Party City Holdco (PRTYQ) 9 May 192019 Q1 Earnings call transcript

Good morning. My name is Chris and I will be your conference operator today. At this time I would like to everyone to the Party City, Q1 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. Instructions]. [Operator you. Thank General your Associate Party you City, Ian Counsel being conference. may Heller, of

operator. and XXXX Thank us. morning Good you, everyone we our This thanks released first results. quarter financial morning joining for

at a find Press our of You www.investor.partycity.com. can copy Release our on website

Now to executive are introduce team you call. on today's to I'd who like our here

or we We our with Officer. before the Financial Private subject the to call These and it under company's XXXX Interim about some and Harrison, from statements uncertainties Act of remarks risks the open We'll today's Chief actual cause Jim may statements. that make Officer; Executive Q&A. that materially regarding events our their future differ performance, defined prospects Jim forward-looking for results Chief have plans. Litigation and and these business statements to Correale, by prepared Please expectations as Securities are Michael up in management beliefs future start could Mike, note Reform discussion future or

in our that any that reasonable, no give Although we be can we statements updates expectations assurance are statements these expectations provide to to We the expressly forward-looking duty realized. will disclaim forward-looking such urge review believe in our information, SEC new events as result the contained factors earnings as a risk in whether of release filings. the statements our or everyone otherwise. provided future harbor We to safe as well reflected

financial GAAP results. non-GAAP both During to measures the today's company's call will we and and of operating financial refer

release. that, turn to reconciliations measures, refer directly GAAP over information regarding please with Jim to measures our I'll earnings the the more non-GAAP most call Harrison. and For financial the to comparable And

guidance by today. highlights on to some detail in the Good and the you Mike address and and thank improve underway headwinds summarizing performance first of our our of discuss we result quarter for today. Ian. financial have year focus joining I'll then reiterating undated revenue us a we you, comments key the initiatives performance, financial then the for on provide everyone adjusted will strategic are further the and full morning of Thank faced. which earnings overall some some that and begin

Following reflecting open of consolidated call comp a by headwinds sales. quarter to increased currency X.X%, generally X%. basis in-line first XXX challenges balloon weather On were results basis questions. will expectations. your Overall negatively which with positive headwind were up store constant a the comparable with included When This positive a the which result represented sales we bips. store a revenue points negative an sales and XX offset affected and latex combined adjusted shift, overall helium holiday result metallic

X% key momentum grew web product omnichannel Total in segment in as on sales store for the acquisitions improved foreign the impact side well adjusting highlights Continued of franchise our execution consumer as positive business, QX. were and retail after exchange.

a adjusted adjusted-EBITDA reduction XX%, a the was million quarter million income margin million. free in adjusted net the during gross For quarter. $XX generated top capital overall are an providing begin was way a in on number In reduction of substantial leverage update There to allocation company. helium. our to by initiatives first priority the for $X.X $XX.X of flow Debt remains We this want I reviewing XXXX cash was under quarter and ratio. achieve

and product retail for businesses. As category are balloons both consumer a most you our key of are aware, products

cyclical the and second expect alternative have In saw been and of half continue expected, as QX a persisted have additional we to to it we current XXXX shortages the actively securing response resources headwind in the As shortages, identifying we well. to create supplies. potential

requirement alternative XX% sources. of approximately annual from secured have we XX March of As our

contract to to have additional of should Press we final allow our believe helium beginning of in allocation with Agreement current to thereby shortfalls are a rates. return at a eliminating of the of levels quantity in us today This signed reported balloon experiencing we a helium categories. subject in provide normal new helium definitive QX, we source Letter sales our as importantly, will Release, which More we execution multi-year of

While increasing in over the successfully these cost serve prior will is increases put average helium years, the have to of costs. price selective we mitigate helium higher which place

During store of productivity a at comprehensive quarter the the first the aimed we of also fleet. overall review completed the portfolio, improving

level we our performance on of of our level market isolated opportunities to profitable basis. approach independently this of to forward viewed to year was Due rather centered than stores around review we analysis sort annually, this an basis. of store unique model, While when conduct review have the are a evaluate profitable drive improvement. most productivity our year vertical market This the

we This build full This selective Following on markets. course Party which and capital basis. the to adjusted flexibility beyond. XXXX to have new openings stores as close store of allows recapture disciplined us the leverage in operating we spend those in on decided opportunities in analysis a that XX approximately a year accretive stores City EBITDA substantial on optimization capitalize have in market where a markets, to for look be to other these XXXX, our store underpenetrated our transfer creates decision sales markets has will study, the the as those closed to portion of over we will opportunity the shown also

stores. reflect Canada the analysis and to greater wide new XXX market of space Our opportunity in the States than continues United

as These smaller offer we piloting format with unique square test markets in XX,XXX consult four where can distinct we to several Additionally, stores or fill assortment. new [inaudible] void markets. characteristics and tailored foot smaller stores be are designed in markets this we year X,XXX the to see will a what

open fall. also We concept we this store new actively developing that will are

shopping provide of a open Our stores designed a future prototype environment improve and to merchandising product easier more footprint. the cleaner overall is to our stores crisper, and experience shopping and

program from the efforts. The party continue as at planner best on we continues planner store where refine seen the generated growth benefits As and program our comp higher to our in part by and funded have of productivity elevating a the being continued XXX non-party as of for the associated well consumers, that stores. operational form stores experience improvement satisfaction is focus the over efficiencies customer engagement in-store in we scores,

