With soaring results and new store upgrades, Party City is ready for one of its most important sales seasons - Halloween
Party City, the leading U.S. party supply retailer, announced plans to open 80 to 100 temporary Halloween stores this year, up from 25 in 2020.
By comparison, Party City opened approximately 250 temporary Halloween stores in 2019.
"We have built up our new sales and store teams over the past 18 months. We performed well in the lead-up to Halloween this year, so we're excited to be ready for a really fun and important season," said Brad Weston, Party City's CEO, on the second quarter earnings call.
Brad Weston added that Party City is ready for any level of Halloween demand, but that it is still a "season of variables.
He said, "We think the market outlook for Halloween is more stable and it looks like everyone feels the same way, but we still have to stay focused on the level of consumer engagement on Halloween."
In addition, PartyCity is moving forward with its next-generation store remodeling program. The company remodeled 16 stores in the second quarter, bringing the total number of remodeled stores to 57.
The new stores include a more carefully curated assortment, lower shelf heights, better signage and a shopping experience that keeps inventory to about $100,000 per store, but still generates higher sales.
Weston said on the call, "We plan to open another 41 next-generation stores by the end of 2021, including 23 new stores in the third quarter, bringing our projected full-year total of new store openings to 98."
He added that as PartyCity continues to innovate and improve the design of its next-generation stores, sales at its remodeled stores have increased by several percentage points over sales at existing stores.
Currently, our performance capital expenditures for a remodeled store are about $250,000, net of tenant improvement allowances of only $150,000," Weston said. Even assuming a different standard, we typically have a payback period of less than three years per store."
Thanks to the improved performance and strength demonstrated by its next-generation stores, Party City will move forward more aggressively with its new store remodeling program in 2022 and beyond.
Weston said, "We continue to look to upgrade the majority of our stores in the coming years. As a result, we will remain as aggressive as possible."
Party City's total revenue for the quarter ended June 30 was $535.7 million, up 110.4 percent from the second quarter of 2020, driven by a strong rebound in retail sales.
Total retail sales increased 138.9 percent. Comparable sales increased 118.3% year-over-year, up 19.1% from the second quarter of 2019.
Adjusted net income of $34.1 million, or $0.29 per diluted share, compared to an adjusted net loss of $61.3 million, or $0.66 per share, in the second quarter of 2020.
Weston said, "Strong trends in the retail sector allowed our company's results to quickly rebound this quarter, and the recovery in the home wholesale and retail sectors is proceeding as expected.
Party City was able to deliver excellent results due to a solid and broad base of business, particularly in the Everyday Products category, which is our core business, which performed strongly, while at the same time our seasonal categories also delivered better results."
PartyCity currently operates 831 Party City stores across North America, as well as an e-commerce site.
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