Whether Party City locations across the Lehigh Valley will be part of 45 national stores slated to close sometime this year remains up in the air.
But a chain spokeswoman said the closures, announced on May 9, have nothing to do with a global helium shortage, contrary to various published media reports.
Only 14 liquid helium plants reportedly operate worldwide with seven located in the United States, accounting for nearly 55 percent of worldwide production of the gas. Demand for the gas has been high, with domestic reserves being depleted. There are reportedly just these three sources for the gas: Ras Laffan Industrial City in Qatar, ExxonMobil in Wyoming, and the National Helium Reserve in Texas.
“It’s important to note that Party City’s decision to close an increased number of stores in 2019 is completely unrelated to the global helium issue," said Jim Harrison, the chain’s chief executive officer, in a statement. “These are two separate topics, the latter of which we’ve made significant in-roads in addressing.”
Harrison said the decision to close 45 stores is part of a network optimization process focusing on maximizing store performance on a market basis. He added: "We believe that the opportunity to recapture much of the business conducted in the closed stores in other Party City locations within the market, will provide for overall improved profitability for our company. It is also important to note that most of the stores being closed were themselves profitable on a stand-alone basis.”
Party City is yet to release the list of 45 stores to be shuttered, but NBC News is reporting closures have prematurely been announced in Connecticut, Illinois, California and Washington. Regional locations include Bethlehem, Whitehall Township and Hackettstown.
Party City had been closing 10 to 15 stores annually, on average, in recent years as part of its network optimization process in response to ongoing consumer, market and economic changes, the spokeswoman said. After careful consideration and evaluation of the chain’s fleet, the company this year made the decision to close more stores than usual in order to help optimize its market level performance, focus on the most profitable locations and improve the overall health of its store portfolio, Harrison said.
The chain’s first quarter fiscal report, ending March 31, showed total revenues increasing by 1 percent on a reported basis and 2 percent on a constant currency basis. Retail sales increased 4 percent on a reported basis. Brand comparable sales, however, decreased 1.4 percent during the first quarter due to approximately 200 basis points of headwinds (referring to external difficulties a business faces) from the helium shortage, according to the report.
Party City has indicated it’s working to identify new sources of helium with Harrison saying the chain recently signed a letter of agreement for a new source of helium, in which subject to final execution of a definitive contract, would provide for additional quantities of helium beginning this summer and continuing for the next two and a half years.
“We believe this new source should substantially eliminate the shortfall we are experiencing at current allocation rates and improve our ability to return to a normal level of latex and metallic balloon sales,” he stated.
Pamela Sroka-Holzmann may be reached at pholzmann@lehighvalleylive.com. Follow her on Twitter @pamholzmann. Find lehighvalleylive.com on Facebook.