PRTY - Potential Parties and the Future of Social Gatherings

Ticker: PRTY (Traded on NYSE) Company: Party City Holdco Inc  About the Company Party City is an American publicly traded retail chain of party stores, and the largest retailer of party goods in the United States, Canada, and Mexico. The Company operates through Retail and Wholesale segments and is believed to be the largest vertically integrated supplier of decorated party goods globally by revenue. Its retail operations generate revenue primarily through the sale of its Amscan, Designware, Anagram and Costumes USA party supplies through its Party City stores, Halloween City stores, and PartyCity.com. Its wholesale revenues are generated from the sale of party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons, and stationery. Party City US operates 900+ retail locations including a leading party supply wholesale business and eCommerce platform. Party City Canada operates 65 corporate retail stores across 7 Canadian provinces.  Brief Acquisitions and Developments In 2005, Party City became the acquisition of Amscan Holdings Inc. It is one of the largest manufacturers, designers, and distributors of party-related products in the United States.   In 2011, Party City expanded outside the United States with the acquisition of the Canadian retailer Party Packagers, making Party City the largest party goods retailer in North America. In 2013, Party City bought iParty, followed by the acquisition of MG Novelty Corporation and its seven Party Galaxy stores in Oklahoma for around $5.5M in 2017. Party City’s Canadian operations have since been acquired by the Canadian Tire Corporation in August 2019 for $174.4 million. Share Price & Growth Like many industries, Party City Holdco Inc. has faced extreme performance fluctuations as a result of the COVID-19 pandemic due to its retail nature and the fact that it is a non-essential business. The current share price is $8.14 ($874.1M market cap, 110.65M shares outstanding) PRTY has a 52-week change of 166.89% Was trading at $1.05 on March 11th, 2020 when COVID19 reached pandemic status and has increased by 670.5% since then, and is now trading at approximately $8.09 The Cons Tariffs on Chinese imports caused “temporary operation disruptions” in 2018 PRTY crashed 67% on November 7, 2019 Party City’s dependence on helium is a unique business challenge as a retailer PRTY reached an all-time low of $0.27 USD on March 18, 2020 Brad Weston, Chief Executive Officer of Party City, stated that “the rapid surge in COVID-19 cases had a greater than expected impact on customer behavior in the months of November and December,” due to the reduced size of social gatherings https://www.globenewswire.com/news-release/2021/01/12/2157505/0/en/Party-City-Updates-Fourth-Quarter-Outlook-Ahead-of-Participation-at-the-ICR-Conference.html The Pros PRTY trading at the highest it’s been since May 2019 (around $8.09) Better than expected Halloween and October 2020 performance despite the pandemic-impacted environment (total revenues of $533.8M, compared to $540.2M in 2019 when helium shortages occurred) Party City utilized Hertz to launch its same-day delivery service and focus on virtual celebrations In 2021, many people and organizations are looking to redo or go all out in honour of missed celebrations in 2020 https://www.globenewswire.com/news-release/2020/11/09/2122484/0/en/Party-City-Announces-Third-Quarter-2020-Financial-Results-Total-Revenue-for-Fiscal-October-2020.html As the world gradually returns to normal in 2021, Party City is focused on strengthening its competitive differentiation and elevating its customer experience across all retail channels. Mr. Weston stated that they are taking action 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.” Recently launched as a new service, US Party City customers can now pre-order their balloon orders for delivery at all locations. As life returns to normal, social gatherings and celebrations are hopeful to restore and build financial performance for Party City.

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rachelrabito7

Feb 24, 2021

-2.33%

Change % Since Posting

8.17

Price When Posted

-0.19

Change Since Posting

PRTY

Party City Holdco Inc

8.36

-0.14
-1.65%
Current Price

PRTY - Potential Parties and the Future of Social Gatherings

bearish

Ticker: PRTY (Traded on NYSE)

Company: Party City Holdco Inc 

About the Company

Party City is an American publicly traded retail chain of party stores, and the largest retailer of party goods in the United States, Canada, and Mexico. The Company operates through Retail and Wholesale segments and is believed to be the largest vertically integrated supplier of decorated party goods globally by revenue. Its retail operations generate revenue primarily through the sale of its Amscan, Designware, Anagram and Costumes USA party supplies through its Party City stores, Halloween City stores, and PartyCity.com. Its wholesale revenues are generated from the sale of party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons, and stationery.

Party City US operates 900+ retail locations including a leading party supply wholesale business and eCommerce platform. Party City Canada operates 65 corporate retail stores across 7 Canadian provinces. 

Brief Acquisitions and Developments

In 2005, Party City became the acquisition of Amscan Holdings Inc. It is one of the largest manufacturers, designers, and distributors of party-related products in the United States.  

In 2011, Party City expanded outside the United States with the acquisition of the Canadian retailer Party Packagers, making Party City the largest party goods retailer in North America. In 2013, Party City bought iParty, followed by the acquisition of MG Novelty Corporation and its seven Party Galaxy stores in Oklahoma for around $5.5M in 2017. Party City’s Canadian operations have since been acquired by the Canadian Tire Corporation in August 2019 for $174.4 million.

Share Price & Growth

Like many industries, Party City Holdco Inc. has faced extreme performance fluctuations as a result of the COVID-19 pandemic due to its retail nature and the fact that it is a non-essential business.

  • The current share price is $8.14 ($874.1M market cap, 110.65M shares outstanding)
  • PRTY has a 52-week change of 166.89%
  • Was trading at $1.05 on March 11th, 2020 when COVID19 reached pandemic status and has increased by 670.5% since then, and is now trading at approximately $8.09

The Cons

  • Tariffs on Chinese imports caused “temporary operation disruptions” in 2018
  • PRTY crashed 67% on November 7, 2019
  • Party City’s dependence on helium is a unique business challenge as a retailer
  • PRTY reached an all-time low of $0.27 USD on March 18, 2020
  • Brad Weston, Chief Executive Officer of Party City, stated that “the rapid surge in COVID-19 cases had a greater than expected impact on customer behavior in the months of November and December,” due to the reduced size of social gatherings

https://www.globenewswire.com/news-release/2021/01/12/2157505/0/en/Party-City-Updates-Fourth-Quarter-Outlook-Ahead-of-Participation-at-the-ICR-Conference.html

The Pros

  • PRTY trading at the highest it’s been since May 2019 (around $8.09)
  • Better than expected Halloween and October 2020 performance despite the pandemic-impacted environment (total revenues of $533.8M, compared to $540.2M in 2019 when helium shortages occurred)
  • Party City utilized Hertz to launch its same-day delivery service and focus on virtual celebrations
  • In 2021, many people and organizations are looking to redo or go all out in honour of missed celebrations in 2020

https://www.globenewswire.com/news-release/2020/11/09/2122484/0/en/Party-City-Announces-Third-Quarter-2020-Financial-Results-Total-Revenue-for-Fiscal-October-2020.html

As the world gradually returns to normal in 2021, Party City is focused on strengthening its competitive differentiation and elevating its customer experience across all retail channels. Mr. Weston stated that they are taking action 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.” Recently launched as a new service, US Party City customers can now pre-order their balloon orders for delivery at all locations. As life returns to normal, social gatherings and celebrations are hopeful to restore and build financial performance for Party City.

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read-time
3 min

7.20

Target Price

3/ 10

Confidence

6-12 Months

Timeframe
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Earnings Release
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News
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