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Party City Falls on Weak Q4 Preliminary Results

Party City blamed the rapid rise in Covid cases for reduced sales in the quarter.
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Shares of retailer Party City  (PRTY) - Get Party City Holdco Inc. Report fell sharply Wednesday after the company reported preliminary fourth quarter sales results that were lower than Wall Street expected.

The Elmsford, New York-based company expects to report fourth quarter revenue between $645 million and $650 million, compared to FactSet's consensus estimate of $676.5 million.

Comparable store sales are expected to fall in the mid-single digit range, compared to FactSet's consensus for a 2.3% decline. Party City shares were down 7.0% to $7.51 on Wednesday afternoon. 

"The rapid surge in COVID-19 cases had a greater than expected impact on customer behavior in the months of November and December," CEO Brad Weston said. 

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The evidence for this assessment is underperformance in regions such as the Northeast, as well as certain categories such as tableware that are most impacted by reduced size of social gatherings. 

"As we look to 2021, and the eventual return to normal, we continue to execute against our five strategic initiatives to increase relevancy, strengthen our competitive differentiation and elevate our customer experience across all retail channels," Weston said.

Party City also said it now expects the previously disclosed sale of a significant portion of its international operations to close by Jan. 31. That sale has a total transaction value of about $59 million, including $45 million in cash proceeds and approximately $14 million excess cash and other adjustments to be returned to the company. 

"In support of our strategy, we continue to take actions to improve the in-store and online experience including increasing newness, reducing inventory with a more edited and curated product assortment, improving customer engagement and expanding omnichannel capabilities," Weston said.