Finally a value designed to with improve the number initiatives pricing we of consumer. our are testing perception

While is depth stimulated price lower. scores we for enjoy much unparalleled purchase part in perception. over consideration and brand assortment, XX% unaided convenience in with by breadth our reason are and much The this generally the awareness consumer, our of

underway look to retail reinvigorate also for are major for These searching concept consumers improve drive convenience the While we our omnichannel perception strategy, address shopping will experience. improved our just as comprehensive and value look we ultimate Salvatore unique [ph] believe traffic. of the to initiatives an with that the we experience some

can I'm retail Halloween temporary excited retail been presence store in Europe headquartered Halloween we serve U.K. the to e-commerce learning’s announce chain This part pilot line party this interest popular can was making America of a the well Party full the We're for that has interested on in see as here as level. in we a pilot broader opening Ireland. pop-up first what are the European well. us at landscape that Party tells us our European headquarters. specialty retailor store as gained how offer the Finally Delights, offering so party front stores the will towards through the as only shape branded business, in extremely and North to store Specialty our Previously consults only of in to a a determine consumer that Ireland

invested competency a own XXXX. the products our front, quarter during the by is This of new new paper in straws. all allow a addition the talks with added our manufacturing. to end of deal. adding first On this We look us to competency eliminate manufacture straw we equipment manufacturing footprint to sustainability; to straws By big the consumer plastic our to from assortment we sustainability paper

team the improving has past our management to ensure an heavily are several on environmentally Over citizen. corporate our efforts focused that communicating responsible we and months

modifying products be standards plastic cups, plastic and they'll so new molded and injected products conform and to European testing molded extrusion many reusable We safe. other that to and include dishwasher plates, bowls are

We sources. biodegradable Council compostable tissue looking paper either which Stewardship or is Forest Certified board, source are and to paper from

the discouraging balloon to We responsibly. their Wide dispose are balloons of weight and intentional also conjunction balloon World consumers them encouraging releases counsel, with in and actively

as We continue to as actively through of Wounded financially, clean-up as well organized our steps support by many both environmental Nature, organizations such associates.

grocery While continues and in also independent affected topline products performance, the specialty helium consolidated performance, channels. continued by both new mass affect This issues. franchise customers our and our shortage sluggish to been partially which has has helium offset consumer continues the to American retail North gain helped party business

continue sales Internationally, and key non-traditional in as in the Europe as approximately these the we deepen U.K. well Australia, with retailers. grew in in to tracks gaining pleased alterative relationships are to constant with We quarter we venues, X% party as currency are retailers

As the offerings. been have the offerings XX% month very XXXX you the more manufactured has end States. sourced, this we product partnered of and or following a distribute Halloween consumer closely our the last than on teams our I'm our retail headed of warehouses major challenges containers will towards move designed, This cadence select, to seasonally change pleased which report to and season, all-important we by our product that focus United in be Halloween and in-store, either efforts to encountered By year.

is the Online, on a the likelihood expanded holiday end change will successful to of omnichannle things X% company the the for June. be of another platform the re-platform way of the huge done, pleased we our Additionally continue has and capabilities. be of This with site and many by improving our ever completed seasons.

everything Marketplace online The very on product Our been our content, is successful improved and mobile provided to Buy presentation, customers their as product of traction and and advantage with now penetration experience. around mind out storefront The consumer taking usability browsing of often well better and having to Party pick buying has has branding continues you been the the reaching gain for of to reach us need own offering. also far online have as up in check store, flow, new site in all orders. e-commerce peace up our City responsive expand store of around this XX% celebration. Amazon capability ability creative in increase the the to picking

have site have offering seasonal other Given celebrations. a now the site growing and our strong includes expanded broader we on traffic product and and assortment that birthday of conversion the level the rates, to

this Halloween, where We accessories featured many proprietary time our and are offering marketplace our will about are first the and of license costumes excited coming particularly available. we for for be

and now first on and drive acquisition customer traffic Regarding Marketplace by second quarter over awareness in we assets, markets. stage brand City to Kazzam site. five pilot, the moved is the leveraging markets selected XX focusing assets live to the our and In the digital the to of business build Party

combination As a markets now discovered our out future about marketplace market to aware the more initiatives, convenience this needs. third in well in-store they help deploying Kazzam, and digital become of drive We party scale this above business. of anticipate as covering provides marketing XX% the the their into stores, and providers consumer awareness retail line for of as limited We're efforts year. customers roll later securing celebration

in customer We targeted support informer customers, and customer which segment against marking digital utilize and collect targeted to and we our can will traditional. continue also to our of it database data provides consumers. We've as of campaigns begun more CRM strategies. CRM, has to to leverage to data identifiable shift create marketing XX and relevant over which customer site personalized stay as less Other of we efforts topic helped Kazzam create from the our data we spend to million promotional engaged the

