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Bankrupt Party City might cut its successful balloon business loose.
The party supply chain is weighing a spinoff of Anagram, a leading manufacturer of foil balloons, according to a Bloomberg report citing anonymous sources—and some partners aren’t surprised.
“It’s a fantastic business,” Elissa Mast, owner of E&R Sales, a wholesale balloon distributor in Virginia, said. “So it’s not gonna go away.”
Indeed, while Party City struggled prior to declaring Chapter 11 bankruptcy earlier this year, Anagram was generating profits, which the cash-strapped parent company borrowed. A global shortage of helium and a shift in consumption away from non-essential items were partially to blame.
Party’s not over: Anagram’s strong position relative to Party City was well-known among wholesalers. David Hays, owner of Midwest Balloon & Party in Nebraska, said he assumed that the bankruptcy would be followed by a spinoff.
As reported in Bloomberg, Anagram’s debt was held apart from Party City, but the two businesses are still deeply entangled. The chain bought nearly all its balloons from Anagram and brought in about 40% of its revenue.
Meanwhile, Party City’s restructuring has led to dozens of store closures. The firm is also facing a class action lawsuit for allegedly misleading investors about its liquidity troubles prior to bankruptcy.
In the past, Party City said its vertical integration made it more resilient than its competitors. While the party supplies market is expected to grow at an annualized average rate of 8.5% between 2023 and 2031, according to Straits Research, major players such as Party City and Hallmark have significantly reduced their brick-and-mortar footprint.
Now, Anagram could get a chance to float on its own.
“I don’t have any concerns” about Anagram’s long-term success, Mast said. “They’re a leader in the industry, and if they break out from Party City, it will be fine.”
Party City did not respond to Retail Brew’s request for comment by publication.