Party City Shares Tank 64% After Guidance Cut | Financial Buzz

Party City Shares Tank 64% After Guidance Cut

Party City Holdco Inc. (NYSE: PRTY) reported its third quarter financial results on Thursday. The Company fell short of revenue and earnings estimates. Additionally, Party City also cut its guidance, which sent shares plummeting by as much as 64% during late afternoon trading hours. 

For the quarter, Party City reported earnings loss of USD 0.28 per share on revenue of USD 540.2 Million. FactSet analysts polled earnings to breakeven, while revenue was anticipated to be USD 551 Million.

During the quarter, the Company witnessed its revenue decrease by 2.3%. Retail sales fell by 1.7%, while brand comparable sales decreased by 2.6%, largely due to headwings from helium shortages.

Meanwhile, North American e-commerce sales grew by 11.6%, driven by Party City’s Buy Online Pickup In Store initiative. Lastly, net third-party wholesale revenues increased by 0.2%.

James M. Harrison, Chief Executive Officer, stated, “Our third quarter and October results were disappointing as many of the tailwinds that we expected failed to materialize. The negative impact of helium shortages was felt across the business on both the top and bottom line including a 210 basis point headwind to third quarter brand comparable sales. However, we are encouraged that our retail operations have approached a 100% in stock helium position since we began the fourth quarter, resulting in abating helium headwinds at retail and a bounce-back in the helium impacted categories.”

Based on the third quarter financial results, Party City slashed its guidance for the remainder of fiscal 2019.

For fiscal 2019, Party City is forecasting earnings between USD 0.84 per share to USD 0.91 per share on revenue in the range of USD 2.35 Billion to USD 2.38 Billion. Previously, Party City forecasted earnings between USD 1.26 to USD 1.36. 

Following Party City’s earnings release, the stock is now 78.11% this year.