CEO Delivers Difficult News
In a video conference meeting on Friday, the corporate employees were advised by the CEO Barry Litwin that operations are “winding down,” effective immediately, and that the day would mark their last with the company. They were told there would be no severance pay, and their benefits would go away as the company closes its doors.
“This is without question the most difficult message I’ve ever had to deliver,” Litwin said during the call. He explained that despite the company’s “very best efforts,” financial challenges, including rising inflation and reduced consumer spending, had made it impossible for Party City to stay afloat.
“We’ve done everything possible to try to avoid this outcome,” Litwin stated. “Unfortunately, it’s necessary to commence a winddown process immediately.”
Store Closures Begin
Letters to store employees informed them that Party City’s locations would close by February 28, at which point store staff would also be let go.
“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,” the letter read.
Party City declined to comment on the announcement when contacted by CNN.
A History of Struggles Party City has struggled financially for years. In January 2023, the company filed for bankruptcy with a $1.7 billion debt load. It managed to wipe out nearly $1 billion of that debt and kept most of its 800 stores open, but the weight of the remaining $800 million became too much to bear.
Litwin, appointed CEO just four months ago, acknowledged the challenge himself in his LinkedIn post at the time of his appointment; the company was first focused on “strengthening its financial health.” Against a stabilizing operation, heavy debts continued to bleed earnings into 2024.
A Tumultuous Ending
Evidence of possible trouble surfaced early this month, where corporate employees were sent home on December 10 and security locked the doors of the company headquarters. Now, employees had to announce their arrival in advance, stating the purpose of entry with several impediments in place to limit unauthorized access.
Two weeks ago, the company’s product development team was abruptly pulled back from an annual vendor trip. Staff were informed the trip presented a safety risk because Party City had stopped paying its suppliers.
The sudden shutdown caught many employees off guard, who said recent town hall meetings had painted a rosy outlook for the business. Internal Microsoft Teams chats revealed frustration and anger among staff about a lack of transparency.
Litwin apologized for the bad communication at the top of Friday’s video conference. “We realize the flow of communication has not been the way we handle sensitive situations such as this,” he said.
Karen McGowan, Party City’s chief human resources officer, got choked up – even tears flowed when attempting to explain benefits and severance for the employees. “I certainly know this is a lot to take in,” she said – when collecting herself. “My apologies.
The End of an Era
The liquidation of Party City brought to a close a beloved brand that had supplied parties and celebrations to millions of customers for decades. As its employees and customers bid their goodbyes, the demise underlines how tough it is to handle increased costs and a change in consumer habits in a volatile economy.