One address the of efforts. within CRM like results would to initial We tariffs. item please last our I are operational is

proposed China to well our the both of reiterate tariffs if of mitigated I is testers. believe subject to XX% will to important duties the as it pricing again occurs impact We owned, resourcing XX% via product and China of XXXX third move the be results. party, have factories the once for company annual finding within it non-China current As pricing increased through the believe us headlines, as been largely has immaterial re-engineering, renegotiated that

a stated Finally XXXX. our principal our is debts company entire as last in flow cash during generating goal call, free and for I paying down

million targeting we In capital, of the a generated by cash business generally XX/XX/XXXX. our addition $XXX reduction model, and year-over-year million $XX are strong to networking by between of flow

capital the ratio helium quarter by Currently free-up first quarter. the to current largely on also as well. are expected, end year opportunities business, be we pay-down debt our which we summary, focused exceed We us end target. the should targeting headwinds In to and of keenly behind played hope that including exploring to other throughout low-Xx out of the have to by are the our as the leverage believe

evidence We this we remain availability, made and from greater present supply strong that progress will operationally year, benefits tail-winds fronts have believe chain Thursday including discuss we greater helium a And the by IP and of on the XXXX the impacted business calendar, the encouraged results many that to the that extremely detail. in Halloween made themselves provide the like outlook later and now to disruptions following Mike I’d call quarter in over turn first XXXX.

our XXXX Thanks of I'll outlook and we'll then before financial everyone. Jim. on for morning performance quarter for fiscal further discussing call Good open the questions. for your remainder provide insight the the

approximately store the goods charge expenses. EBITDA net to remainder impairment for XX $XX million quarter. that closures I entire restructuring started, quarter want of back has and which the Approximately The million related cost operating adjusted discussed. for with the get in will reported Jim $XX note be store charges been include reflected our both of first to the I and of million sold results first added Before $XX income in adjusted

at closely or X% topline results, X% our we our grew more on basis. currency a Looking revenue consolidated constant quarter first

driven Our Brand included our first basis corporate comparable quarters stores, retail over This of U.S. by last a the permanent declined acquisition last North stores point comp end segment helium. network and are of stores. XXX XXX stores X.X% quarter X%, which sales over XXX business versus totaled comp headwind franchise X.X%. months. American sales which Canadian XX of and At independent increased year's for include year's and e-commerce the

In we shifting shift Easter positive Eve a impact New into first sale quarter had out. addition, holiday net with and certain the shifting Year's

However comps quarter X.X% shift for On across and of weather. by than more grew markets. the in impact the we net adjusting many of the estimate weather, comps adverse BOPIS adjusted our run holiday spring Web for rate basis, shift offset the XX.X%. after holiday a increased helium, was when

X% after consumer Turning of in increased quarter adjusting non-vertical the independent to products foreign and and acquisitions revenue franchise currency. impact net business, for the one,

acquired excluding of increased business for the sales after impact in franchise U.S. adjusting independent X.X% Our Balloons and Mylar stores.

continues business achieved double grocery to bright a growth Our spot non-party store be and in the through with strength digit mass channels.

approximately and to same third in of Mylar International assortment FOB to profit in single strong points manufacturing effective and to to wholesale currency sales the party U.K. requirements down margin manner. year. of The growth continues independent or gross Europe the shortage. Canada by cost negatively the in XX.X% grew at Consolidated soft, continental X% leverage continue result customers’ breadth capabilities from in and meet Balloons as business. We basis the impacted due digit in a X.X% below reported Australia. and direct plant XXX helium a Sales were consumer quarter products be last growth constant was low U.K.

Manufacturing reserves cost decrease inventory mix of from profit manufacturing to by Shelf primarily offset versus program, or to from XX.X% last gross helium compared XX negative acquisition. of a due productivity favorable Granmark were savings point margin of integration was year. Share to the our Share basis XX of further and and of initiatives points year increased QX Shelf. XX.X%, our million $XX Pressures the basis partially related balloon optimization last Excluding store

of at excluding to of operating basis Share for rate to expense a XX.X%, helium. the adjusting year-over-year points QX, non-recurring flat points the overall million of quarter our was million the prior same $X prior of store to as or XXXX with in optimization from million period. was headwind. compared XXXX $XX.X Our was impact minimize the in closures, from to year. of first including Shelf the $XX consistent related Operating basis operations revenue the with quarter impact Interest a during negative-XX charges quarter million managing with the above we XXX expenses associated approximately first program. in non-recurring was to were first increased the was million million of helium the the our of in $XX.X last due and percentage order and year expense $XX impairment store XXXX, loss consulting principally costs charges QX charges quarter severance income these disciplined in Income operations charges After $XX.X from a for of operating the year

