The company, which owns 247 namesake stores and oversees 259 franchised locations, can probably use a new owner. Last month, it missed its December-quarter profit targets as same-store sales fell by nearly 6% at its company-owned stores. At the time, it warned that comps and gross margins would continue to deteriorate through the March quarter.
Party City also mentioned that it had been approached by at least one potential suitor, but you have to wonder about the company's timing. Over the course of the 2005 fiscal year, which ends in June, the company has been investing in initiatives that it proclaims will pay off in the final quarter. That's what made the fiscal second quarter's shortfall seem almost bearable last month, and it's why a lousy March-period showing won't come as much of a shock.
But if the June quarter will mark Party City's turnaround, why is it trying to sell itself so fashionably early? Does that make sense to anyone? It's like crying on your front porch because everyone forgot your birthday when the big day isn't until next week.
Sure, it's not easy being a party goods specialist these days. Places like Wal-Mart
If not, good luck to the next owners. They won't be too happy if they wind up with stores stocked full of empty pinatas.
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Longtime Fool contributor Rick Munarriz loves hanging out at Party City come October. Then again, some of his merriest memories growing up came from working as a scare actor at a popular Miami haunted house attraction when he was a teen. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.