Balloon Pops On 45 Party City Stores Amid Helium Shortage And Deflated Sales

Party City announced it will permanently shutter 45 of its stores amid a helium shortage that had literally deflated its balloon sales, although the company does not blame the closures on that sinking supply. 

The company, which runs roughly 870 locations, said Thursday that the closures will take place throughout the rest of 2019. However, following a wave of media attention, Party City CEO James Harrison stressed on Friday that they weren’t hurt by the gas shortage.

In a statement, Harrison explained that it is “completely unrelated to the global helium issue,” adding that 10 to 15 stores are typically closed each year “as a part of our prudent network optimization process and in response to ongoing consumer, market and economic changes that naturally arise in the business.”

“This year, after careful consideration and evaluation of our store fleet, we’ve made the decision to close more stores than usual in order to help optimize our market-level performance, focus on the most profitable locations and improve the overall health of our store portfolio,” he said.

Harrison also pointed out that most of the locations shutting their doors were “profitable on a stand-alone basis.”

Though Party City denies there is a link between the helium shortage and the closures, the statement also noted that total sales dropped by 1.4% in the first quarter of 2019, a loss the company attributed to the lack of helium hurting sales of metallic and latex balloons. 

According to Gasworld.com, a trade publication, about 75% of the world’s helium is produced by three sources: Texas’ National Helium Reserve, Wyoming’s ExxonMobil plant and Qatar’s Ras Laffan Industrial City.

To complicate matters, Gasworld notes that Texas’ supply “is on a timer to depletion and that by 2021 we will face the reality of a new-look helium business altogether.”

In an advisory to its customers, Party City warned that because of the oligopoly, “any disruption causes a significant impact.”

​“Helium supply has always been a little up in the air (pun intended),” the company said, explaining that “supply is very low while demand is growing.”

Harrison said Party City has reached an agreement with a new helium supplier that would help it cope with the shortage for the next 2½ years.

“We believe this new source should substantially eliminate the shortfall we are experiencing at current allocation rates and improve our ability to return to a normal level of latex and metallic balloon sales,” he said.