Party City Shuts Down After 40 Years, Files for Second Bankruptcy

After nearly four decades of helping customers celebrate birthdays, holidays, and special occasions, Party City has announced it will close all 700 of its U.S. stores, ending its run as the nation’s largest party supply retailer. The company has also filed for Chapter 11 bankruptcy for the second time in less than two years, citing inflationary pressures, rising costs, and declining consumer spending as key factors that made continued operations unsustainable.

CEO Barry Litwin delivered the emotional news during a video conference with employees, acknowledging that despite extensive efforts, including a previous bankruptcy restructuring in 2023, Party City could no longer find a viable path forward. “It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” Litwin said. Store closures will be finalized by February 28, 2025, with most of the company’s 12,000 employees retained temporarily to assist with the wind-down process.

Party City’s challenges were exacerbated by mounting competition from e-commerce giants like Amazon, big-box retailers such as Walmart and Costco, and pop-up stores like Spirit Halloween, which recently expanded to include Spirit Christmas locations. The company also faced setbacks from a helium shortage, which significantly impacted its balloon business, and rising operational costs during the pandemic that it was unable to recover from fully.

In January 2023, Party City eliminated nearly $1 billion in debt through bankruptcy restructuring, but the company remained burdened by $800 million in liabilities. Hopes for a turnaround were dashed by persistent macroeconomic challenges, including inflation and shifting consumer behavior toward discretionary spending. The company closed more than 80 locations between 2022 and 2024, but it wasn’t enough to stabilize its finances.

The announcement follows a difficult period for the retail industry, with major chains like Big Lots also declaring bankruptcy this year. Retail bankruptcies in 2024 are on track to reach their highest levels since 2020, driven by a combination of rising costs and cautious consumer spending.

As Party City prepares to close its doors, the news marks the end of an era for a company that was once synonymous with celebrations and festive occasions. While the brand’s iconic balloons and party supplies will be remembered fondly, its closure underscores the growing challenges faced by traditional retailers in an increasingly competitive landscape.