Pandemic dents seasonal Q4 sales at Party City
Party City Holdco Inc. reported a fourth-quarter adjusted profit and revenue that missed expectations, as the COVID-19 pandemic negatively impacted consumer spending for seasonal celebrations.
Party City’s net loss narrowed to $96.4 million, or $0.88 a share, in the year ended Dec. 31, from $268.8 million, or $2.88 a share, in the year-ago period. Adjusted earnings per share were $0.25, down from $0.51 last year, and below analysts’ estimates of $0.31.
Total revenue fell 11.4% to $648.2 million, below estimates of $659.2 million. Total retail sales decreased 8.3% amid pandemic-related temporary store closures and Party City’s store optimization program. The total number of corporate Party City stores was 746 as of December 31, 2020, compared to 777 a year ago.
Party’s City digitally enabled sales increased 27.1% during the quarter. Brand comparable sales decreased 5.9% due to the impact of COVID-19, especially on seasonal celebrations.
For the full year, total revenues fell 21.2% to $1.851 billion. Total retail sales decreased 21.1%, with a brand comparable sales decline of 16.5%. The company had an adjusted net loss of $49.2 million, or a loss of $0.49 per diluted share, compared to adjusted net income of $43.4 million, or $0.46 per share, in 2019.
“We are very pleased with how our organization navigated 2020, swiftly pivoting to meet the evolving needs of our customers, all while prioritizing the health and safety of both our associates and our customers during this pandemic,” said Brad Weston, CEO. “Throughout the year, we made important strides on our five strategic initiatives, innovating and elevating our customer experience while also significantly improving our financial position and flexibility with our actions to reduce debt and extend maturities.”
As of the end of 2020, Party City had $119.5 million in cash and approximately $176.5 million of availability under the ABL Facility, for total liquidity of $296.1 million.
For the first quarter, the company expects total revenue of $397 million to $410 million, below expectations of $426 million, while brand comparable sales are expected to increase 26% to 31%. It expects to open 15 stores and close five locations.
“We enter 2021 in a substantially stronger position, armed with greater consumer insights and a solid foundation to build upon as we further our mission to deliver The Party Platform by advancing the building blocks that we put in place in 2020,” Weston said. “We remain intensely focused on our customer and more effectively operating and leveraging our unique North American vertical model as we continue our transformation and further strengthen our industry leadership position.”