net increase high our adjusted and company's credit impacted attributable the last from the the interest impact was to was to interest the August of $X.X refinancing. $XX.X the million $X.XX from The on rate year, effective to With stock and exercises. per share our XX.X% $X.XX a per share Adjusted tax by higher increased principally rates. approximately expense. $X.XX quarter, EPS rates QX to and the loan rate decreased LIBOR during option adjusted our in to income X.X%. ABL In quarter. XXXX $X.X related a higher Adjusted yield EBITDA Facility tax term inclusive of Adjusted was rate million million reported agreement decreased due was headwind the

for Finally, data first quarter delivered which cash quarter EBITDA free with above of CapEx as $XX quarter We less was flow the adjusted we $X ended million defined net XXXX. the million, approximately of net X ratio $XXX in of $X times. amendment billion, leverage capacity. to our million Subsequent resulting the of about borrowing April, debt ABL of a Facility we in have

guidance. our to Turning

reiterating adjusted for our provided previously and earnings. are outlook fiscal XXXX revenue We

X%. comp of to We continue $X.XX and expect sales be to revenue to the to billion about $X.XX be billion range in

Excluding closures, anticipate when the operating the continue to related positive slightly impairment adjusted we income be to compared to margin to and restructuring store charges XXXX.

the million to range in net $X.XX per of full $XXX year income $X.XX to expect be or $XXX to share. We adjusted million

interest million million $XXX to EBITDA the to be range the $XXX of year. $XXX million to in We million to be and expect for expense adjusted $XXX

of on continue In debt below priorities, terms spend to our leverage Xx. revenue X.X% allocation the ending with year our capital net expenditures about capital net plan we anticipate and of

For the all over call for other Press to back Release. the With to up the questions. details open operator our to around our I'd that, outlook turn please call like refer to

[Operator Instructions].

Your Sigman comes first question Seth from Credit Suisse. of

is open. line Your

Thanks good morning. guys,

on I are to on basis down were we business. in quarter this assess and in Comps the quarter the slightly trends adjusted then basis. slightly up the underlying So adjusted guess fourth trying an

I during if that and assume categorize late I you and One, guess sort If weather, the think And step to we questions: where back you periods see that shifts you’ve quarter. calendar then you trends the was was and the quarter, within Thanks. could how weather point do you the what speak favorable; weather at appreciate the moving I two comp normalize for as helium you has a in to would start know, of all the seen guess the some cleaner trends? what but taking the you demand pieces, the normalized?

Seth, Ryan Sure question will Ryan. Group, talk our President Vero. good flip Group, over Head to I you. that our Retail of to Retail to of

good morning. Yes,

mentioned keep and clearly out but hitting which primarily shifting you and the March of mind in the of in of quarter that had February, Easter the we impacts, the a we weather April. impact big different For saw shifting of into some March, moved moving into the but Easter also as we was

period sort so impacts, run just through anniversary normalized that the of we into sort the And shifts, all summertime. we’ve that will now now seasonal are basically the those of getting weather

impacting the shifts see normalizing holiday at in So other point. that we’ll this the than core trend, nothing but significant underlying weather the star really

positive thinking shifts second anything weather Easter first be should quarter. Okay, and aware as would the quarter? about and Any be the the quarter we second think to that more relative the of are or we I in should

material is shifts After on going quarter. second in Easter the no there

you okay. is the that may us that you’re help sounds like the those how feeling the follow make And embedded you’ve store a sort this of of any closed understand adjusted better Got then up have you there’s Can substantial level part it, to you my of recapture analysis closing look sales. around what this the closings back can which rate a lot primary on recapture It for stores? sense. that, Thanks. year from EBITDA and thinking store about if benefit like market that

close talk respect the about we I’ll now the EBITDA closing I’ll first got year, incur are and take later so the of With are and we will closures will stores about that. then a have question entire you EBITDA, close we’ve in to little Ryan we that Seth Halloween. have after recapture think have to also that the going and stores that course QX over how and the to stores

actual we and it for EBITDA look basis and to it look a it’s deminius in the the would process. this EBITDA. at you at we as be expectations implications on when the fairly context on will within to With impact, and Ryan what pro-forma of recapture, on respect year, closure at be annualized of So the our our range accretive. market, we respect With we store the the used definitely tell look

sure. Yeah

little a your of just question. then on So bit and specifics commentary

stores as Party in. as City we But Stores, You lot the given are the years, the know and have stores that store acquired and that some markets generating. we was individual of cases Party profitability these is model acquisitions well, over vertical years very and already in iParty, we etcetera in solid Factory were Card, large a over our mentioned the in independence margins the

