not the only ones caught off guard; store employees also received letters detailing the impending closure. Party City intends to close all retail locations and terminate store staff by February 28. Between 2022 and August 2024, the company had already shuttered over 80 stores, yet managed to keep more than 800 open prior to this announcement.
The closure letter reportedly expressed regret over the decision, thanking employees for their service and contributions to the company. In a related note, another major retailer, Big Lots, recently revealed plans to close over 900 stores, highlighting the difficult landscape for retail businesses.
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