Party City (PRTY) Misses Q3 EPS by 10c, Revenues Miss; Offers FY18 EPS/Revenue Guidance Below Consensus

Party City (NYSE: PRTY) reported Q3 EPS of $0.08, $0.10 worse than the analyst estimate of $0.18. Revenue for the quarter came in at $553.05 million versus the consensus estimate of $594.98 million.

James M. Harrison, Chief Executive Officer, stated, “Our third quarter and fiscal October results were softer than expected, impacted in part by temporary operational disruptions, increased inflationary pressures associated with distribution costs and helium shortages and slightly lower sales than expected. Despite the top line challenges, we continued to focus on leveraging our vertical model, driving costs out of the business, effectively deploying capital and strengthening our business model through investment and execution of our growth strategies. Our North American retail Halloween business was down 90bps1 versus fiscal October 2017 on a like for like basis as our strengthened North American web business and improved temporary store offering only partially offset Party City permanent store comparable sales declines. Based on our year-to date financial performance we are revising our previously provided fiscal 2018 outlook.”

Mr. Harrison continued, “Looking ahead, we continue to focus on our growth initiatives and we believe these key strategies will help drive improvement given the encouraging early results we’ve seen in many areas. The investments we are making across the business will further strengthen our market position as the leading wholesaler and retailer in the industry and allow us to capitalize on the exciting opportunities that will present themselves in 2019, including a Thursday Halloween and significant new licensed properties.”

Mr. Harrison added, “We are also announcing today that our Board of Directors has approved a new $100 million share repurchase program. We believe that our strong free cash flow characteristics afford us the opportunity to return value to shareholders via this repurchase program at attractive share price multiples, while we also de-leverage the balance sheet.”

GUIDANCE:

Party City sees FY2018 EPS of $1.60-$1.65, versus the consensus of $1.83. Party City sees FY2018 revenue of $2.43-2.46 billion, versus the consensus of $2.48 billion.

For earnings history and earnings-related data on Party City (PRTY) click here.

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