Party City grows footprint, but not sales
The CEO of Party City says his company is making strong progress on key strategic priorities, even as the retailer reported weaker fourth quarter sales results.
Same store sales decreased 1.4% during the fourth quarter ended Dec. 31. After adjusting for the impacts of Hurricanes Harvey and Irma and a shift in the fiscal calendar, such sales were essentially flat, the company said.
Party City reported that adjusted net income increased 3.2% to $94.1 million, compared to $91.2 million for the prior year quarter. Adjusted diluted income per share increased 6.6% to $0.81 from $0.76 in the fourth quarter of 2016.
“With fourth quarter results that were in line with our expectations, we achieved 4% topline growth and 8% Adjusted EPS growth in 2017," said CEO James M. Harrison. "More importantly, we made strong progress against many of our key strategic priorities: expanding the reach of our unique vertical model; improving in-store efficiency and the shopping experience for our customers; elevating our digital capabilities; increasing our presence across multiple alternative market channels as well as in key international markets; expanding our manufacturing capabilities and entering new streams of business through acquisitions and finally, executing a highly accretive share buyback program.”
The company announced Friday that it had entered into an agreement to acquire the master franchise group representing 11 franchise stores in the Maryland market for $14 million.
Prior to this acquisition, the company’s retail operations included 803 company-owned Party City stores and 148 franchise stores.
"The acquisition of this franchise group solidifies our position in this highly attractive market, where we now have a total of 21 company-owned stores. We look forward to continuing to evaluate opportunities for accretive franchise acquisitions in the future, as a part of our strategy to improve brand integrity and operational efficiency while enhancing the overall customer shopping experience and growing value for our shareholders,” Harrison said.
For the full year, revenues increased 3.9%, while adjusted EPS increased 7.8% to $1.24 million. Same store sales decreased 0.7% during 2017.
“We are well-positioned to build on this progress in 2018 as we continue to grow our consumer products businesses, focus on our retail initiatives and enhance our digital assets and omni-channel platform. We will also continue to deploy the strong cash flow this business generates with a disciplined approach that balances our growth objectives with the continued deleverage of our balance sheet and the return of capital to shareholders,” Harrison added.
During the year, the company opened 16 new stores, acquired 36 franchise stores and 8 independent stores, and closed 7 stores.
For 2018, the company provided the following guidance:
- Total revenue of $2.44 to $2.49 billion
- Brand comparable sales growth of approximately 1%
- Adjusted EBITDA of $415 to $430 million
- Adjusted net income of $172 to $183 million
- Adjusted diluted EPS of $1.76 to $1.87
Party City Holdco Inc. now operates more than 900 stores throughout North America under the banner names of Party City and Halloween City, and e-commerce websites, principally through the domain name PartyCity.com.