The stock slumped by as much as 31% Tuesday, its steepest decline since May 9, after rising prices took a toll on consumers’ willingness to spend on parties and on the company’s outlook. Notes for Party City have sunk to their lowest levels on record.
Managing rising costs as well as inventory has been an issue for many retailers this earnings season and the party goods store was no exception. The supplier of balloons and candles said that it now expects full-year revenue of $2.14 billion to $2.19 billion instead of an earlier guidance range of $2.15 billion to $2.23 billion, its third outlook cut in just six months.
Party City shares have lost more than 80% of their value this year as any post-lockdown zeal for social gatherings has been superseded by worries over inflation. The company has a more-than $1.2 billion debt pile made up largely of junk-rated notes. Its 8.75% bonds due in 2026 dropped 7.5 cents to trade at 52 cents on the dollar, as of 8:37 a.m. in New York, according to Trace data.
Chief Executive Officer Brad Weston said that, while Halloween sales were up year-on-year, they came in at the lower end of the company’s expectations as macroeconomic pressures hit consumers’ ability and willingness to spend.
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