Party City Updates Fourth Quarter Outlook Ahead of Participation at the ICR Conference
January 12 2021 - 4:15PM
Party City Holdco Inc. (NYSE: PRTY) today updated its outlook for
total revenue, brand comparable sales, and Adjusted EBITDA for the
fourth quarter fiscal 2020.
The following are the Company’s updated
expectations for the fourth quarter ended December 31, 2020:
- Preliminary total revenue is
estimated to be approximately $645 million to $650 million
- Brand comparable sales are expected to decrease in the
mid-single digit range
- Adjusted EBITDA is estimated to be in the range of $75 million
to $80 million
Brad Weston, Chief Executive Officer of Party
City, stated, “We are pleased with the progress we continued to
make in the fourth quarter against our strategic initiatives to
reinforce our position of authority when it comes to celebrations.
However, the rapid surge in COVID-19 cases had a greater than
expected impact on customer behavior in the months of November and
December. This was evidenced by underperformance in regions like
the Northeast, as well as in certain categories like tableware that
are most impacted by the reduced size of social gatherings. We
remain very encouraged by the strength in balloon demand across our
fiscal fourth quarter, as winning in balloons is a core strategic
priority and differentiator, and key to expanding our relevance
with customers.”
Mr. Weston continued, “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. 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. We look forward to discussing
our fourth quarter results and go-forward plans in more detail on
our year-end call.”
The Company also now expects the previously
disclosed sale of a substantial portion of its international
operations to close by January 31, 2021. As previously disclosed,
the announced sale has a total transaction value of approximately
$59 million, including $45 million of cash proceeds and
approximately $14 million of excess cash and other adjustments to
be returned to the Company.
During the fourth quarter, the Company continued
to make progress in improving inventory levels across its stores
and distribution network. Consistent with the strategy of
rationalizing in-store SKU count and improving working capital
velocity, the Company has updated its seasonal assortment strategy
to target higher in-season sell-through of merchandise and reduce
annual inventory carry-over. The more edited and curated
assortments are expected to improve the customer experience by
making stores easier to shop and product selections more relevant
to consumers, while also improving the efficiency of inventory
management and reducing working capital needs. As a result, the
Company disposed of approximately $80 million in inventory during
the fourth quarter that will not be required in future seasons.
These updated financial expectations are
unaudited, based upon the Company’s current estimates and subject
to completion of financial and operating closing procedures as of
and for the quarter ended December 31, 2020.
As previously announced, the Company will be
participating in the ICR Conference. The Company is scheduled to
host a fireside chat on Wednesday, January 13, 2021, at 8:30 a.m.
Eastern Time. A live audio webcast of the Company’s fireside chat
will be available online at investor.partycity.com. Participants
should log in approximately 10 minutes prior to the start of the
presentation. A replay will also be available.
Forward-Looking Statements
This press release contains forward-looking
statements. Forward-looking statements give current expectations or
forecasts of future events or our future financial or operating
performance, including Party City’s expectations regarding brand
comparable sales and its plans for future operations including
reducing inventory. The forward-looking statements contained in
this press release are based on management's good-faith belief and
reasonable judgment based on current information, and these
statements are qualified by important risks and uncertainties, many
of which are beyond our control, that could cause our actual
results to differ materially from those forecasted or indicated by
such forward-looking statements. These risks and uncertainties
include: potential risks and uncertainties relating to the ultimate
geographic spread of COVID-19; the severity of the COVID-19
pandemic; the duration of the COVID-19 pandemic; actions that may
be taken by governmental authorities to contain the COVID-19
pandemic or to treat its impact; the potential negative impacts of
COVID-19 on the global economy and foreign sourcing; the impacts of
COVID-19 on our financial condition and business operations; our
ability to compete effectively in a competitive industry;
fluctuations in commodity prices; our ability to appropriately
respond to changing merchandise trends and consumer preferences;
successful implementation of our store growth strategy; decreases
in our Halloween sales; the impact of helium shortages on our
financial performance; disruption to the transportation system or
increases in transportation costs; product recalls or product
liability; economic slowdown affecting consumer spending and
general economic conditions, including as a result of the COVID-19
pandemic; loss or actions of third party vendors and loss of the
right to use licensed material; disruptions at our manufacturing
facilities; and the additional risks and uncertainties set forth in
“Risk Factors” in Party City’s Annual Report on Form 10-K for the
year ended December 31, 2019 and in subsequent reports filed with
or furnished to the Securities and Exchange Commission. Although we
believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future events,
outlook, guidance, results, actions, levels of activity,
performance or achievements. Readers are cautioned not to place
undue reliance on these forward-looking statements. Except as may
be required by any applicable laws, Party City assumes no
obligation to publicly update or revise such forward-looking
statements, which are made as of the date hereof or the earlier
date specified herein, whether as a result of new information,
future developments or otherwise.
About Party City
Party City Holdco Inc. is the leading party
goods company by revenue in North America and, we believe, the
largest vertically integrated supplier of decorated party goods
globally by revenue. The Company is a popular one-stop shopping
destination for party supplies, balloons, and costumes. In addition
to being a great retail brand, the Company is a global, world-class
organization that combines state-of-the-art manufacturing and
sourcing operations, and sophisticated wholesale operations
complemented by a multi-channel retailing strategy and e-commerce
retail operations. The Company is the leading player in its
category, vertically integrated and unique in its breadth and
depth. The Company designs, manufactures, sources and distributes
party goods, including paper and plastic tableware, metallic and
latex balloons, Halloween and other costumes, accessories,
novelties, gifts and stationery throughout the world. The Company’s
retail operations include approximately 830 specialty retail party
supply stores (including franchise stores) throughout North America
operating under the names Party City and Halloween City, and
e-commerce websites, principally through the domain name
PartyCity.com.
Source: Party City Holdco Inc.
Contacts:
Investor Relations
ICR
Farah Soi and Rachel Schacter
203-682-8200
InvestorRelations@partycity.com
Media Relations
ICR
Brittany Fraser
203-682-8200
PartyCityPR@partycity.com
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