Nothing like a giant balloon to spread some holiday cheer this season over a Zoom call with 50 family members.
Party City (PRTY) — home to the seasonal balloon — is banking on every one of those Zoom squares showing off a helium-filled reindeer, Christmas tree or snowman as a way to make its key fourth quarter numbers amidst the challenge of COVID-19 limiting-in person parties (and balloon binging). The balloon business represents about 20% of Party City’s business, CEO Brad Weston told Yahoo Finance Live. And despite the raging pandemic, he says balloon sales have held up.
“As you can imagine, in this period of time in a pandemic with consumers celebrating differently we have seen our core categories like balloons, birthday and entertaining really being some of our biggest growth drivers,” Weston said. “I have been pretty upfront that balloons are performing well, and they are part of both our short-term and long-term strategy.”
Party City is expected to open several new prototype stores in 2021 that place a greater emphasis on balloons.
That isn’t to say more virtual celebrations — or no celebrations at all — haven’t weighed on Party City in the year of COVID-19. Party City’s October sales fell 16% from a year ago amid weakness during the all-important Halloween selling season. Core sales (which includes balloons) remained strong, Party City said.
But, the pandemic has forced Party City to focus more on keeping its inventory lean and shuttering underperforming stores. Those initiatives helped drive Party’s City’s third quarter adjusted operating profits to $49.2 million from $17.1 million last year. Couple that with a deal in May to restructure $450 million in debt and raise $100 million in capital, and it explains why Party City’s stock has shot up 85% year-to-date.
Weston says he is comfortable with Party City’s capital position.
“As we look at our business, we are being extremely disciplined, extremely controlled, and feel very good about our capital structure right now and the outlook for it in the near-term and long-term,” Weston added.
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