(Bloomberg) -- Party City Holdco Inc., trying to bounce back from a slowdown in recent years, is looking beyond Halloween costumes and trying to make and sell more wares to other businesses.
The idea is to turn Party City into more of a consumer-products company, rather than just a retailer, according to Chief Executive Jim Harrison. In addition to selling masks and party plates, the company is the largest wholesaler, designer and manufacturer of party goods.
“We're still looking to get to the consumers at the party, but the party store is no longer the only intermediary,” Harrison said in an interview.
Investors have been waiting for the transformation to pay off. The stock is down 20 percent this year, eclipsing the company's gain in its first full year as a public company in 2016.
Party City's fastest-growing segment is in manufacturing goods for other activities, like jumbo popcorn buckets for movie theaters, personalized matchbooks for weddings and limited edition Halloween buckets for Yum! Brands Inc.'s KFC. While a small part of the business, these projects -- called “alternative markets” -- posted double-digit growth last quarter, Chief Financial Officer Dan Sullivan said.
Production has also helped boost margins at the company's retail stores since about 80 percent of what's sold in them is sourced or manufactured through its wholesale vertical model, Sullivan said.
As for major challengers like Wal-Mart Stores Inc. and Amazon.com Inc., Harrison said they mainly compete on individual items -- like a superhero costume -- rather than full collections within a theme -- like superhero plates, cups and goody bags. Party City is scheduled to report earnings on Nov. 9.
Revenue fell slightly last year and gained just 1 percent in 2015, down from an 11 percent increase in 2014.
Halloween is still big business for the largest U.S. party-goods retailer. The company hired 25,000 seasonal workers and opened more than 270 Halloween City pop-up stores for the spooky season. Tonight, the team is taking off work to celebrate -- Harrison is taking his grandkids trick-or-treating, while Sullivan is dressing up as Batman.
“Enjoying the moment and having fun has always been there,” Harrison said. “The only thing that changes is how and when and where.”
To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net.
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Lisa Wolfson, Jonathan Roeder
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