“as expected, our underlying results were affected by higher costs, including higher-than-expected pressure on freight and commodity costs later in the quarter,” Mr Weston said.
As we look forward to the rest of 2022, we expect supply chain and inflationary pressures to continue, as reflected in our updated annual forecasts. While we have dealt with this recent cost volatility, we have taken very considerate mitigation measures in terms of pricing while providing a better customer experience. “
Party City, a well-known US party supply chain, reported a larger-than-expected loss in the first quarter as deteriorating supply chains and persistent inflation had a big impact on its performance.
Given the current disadvantages, Party City believes that performance will be weak throughout 2022, but the company is still committed to actively launching its next-generation store prototype this year and beyond.
In the first quarter, Party City opened 35 new stores, and a total of 130 stores are now built and operated under its new model.
“We continue to see strong performance in these stores, which have generated medium-single-digit average sales growth compared to previous old model stores, with an average payback period of less than 24 months per store,” Brad Weston, chief executive of Party City, said on the company’s earnings call.
Party City aims to renovate or open about 100 to 125 new stores by 2022, and about 1/3 of existing stores will be converted by the end of 2022.
Party City posted a net loss of $26.9 million, or 24 cents per share, for the quarter ended April 3, compared with a loss of $14.1 million, or 13 cents per share, in the same period last year. The adjusted loss per share was $0.22, higher than the analyst estimate of $0.12 per share.
In addition to the negative impact of soaring freight rates and the O’Micron epidemic on the celebrations at the beginning of the year, Party City will continue to be challenged by persistent problems in the helium market.
In the US, a plant that produces 8 per cent of the world’s helium has been struggling since last year.
The plant was completely closed in January 2022 and may reopen in June. Several foreign factories that produce helium have also encountered problems.
In addition, PartyCity’s total sales edged up 1.4% to $433 million, below expectations of $435.8 million. Total retail sales increased by 2.3%, mainly driven by strong comparable sales growth in the seasonal category.
Comparable brand sales increased by 2.1%. Net third-party wholesale sales fell 1.6%.
“as expected, our underlying results were affected by higher costs, including higher-than-expected pressure on freight and commodity costs later in the quarter,” Mr Weston said.
As we look forward to the rest of 2022, we expect supply chain and inflationary pressures to continue, as reflected in our updated annual forecasts. While we have dealt with this recent cost volatility, we have taken very considerate mitigation measures in terms of pricing while providing a better customer experience. “
Party City expects sales of $2.225 billion to $2.3 billion this year, an increase of about 2.5% to 6.0% over 2021. Analysts expect sales to reach $2.3 billion.
But PartyCity will also have a good opportunity in the near future, with about 70% of consumers planning to attend this year’s offline graduation ceremony, according to a recent survey of shoppers across the United States.
Of these, 32% of consumers plan to hold large parties in outdoor space to celebrate their graduation, followed by 31% of consumers who plan to hold smaller, more intimate celebrations at home.
In addition, 49% of consumers believe that 2022 is the first “normal” graduation year since 2019, while 30% of consumers still think this year is “abnormal”.
Thirty-seven percent of consumers plan to buy graduation party necessities through a combination of in-store and online shopping.
Of these, Party City stores totaled 759, compared with 751 in the same period last year.
In addition to its retail business, the company is also one of the world’s largest decoration consumer party product design service providers, manufacturers and distributors, with products in retail stores around the world.