Party City Closing Roughly 45 Stores Because of Helium Shortage

Party City is the latest chain to shut down several of its stores, but the reason might surprise you. While stores like Sears, PayLess, and Toys "R" Us have closed up due to dwindling sales and competition from online, Party City is facing issues with a shortage of helium.

The chain announced that it will close 45 of its locations in 2019, 5 percent of its storefronts, with the worldwide helium shortage standing as one of the main culprits. CEO James Harrison noted that the chain typically closes 10 to 15 stores annually according to NBC Connecticut, but this year would be a bit of shock to the system.

"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," Harrison said in the announcement.

The helium shortage has been an ongoing issue for seven years according to CNN, which makes sense when you read the description for how the element is created and mined.

Drilling and fracking companies don't have to smash atoms in the Sun to create helium, but they do have to discover it under the rocks on Earth. As the network points out, drillers have claimed to find "troves" buried underground but haven't seen any of it come to fruition. Party City began to see the effects of this shortage in August 2018.

Despite shuttering these stores, there is a light at the end of the tunnel for Party City. The retailer has signed an agreement with a new helium supplier that should help them rebound in the fall.

"We believe this new source should substantially eliminate the shortfall we are experiencing," Harrison added. "Over time, will helium come back down in price? Nobody knows. We'll see."

Having to wait until fall is an issue for Party City because of spring, with May, in particular, topping their list due to graduation season. The other issue is the lack of certainty that their new helium supplier is a solid deal.

"Mother nature will ultimately determine whether or not those fields have the adequate amount of helium to reach the goals that we've set," Harrison noted. "We feel very comfortable that the expectations and the estimates made are solid."

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Both announcements seemed to negate each other at the stock market, with prices for Party City jumping after a new supplier was announced and then falling again on Friday.

The surprising part of the stores closing is that all of them were profitable. According to CNN, the plan is to send people to nearby stores and boosting "overall profitability." There are 900 stores currently in North America.