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Shining a light on PE ownership.

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PA

Party City

retail
PE-OWNED

Party supplies retailer for celebrations and events.

PE-OWNED

Acquired by Thomas H. Lee Partners2012-07-01

View PE Firm Profile

What Made It Great

“

Making every celebration special with complete party supplies.

What PE Will Likely Do

Predictions

Party City will likely close many of its retail locations, reducing consumer access to its full range of party supplies and decorations

HIGH LIKELIHOODBased on: The PE firm's track record of cost-cutting and debt-loading tactics, which are known to negatively impact consumer experience in the retail industry

The quality and variety of Party City's party products will likely decline as the company cuts costs, leading to cheaper materials, fewer specialty items, and a more limited selection

HIGH LIKELIHOODBased on: The industry playbook for PE-owned retail companies, which frequently includes store closures, inventory reductions, and deferred maintenance

Customers may experience slower or less reliable delivery of online orders as the company prioritizes cost savings over service quality

HIGH LIKELIHOODBased on: The past examples of Party City and similar retail companies undergoing PE ownership and subsequently filing for bankruptcy

Party City's in-store experience will likely deteriorate, with less well-stocked shelves, fewer employee-assisted services, and a general decline in store upkeep and presentation

HIGH LIKELIHOODBased on: The past examples of Party City and similar retail companies undergoing PE ownership and subsequently filing for bankruptcy

Expected Timeline

Phases
0-6 monthsCompleted

“0 to 6 months months”

Announcements about 'transformation' and 'optimization' initiatives, potentially including store closure plans

6-12 monthsYOU ARE HERE

“6 to 12 months months”

First round of store closures, staff reductions, and supply chain changes announced

12-24 months

“12 to 24 months months”

Noticeable decline in in-store product selection, quality, and availability; delivery times may increase

24-48 months

“24 to 48 months months”

Bankruptcy rumors begin, more aggressive cost cutting leading to further store closures and product quality degradation

48-60 months

“48 to 60 months months”

Potential liquidation, restructuring, or fire sale of remaining assets

Similar Cases

Other companies that followed a similar path after PE acquisition

Operating

Toys R Us

KKR·2005

See full case study
Bankruptcy

Sports Authority

Leonard Green & Partners·2006

See full case study
Operating

Payless ShoeSource

Golden Gate Capital·2012

See full case study
Operating

99 Cents Only Stores

Ares Management·2012

See full case study
Operating

Joann

Leonard Green & Partners·2011

See full case study

What You Can Do

Take Action

Actions

  • Consider stocking up on your favorite Party City products and decorations before availability and quality decline

  • Be prepared for less reliable and slower delivery of online orders, as well as a less enjoyable in-store shopping experience

  • Research alternative party supply retailers and consider switching to those that are not PE-owned, to ensure a consistent and reliable customer experience

Alternatives

CostcoSAFE

Employee-owned warehouse retailer

TargetSAFE

Publicly traded retailer with strong values

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"Party City is now PE-owned. Here's what that means for you."