Party City is scaling up its Halloween operations with plans for 80 to 100 seasonal Halloween stores in 2021, compared to just 25 in 2020. The retailer also is remodeling stores to create a new concept with better curated assortments, lower shelf heights and better signage, with plans to reach 98 locations by the end of the year.
The number of planned Halloween pop-ups is still well below the 250 the retailer opened in 2019, largely due to continued volatility in the market. While there is still some uncertainty due to the emerging Delta variant, Party City CEO Brad Weston noted in a statement that “we are well positioned for the upcoming Halloween season and are prepared for a variety of demand scenarios from an assortment and inventory perspective.”
One area where Party City is particularly prepared for Halloween is the supply chain. The retailer acknowledged that it has been hit by the same rising costs and delays being felt across the industry, but it already has products in stores, distribution centers and “on the water.”
“With the continued challenges facing all global supply chains, our logistics team is taking prudent actions to ensure high end stock rates for our Halloween season,” said Todd Vogensen, EVP and Chief Financial Officer at Party City on an earnings call. “We feel confident that we are well positioned to fully support our holiday strategies, but we also expect to incur higher freight costs over the nearer term.”
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With inventory in place, the remaining puzzle piece that will determine the success of the season is whether shoppers are ready to open their wallets, or if they shy away from large gatherings in the fall.
New Concept Can Sell More With Less Inventory
Party City’s next-gen stores also will assist with handling potential supply chain challenges. The model enables stores to reduce the inventory they carry by $100,000 while still generating higher sales. The remodeled stores are currently averaging a “mid-single digit” sales increase compared to control locations, according to Weston.
“Our current performance capital spend is approximately $250,000 for a remodeled store, and it is only $150,000 after tenant improvement allowances,” said Weston. “Even when assumptions vary from the norm, we generally get a payback period for each store of less than three years.”
Party City will continue to aggressively roll out its new concept in 2022 and beyond to build on the momentum created by the new concept. The retailer has been recovering nicely from the pandemic’s effects — revenue reached $535.7 million in Q2 2021. This figure is up 110.4% compared to Q2 2020 and 19.1% compared to Q2 2019.
“The quarter was highlighted by robust trends at retail with the recovery at wholesale underway, as expected,” said Weston in a statement. “The strength in performance was broad-based, particularly across our core everyday business, along with improved results in our seasonal categories.”
