Party City shrinks loss

Party City Holdco Inc. narrowed its loss in the first quarter as gross margins improved.



The party supplies retailer and wholesaler reported a loss of $394,000, in line with Wall Street expectations, for the quarter ended March 31, down from a loss of $8.5 million in the year-ago period.



Total revenue was flat at $457.7 million, which missed Street forecasts.



Same-store sales fell 1.5%, which the company partially attributed to Easter Sunday (a day on which Party City stores are closed ) falling in the first quarter this year as opposed to the second quarter last year.



Gross margin widened to 36.7% from 35.8%, credited largely to higher shelf share.



“We are pleased with our first quarter results, which were generally in line with our expectations,” said CEO James M. Harrison. “Our share of shelf exceeded 75%; our total gross margin expanded 90 basis points and we continued to make progress executing against our growth strategies.”



Harrison noted that the company’s recent acquisition of Festival, a costume manufacturer based in Madagascar, will help expand Party City’s vertical model and also help fuel margin expansion.



“We also saw positive momentum in international markets where wholesale revenues grew 6% on a constant currency basis and we continued to gain traction with new wholesale customers outside the party supply channel,” he said.



Party City acquired 19 franchise locations in the quarter, broadening its corporate-owned territory and increasing its owned store base to 731. “



“Given these factors and our solid first quarter results, we are reiterating our full-year guidance for 2016,” Harrison said.



Party City said it expects full-year earnings in the range of $1.17 to $1.25 per share, with revenue in the range of $2.35 billion to $2.42 billion.