at individually that of while total piece in now are look owner so retail And really most areas we party stores pull the oversaturation market of you there’s of. paper the these good back a and on for an look when of stores all the some part,

store one what another company so and great really bottom strategy back, together to for did. opportunity the a we at accretive that’s and to pull look to at so look closings of market put transfer the sales us we a dynamics, where that’s can line, store And from total

sales to that so. sister I be unless the to out make we breaking but profitability and it flow economically enough the not the closing of we rates, do wouldn’t beneficial recapture the We’re suffice say stores it recapture felt that in we through specifics would would stores to

sense. Understood, makes much. you Thank very

Seth. Thanks care. Take

Your Please Matthew of next question comes from Barclays. ahead. go McClintock

morning good everyone. Yes,

and kind did to on trying first I go these Just if just that individual in are in stores, to those you and of markets to become more you follow-up accessing what you this sales more market those through wondering changed customers That trying I those just us transfer to more specific in as could made online, that be efficient But what give stores – a what was store looked you attractive. just at wholesale my closures. other sales stores. sales partners, went with know specific changed those question, was your industries. less I markets? go mean would changed that some thanks. of your actually analysis

Sure how truth to nothing the we our a do we elected different the of in changed elected from analysis It’s is to look per the say. prism. markets really of how at and the fleet Matt. The fleet performance

that in level now as basis, look a that XXXX programs look retail are between as a basis investment in a become and to in on mention remarks, of them them, effective said the those acquisitions. business, specific is take at essentially XXXX, up prepared fleet believe I silent we profitable. on sell at and that my having industry made a dynamic stores the for an basis like reinvest extremely we us more retail It’s Remember of invested we rolled opportunity are of back markets, and profitable at a our and market Ryan the into number DA, the and capital So for market allocation. markets investment as we accretive forward which the reduce capital our store in the new there’s some look now certainly under

it think debt reduction towards times. capital driven I on of allocation, three overall focus moving our target really our leverage by So is our ratio and

you one that profitable for Okay, it balloons, where just just structurally congratulations that constraints or does your the the to that. change more you. helium squeeze establishing make helium, the securing I or helium because itself. your that. was cost the going forward was given businesses, I thanks And Thank Does that’s are in business how pass new or the along wondering, does source to – of then just that on up of it believe of it on that goes margins helpful, able consumer?

Sure, respect XX% that I remarks, expensive to also new than board what in previous that alluded my question. With more come that’s that on the a helium – great to onboard that contracted have was. is coming our quantities are price

upon several the prices have the higher being to increases balance put On our the as knows, a we said, managing during our through bit that helium that four selectively are is buying ago the see with we That the we’ve our pricing the at helium second unbalance operations nobody store based we’ll part in of believe of We’ve offering we’ll to helium, not improving one increased being are we the when the helium reflecting additional being over it elements will receptivity of We the consumer there the efficiency the would it back where reaction for plus to pattern where cost. look say just I and helium There come are would fit as yield of the perhaps higher more in within more pass does to we initiatives category, offering or be to a of level, productivity commoditized included for to time helium inelasticity respect price, stores, and a going pricing store demand helium, we project see difficult. back used the last, other of able you some that nature, higher been process, which if able of which between year last all. our retail to in and little helium terms elements price reasons very cost little at by most higher consumer recovering size one cost. down the see. within mitigate into the months. seen some There the of

color. of the luck! Best appreciate I Alright,

And your Nelson of Please next ahead. go from comes question Rick Stephens.

Thanks, good morning.

morning, Rick. How are Good you?

thanks. XQ big headwind Helium know it’s more that move good into we XQ, a we that saw period. I graduation as does Very pronounced.

what talk If fails balloon or you that about revenue proportion know account of for? you could might

Sure, season Rick. great doubt for about no is That balloons, question. Rick a is Obviously graduation that. a big

in procured As some QX we incremental more for remarks, quantities this outside recent I our of have mentioned helium development.

big view hopefully saw into we have QX a similar part sometime with what somewhat in well, QX. QX mirror in rear helium impact to So it’s business of QX, we’d the going QX, end around on of expect while of a the it in to

Yeah to Ryan. Rick, add is just this to that,

If balloons graduation of big Year’s the mention are very Day the seasons actually similar being Valentine’s very at QX as total look big, sales of has mix with balloons quarters. balloon New percent QX some a in in very, QX also of as the and you Jim and those balance and

below for also that that. you are I net to debt notice targeting EBITDA, Xx. Thank now you

think know your really X.Xx. What’s What you driving forecast haven’t I prior was changed? that? your guide is EBITDA

Sure.

