Party City Store Closure: 45 Outlets Shut Amid Helium Shortage

Party City, the retail chain of party supply stores, announced Thursday that it will shut 45 of its 870 stores in 2019, even as it reported a first-quarter revenue growth of one percent and retail sales growth of four percent.

Some of the stores which will be closed are located in Santa Clarita, Banning and Hemet in California; Meriden in Connecticut; DeKalb in Illinois; and Moses Lake in Washington. In a press release, the company’s CEO James Harrison said the decision to close a higher number of stores this year was made with the agenda to focus on Party City’s most profitable locations across the United States and Canada.

“Each year, Party City typically closes 10-15 stores as a part of our prudent network optimization process and in response to ongoing consumer, market and economic changes that naturally arise in the business. This year, after careful consideration and evaluation of our store fleet, we’ve made the decision to close more stores than usual in order to help optimize our market level performance, focus on the most profitable locations and improve the overall health of our store portfolio,” he said.

Helium – which is used in several industries, from party supply retailers to space and medicine, because it has the lowest boiling point (about minus 452 degrees Fahrenheit) among naturally occurring elements – reportedly is in short supply globally, mostly because 75 percent of its entire supply comes from Ras Laffan Industrial City in Qatar, ExxonMobil in Wyoming and the National Helium Reserve in Texas, according to Gasworld.com. And helium reserves in Texas are fast-depleting.

Party City has acknowledged the shortage becoming a global problem in a warning published to its customers.

“​Helium supply has always been a little up in the air (pun intended)… Currently, helium supply is very low while demand is growing,” the warning said. “Because of this global helium shortage, fulfillment of balloon orders may be affected at your store. We’re working to replenish the helium at the affected stores as more supply becomes available.”

Due to the helium shortage, the company’s total sales decreased 1.4 percent in the first quarter of this year, compared to the first three months of 2018. The company ended the quarter with $1,991 million in debt.

As a solution, the New Jersey-based company urged party planners to opt for “a balloon arch or balloon wall with latex and foil balloons” which did not need helium, “just some tape and creativity.”

However, in Thursday’s press release, Party City said it had begun the process of negotiating a deal for an alternative source to helium, which meant the company’s woes regarding the short supply of its main ingredient might soon be over.

“We have signed a letter of agreement for a new source of helium which, subject to final execution of a definitive contract, would provide for additional quantities of helium beginning this summer and continuing for the next two and a half years. We believe this new source should substantially eliminate the shortfall we are experiencing at current allocation rates and improve our ability to return to a normal level of latex and metallic balloon sales,” Harrison said.