$PRTY Party City Holdco Inc.

$PRTY Party City Holdco Inc.
https://www.sec.gov/Archives/edgar/data/0001592058/000095017022008228/prty-ex99_1.htm
Just read the press release (SEC EDGAR SEARCH, PRTY). I used to love this stock, but now the company needs to belt tighten again. I hope it is not too late.

On the negative side:
Rev growth < inflation, COGS up, SGA up, Debt up, Interest expense up, Capital Expense on a new corporate HQ building, Q1/22 Negative Net Income & negative CFFO.

On the good side, they have until 2025 to pay back or restructure their $1.5B in corporate debt (except for $22M in 2023). BK is likely off the table for now.

CEO Commentary (verbatem):
Brad Weston, Chief Executive Officer of Party City, stated, “We are pleased to deliver another quarter of topline growth with a sales increase of 1.4% and brand comp sales growth of 2.1%, despite a difficult consumer backdrop with the Omicron variant earlier in the quarter. As expected, our bottom line results were impacted by elevated costs, including greater than anticipated freight and commodity cost pressures that ramped later in the quarter. Amidst this choppy macro environment, our teams are doing a good job executing against our strategic priorities of ongoing enhancements to customer engagement as well as digital, IT and supply chain, in support of our purpose to inspire joy and make it easy to create unforgettable memories.”
 
Mr. Weston added, “As we look to the remainder of 2022, we expect supply chain and inflationary headwinds to continue, which is reflected in our updated outlook. While we navigate this near-term turbulence in costs, we are being very thoughtful with our mitigating actions on the pricing front, along with delivering an improved customer experience. To that end, we remain focused on executing against our strategic priorities, which we are confident will even better position Party City to drive long term growth and shareholder value.”


We think this quarter's results were accented by the reference to their new HQ building. This is the total opposite of what a specialty retailer needs to be worried about during periods of high supply chain costs, supply disruptions, inflation, pandemic, war in Europe, and the risk of recession. They should save every penny (outside the stores) that they can.

When debt is $1.5B and equity market cap is ~$0.2B, the party at HQ should be over for now.

$PRTY 1.34

$0.15M equity cap
$1.56B debt
Priced for BK?

"Based on a total of 112,451,912 shares outstanding as of February 17, 2022 as set forth in the Issuer’s 10-K filed with the [SEC] on [02/28/22]."

and latest earnings releasehttps://t.co/cpaKjOXA54

— Chicago Quantum (@chicago_quantum) May 9, 2022