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Why Party City Stock Had a Party Today

What happened

Shares of Party City (NYSE: PRTY) had a party today, up 12% as of 1:45 p.m. EDT, after the company announced that it plans to hire approximately 20,000 temporary workers for the Halloween season. Halloween is the most important time of year for Party City.

So what

Party City will also open around 25 Halloween City pop-up locations ahead of the holiday. The retailer said it expects to keep on 10% of those workers after the Halloween season is over. Halloween will certainly be very different this year due to the COVID-19 pandemic, as distributing candy to groups of trick-or-treaters sounds like a recipe for virus transmission.

Image source: Getty Images.

This week, the CDC updated its guidance for Halloween and is recommending against trick-or-treating, suggesting lower-risk alternatives to celebrate. "Many traditional Halloween activities can be high-risk for spreading viruses," the public health agency wrote. "There are several safer, alternative ways to participate in Halloween."

Now what

Party City said that it recently conducted a survey that showed 96% of parents were still planning to celebrate Halloween, with 70% of respondents planning alternatives to trick-or-treating. The company has launched a new "You Boo You" campaign to sell other types of party supplies like home decorations, a category that is expected to see higher demand this year.

This time of year is critical for Party City, which notes in regulatory filings that revenue and profits are typically highly concentrated in the fourth quarter "principally due to its Halloween season sales in October." Management said on the last earnings call that sales are expected to decline this year due to the coronavirus, but the company is focused on "controlling what we can and staying nimble and ready for a range of scenarios."

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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