Party City to close its stores as company files for bankruptcy

LOS ANGELES — For nearly 40 years, customers flocked to Party City for Halloween costumes, favors for children's birthday parties and decorations for New Year's Eve celebrations. Now, the go-to shop for everything from cartoon-themed balloons to Super Bowl decor is closing stores.

Party City announced Saturday that it would start a ''wind down'' of its retail and wholesale operations as it prepares to shutter nearly 700 stores nationwide. The company has also filed for Chapter 11 bankruptcy protection for the second time in less than two years ''to maximize value for the benefit of the company's stakeholders.''

''The decision was made following exhaustive efforts by the company to find a path forward that would allow continued operations in an immensely challenging environment driven by inflationary pressures on costs and consumer spending, among other factors,'' Party City said in a statement.

Party City also filed for Chapter 11 bankruptcy protection in January 2023. That move allowed for a restructuring that eliminated nearly $1 billion in debt. But ''macroeconomic headwinds more recently proved too severe'' to overcome, the company said.

The New Jersey-based retailer said it will keep more than 95% of its 12,000 employees to help with the process of shutting down.

Party City has faced growing competition from Walmart and Target and increasingly from occasion-based pop-up stores such as Spirit Halloween, which announced in October that it would also open 10 Spirit Christmas stores. That pressure has intensified in an era of rising prices, including for helium used in party balloons, and slowing consumer demand.

The competition has also hit other retailers: Last week, discount chain Big Lots said it would start going-out-of-business sales at its remaining locations after a sale of the company didn't materialize. Party City's website similarly shows going-out-of-business discounts of up to 50% on the shop's entire assortment goods.