our at manage one and perhaps really with of operating of a different of take the capital manufacturing sharp kind a all created respect can and take that. a I – the type and working we’ve XX the being units. think how how more else. we out mandate operating organization We Historically tissue. inventories and our mandated of is of about. tissue. units, it one fine capital give of tissue, really to the efficient which put working really talking Council look business the at pencil the I’ll capital Remember you things allocation all we example of, off have to Rick well require two the is kind that throughout and principal So stocks organizing indicative white against and balance cash Certain drives of over everything of different white entire the we’ve plants for Stewardship of white the we so customers Forest become certified year one non-certified different being or tissue, other maintained we’re last certify cash

our all We are moving of to certified. tissue

finally, that off inventories over refining our in then both level terms Christmas, just So of balance at high were of as effectively. eliminate Halloween up with well year Also replenishment levels safety looking those in, last sure min-max’s carry are which warehouses and stocks. to min-max’s ended and substantial in and stock will And duplicate that our at our investor really on store taking our we our and as okay. we make we of

So at opportunity okay, be was our was actually Halloween carryover to and Christmas we is particular perfectly sharp Christmas there this that as strong, all seasonal look in but quite was good inventory of so as for Halloween there for the and year in inventory well. us buys

by of capital that see amount working And two out so be we’ll those carry-over into next we’ll seasons. reducing the year going of driving

really it’s So the allocation. organization capital stronger a focusing entire matter of on

good That’s helpful. Thanks lot a luck. and

J.P. Zakaria comes Morgan. go next from ahead. Your Tami from Please question

thanks Hi, for taking question.

before to supply half the is so question last with do my normal will expect actually increase capacity be of the source you back began? So supply new and helium a year in half helium go identified, or the helium to back shortage similar year’s this in back net

Tami. great question a That’s

are doing – when folks certain what drill productivity about new geological for that so productivity helium, additional expectation predicated today fields, holds. with that gas with the they’re of is the because we for certain they not they or – expectations obviously for that is our upon So our drill drill of or field the resource oil talking

amount the take goals to helium or are the solid. fields of will that fields committed have those made of that product So we’ve amount to fields, a those Nature committed comfortable estimates feel produce Mother determine set. We ultimately expectations those certain reach the from the are that and for us. whether not product we to very adequate

year that the coincidentally, really August, to would As helium ironic last become it stronger supplies call at the year, that balance to store of level and over of continues helium in we the expect flip where see quarter. somewhat our we July our helium at – fourth of course in began for the overall we I’ll feel second helium the probably or start We improve to though ironic. look half more would

position would in improved that certainly on versus I slightly last balance year QX. So expect we say helium a would

super stores the that’s one closing stores these are EBITDA all where at quick the you’re moment. that it, year, And Got follow-up; positive for helpful. these, this XX

perhaps a generally they Generally yes, are weren’t, but that profitable. handful is there

sales get in improvement so exit to transferred obviously profitability the we as And EBITDA. territory, we OpEx. remain That’s well that be what drives the that from to annual as leveraging the operating result stores expect the up in incremental

you thank it, much. so Got

from next Simeon comes question ahead. Your Gutman Stanley. of Please go Morgan

everyone, good Hi morning.

is Just that’s proxy everyday so good to or us you if business adjusted a was around I the that the if remarks. for points, to the hone is said right on think you business don’t basis in on number Jim that, prepared again know the the tell about that underlying business, plus-XX can or if

or shift did Easter is pure I in mean extra everyday Year’s its but adjust Yeah, that whether so of Valentine’s of for it’s is the out, respect. you the day fundamentally shift Eve and the adjust know some we the in New also QX for St. Pat’s, business. it there did pretty we for noise

business, it So is everyday yes. the generally

category you’ve expected took, was what just was on headwind taken. have clarify, – the Okay comps give changes were, to just headwind can the facing some guess inclusive you’re know comp, it that pricing the you XXX that versus in I basis the us you meaning a helium, of that what pricing the to occurred how will and of back you unit unit, shortfall actions you the just then balloon sense tell the us that points of relative would And to normally?

Correct.

to against what XXX So gives that stores basis also expected where difficult is, relative measured category; respect that’s of is up wide very giant units, helium, great XX which no-helium because a fundamental a With a numbers. proxy the balloon XX Simeon would everything impact to disparity conversation from there’s have, to inch such we us wide, for the it to and inch we circles, have the these within had points.

function promote where resides what really profitability profitability. and the we our try to a of it’s to maximize So

saw letters for numbers. and would in Ryan you statement posts pricing Numbers in So which where celebrations. social was backdrop was the provide – those of to we we flexibility lot for talking about inelasticity, the around and saw the where media their people if using are

extremely opportunity to really the the to we’ve had So had about greatest we we’ve that think – and that’s perform well those pricing. see continue where

give And be so would units, little just when to you at per we it look unit a numbers. misleading

on it okay. now of lot the after And progressive as is timing a it, improves, the then end there of IP of year Is Got where hits. it the year? particular the a quarter this it

