Party City, a prominent retailer specializing in party supplies, is closing all its stores and ceasing operations after nearly 40 years in business.

CEO Barry Litwin informed employees via video conference, stating, “That is without question the most difficult message that I’ve ever had to deliver.” He acknowledged that despite their best efforts, the company could not overcome its financial challenges, necessitating an immediate wind-down process.

Founded in 1986 by Steve Mandell in East Hanover, New Jersey, Party City grew to become the largest retailer of party goods in the United States, Canada, and Mexico, operating over 850 stores at its peak.

The company faced significant financial difficulties in recent years, filing for Chapter 11 bankruptcy protection in January 2023 due to the COVID-19 pandemic’s impact, supply chain disruptions, inflationary pressures, and helium shortages affecting its balloon sales. Although Party City emerged from bankruptcy in September 2023 after reducing its debt by approximately $1 billion, it continued to struggle with declining sales and overdue rent payments at several locations.

Reports from early December 2024 indicated that Party City was considering a second bankruptcy filing as it ran out of cash to maintain operations. The company was behind on rent at some locations and faced increasing competition from retailers like Walmart, Target, and seasonal pop-up stores such as Spirit Halloween.

The decision to close all stores marks the end of an era for Party City, which had been a go-to destination for party supplies, costumes, and decorations for nearly four decades. The company has not provided specific details about the timeline for store closures or plans for liquidating its remaining inventory.

This development reflects a broader trend in the retail industry, where several chains have faced financial challenges leading to store closures and bankruptcies. Retailers such as Big Lots and Walgreens have also announced significant store closures in recent years, highlighting the shifting landscape of consumer behavior and the increasing dominance of e-commerce.