Party City, a prominent name in the party supplies industry, has announced its decision to file for Chapter 11 bankruptcy and close all of its approximately 700 stores across North America. This marks the second time the company has filed for bankruptcy in two years, as it struggles to overcome financial challenges exacerbated by inflation and declining consumer spending.

The New Jersey-based retailer, known for its wide range of party goods, has been a staple in the celebrations industry for nearly four decades. However, the company has faced mounting financial pressures, including a significant debt load and increased competition from e-commerce platforms and seasonal pop-up stores like Spirit Halloween.

CEO Barry Litwin, who took over the helm just four months ago, informed employees in a video conference that the company would begin winding down operations immediately. Litwin expressed regret over the decision, stating, "That is without question the most difficult message that I've ever had to deliver. It's really important for you to know that we've done everything possible that we could to try to avoid this outcome. Unfortunately, it's necessary to commence a winddown process immediately."

Party City had previously filed for bankruptcy in January 2023, during which it managed to eliminate nearly $1 billion in debt. Despite these efforts, the company was still burdened with over $800 million in debt, which proved insurmountable in the face of rising costs and reduced consumer spending.

The company has announced that it will retain over 95% of its 12,000 employees temporarily to assist with the wind-down process. Going-out-of-business sales have already commenced, offering discounts of up to 50% on party supplies.

The closure of Party City is part of a broader trend of retail store closures in the U.S., with other major retailers like Big Lots also announcing shutdowns amid similar financial struggles. According to data from Coresight Research, store closures in the U.S. have increased significantly in 2024, with over 7,000 confirmed or planned closures.

Party City, which also operates the Amscan brand, has been a leader in the celebrations industry, providing a wide array of products for various occasions. Despite its efforts to restructure and adapt to changing market conditions, the company could not withstand the economic headwinds.

As Party City prepares to close its doors, it leaves behind a legacy of being a go-to destination for party supplies, having served countless customers over the years. The company's closure marks the end of an era in the retail party supply market.