Halloween much material beginning and in coming early impact the impact ultimately with Disney be of out in and will the a in of Story QX, June, with the at pretty Frozen. of and May, in lot will birthday, Aladdin QX, the then a King and QX. terms end obviously IP Lion particularly see the end around The properties June of happens on We that greatest the IP Toy

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it make in extra this that particular year? does hard So

think high To answer great example your and categories first question, is a perceived solids really in commodity I visible, that, right. is those

look solid what you else. depth anybody different to the market, have City store we and of breadth to or from if or four which rest rather Ryan XX, take we Party colors compared a more is at have gently expansive the the to would be So anywhere and of eight give compared

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credit We what our skews; not the a and so perception customers. our that look value we ultimately towards better assortment, and playing will our just to right piloting that what’s of six the is created think and there and do are with at we and how are is the and what’s but the maybe the spent our the configuration the of study to create less plus little colors, now we last count, help now redoing guide answer results the how the our what’s assortment for create what’s do way to we part shape, the put-up, we that we improve are get months that us to that,

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day more the the So at money, about points, to make margin it’s if we and of end me can really then… not making money, making

Jim. thanks Okay,

of from comes Bank. Baker Deutsche Your question Mike next

line is Your open.

Hi, thanks.

questions don’t your guidance, couple trying know of maybe the here and is, comps numbers, range. positive comps, you I know X% quarterly probably give it of are year, only out of I to the even think implied pace back the here, but guidance the get you the with X% in in suggests to half the

what Halloween to in negative you to helium, because preamble. of comparisons, comp still intellectual et most And So, I to expect with of that important? couple Does quarter which shift questions half? guess costs but of then drivers, the the the because are cetera? a or easy turn are comp What around as back then in expect to of biggest reasons of that the the in simply of be are we because doing negative positive a positive turn second few half? comps helium, back because the Should the property,

case. half was and my year that of to If I’d a First expected our the continues back-loaded to first off, be year half the positive I terms I line we in when is well. that okay. to in negative call look headwind question. we our it, to turn positive with implications. first look we comps indicated Yeah, the did second that and great call, And said definitely in be refers half, Mike it the comps full tougher expect of guide which back at expectations mean, and as back be, it in generally on with comments, of be comp year-end or to quarter we the the that in I believe expected the terms we’ll we as to

now the As even have and slight mentioned headwinds implications of my breadth and improved then we to and we depth see to hope the a of to primarily from second a obviously with as look strong breadth stronger at that QX, remarks, headwinds our expect substantially will both for helium tiny offering through ago, subside and moment be the in-stock well in a with a about QX by the year. we expect to continue. which move IP half the what see then I be, first the own we offerings, Halloween. on elements, we the depth we believe perhaps had talked continue the prepared for to and helium helium of a IP We proprietary and going turn and position of of and the bit half Thursday a in respect of as the are our other that, And marketplace be to said I a headwinds Wednesday helium, The into or stores tailwind of anticipated half, costumes. bit will second in of as that we headwind the whole driven the to

on very X%, but second go not will that mitigate is the that for which believe that I’ll in the first or we full drive than to guidance, comment our around I’m your year. result more elements a create a is of back half positive and So X% number X% tailwind to going half the to there positive

slightly if Fair one expected it and correct first the flat to believe comments negative. think half original to I I enough. I am but ask me If be follow-up, was I wrong, could

so maybe kept yet X.X% full-year or in get minus lower? the mind had originally to would than that And with then, sort be you So sort of better little something running thought. expected the you now of a bit my guidance, consistent

probably Yeah, better of little a because we was probably second because a expect bit the in balance, it I helium. higher bit helium, little be right, think on of you’re half, and to because

Understood.

on about terms at are I absolute numbers think, of really the edges of we end in talking the day. the

enough. fair Yeah,

Okay. Appreciate you. Thank the color.

Michael. Thanks,

comes Prykull Chris question next from Sachs. of Your Goldman

open. is Your line

new Thanks for store growth alter look to over large taking fairly to acquisitions, back you’ve retail the back, If acquisitions, a next always guys. guess I five I optimization I openings second. for does positive, morning, stores. had been the many? for so, algorithm and changing Good years? the organic on generally wanted Is potential store that three how questions. just And years of view go Is the if segment to the now? of the that too franchise stores XXX have

question. Terrific

and as So, store those acquisitions first show the the our Canada. format we continue not decisions last mentioned of the quite the respectively. and with the exists looking With our rationalization openings, US franchisees of in amount back cannibalization, some it space the would my Party the of more that address store to to include the relates a of honestly continually demographic to XXX occur. estate really remarks I we white do off, for reverse We’ve undershooting within today perhaps several City stage does them, number really and stores cannibalization opportunities backwards, respect prepared and probably made, acquired years. let’s to earlier at that amount acquisitions. analyses over looking It of real in respect as The

store total to be Additionally, we be the pickup night go of to omnichannel At and end she possession format in exploiting our piloting the a and goods he to so at successful the we’re to the make which idea really store or buy Friday format, larger and we their party sure the able online, also and their the small their night a work. look in likes store, much order number store as see day, smaller can I we the that consumer becomes online, or how the presence redefine party. and be before if it XXX that mentioned, profitable of pickup if the expect has Saturday will successful geography in

the and relates to is So relationship I it our how our think our consumer business category. wants as shop symbiotic business and to e-commerce a between brick there mortar very and consumer

said out as as us of cadence into openings future. for store normal to I look beyond, and we new more future, foreseeable expect XXXX return the going I So, in a I would to think the

factor the a And store the store That’s authorization to Great. that market and in do. in recapture to review annual your review you and follow-up then for really helpful maybe closed annual factor through just color. do that you e-commerce How stores? you the to do or online quick channel

let take I’ll Ryan care of that one.

generated We recapture stores. store. obviously the XX% the delivered of mentioned, retail so buy less online at largest the side. Jim Yeah. look online, total coming basically from it orders on is now share store, are the pickup in as our is of The But that into

their to Party that even City is the where store experience So a City they a pick or purchase there into with up on is website. customer Party experience walking physically their the are product, if partycity.com starting relationship with

two. symbiotic the really it So a between is relationship nice

the just the your could changes I timing if one squeeze inventory Then in Great. on imports. just in, more of Halloween

should holding mentioned What you inventory full the for be this years? that of think prior in improving that fit of capital working hands working the inventory goal XX% how versus month. end How your are the of capital that your I much and implications with year? by compare does that of does

Sure.

was So, about question, the year, by time more XX% your this at probably question. May. of last first there respect to With we end than were one

So it’s increase we a where XX% we improvement or were were. over where

is capital year, than full reduction the be season of, new would balance we’re what we of in expect it we so terms in fundamentally year, the working in substantially year. for that the brought of In this amount balance last far a the less working the and capital, to actually bringing because over

manufacturing of with we’ve carryover, expect to out positions, well as consistent our retail positions done in the capital, our of quantities of within we be end take them and season. looking as as at run that liquidating working to inventory at we inventory some the all expectations our foresee inventories, inventory our the numbers into it’s positions everyday seasonal all account respect So reductions our inventory we’ve and the

built think certainly function thought a I our it’s it into process. So,

So repeat, free I think I’ve missed I got your questions. If apologize. one, feel I to

You nailed year. Good it. Thanks this so much. luck

Thanks much. so

Telsey Your Group. Joseph next from of comes question Feldman

open. is line Your

to Yeah. good wondering Hi, for the will guys I where and Where you the opportunities taking from? mean, number for guys, discussed get improve you was the questions. areas of improvement to big to capital to that Actually question. come a working follow-up working just that capital? are Thanks on wanted net the biggest biggest I improvement morning. I

inventory build last year in big had the of see a to we area and Joe, biggest inventory, improvement, really in The undoubtedly. address opportunities us inventory. is We for

As I good inventory we is mentioned earlier, we very, carryover position fundamentally very inventory have have and the that a inventory.

that by inventory. reduction of been and its Our be its $XX as substantially better it’s $XXX bulk trend to relevant, is million and candid, million - really on than with capital inventory probably, the it’s on historically freshness, to of is ever to newness respect balance but working consumer be ability in of being its today terms to inventory. The receptive

out to business and I’m like a then e-commerce what guys trend to of you definitely you. then built profitability Okay, profitability the how an where about quite channel. on you follow-up, just start wondering yet playing expansion are to it been And we the And can thank it, is find on it we’ve out improvement? has been improving it or continue this areas for see not seems guys and thinking opportunity. Has

one. address I that will let to Ryan

sure. Yeah,

that orders I profitability because So look end you say or sales. have a that differently, but its little channel not web generates we looking at up are bit a channel a resulting aren’t at earlier store, from it’s look the on coming only a sale that a revenue own the that to customers, on XX% than we at as through what perspective, of straight straight as web for said the in delivering business

burden just of they are They the going cost the it. distribution that many So the are the business carrying the side operating within of into carrying not stores. for of components that’s

cost looking said the over have on more an level, costs, growth it we’re mix because shipping those should that fixed omnichannel offset as headwind we’ve the at of and we clearly So, increased positive and where to But of customers cost delivery are leveraging store. to going. year be that some really, contributor it’s of in those are general, helps to are in to it in a quarters, bottom general a last or it’s so. orders costs about so costs existing business already in line shifting for a retail the the the that many operating the previous really sales Obviously in distribution been the has those sales

quarter. Thanks, That’s Good guys. it. with luck helpful. Got this

Thank Joe. Thanks, you.

I for remarks. will today. to final That management was now the our for closing question return call

our your Thank and soon. to great Thank again look a to joining you Have in thank talking we and We for interest you, us business forward everyone all appreciate today. continued day. you. operator, you

This concludes conference today’s call.

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