Party City Sells Stores in Canada for $175M
Canadian Tire Corp. (CTC) has entered into an agreement to purchase Party City's Canadian business for $174.4 million, including $40 million in inventory and 65 Canadian Party City retail stores in seven provinces.
The move comes as CTC seeks to gain ground with millennials and Canadian families. CTC finds Party City customers skew younger and spend 60% more at Canadian Tire than the retailer’s average Triangle Rewards member each year.
“We've set aggressive targets to continue to grow in Canada by building or acquiring to capture opportunities in adjacent categories, or with high-value customer segments like younger Canadians and families,” said EVP, Retail, Allan MacDonald. “With this acquisition we're doing exactly that. We've been looking at the party supply category for a while now and we've been putting our data to work. We've been examining every aspect of the category and consumer engagement.”
Party City's product assortments will be made available nationally across 500 Canadian Tire Retail (CTR) stores and online at Canadiantire.ca. CTC will also expand Party City's standalone store network in Canada, and build store-in-store, pop-ups and "in-line" aisles across CTR. The retailer will also add the party supply brand to its Triangle Rewards program, further expanding and strengthening the program.
“It's a natural extension for us and has a lot of room to grow,” said MacDonald. “The category is almost $2 billion in Canada today and it's actually quite fragmented. By combining Party City and Canadian Tire, we'll consolidate two significant players and immediately become the number one party supply retailer in Canada.”
CTC will first roll out a subset of the 45,000-SKU Party City assortment to Canadian Tire Stores across the country. The formats will vary from shop-in-shops to dedicated Party City aisles, depending on the store.
In connection with the agreement, Party City and Canadian Tire have also agreed to a long-term wholesale supply agreement, with an initial term of 10 years. Under the terms of the supply agreement, Party City’s wholesale business, Amscan Inc., will provide Canadian Tire with consumer products. As one of the top Canadian retail companies, Canadian Tire will be a marquee customer, particularly as it executes its growth strategies. Party City anticipates that the supply agreement will effectively double Amscan’s average annual wholesale shipments into the Canadian marketplace during the term of the agreement.
“We're going to bring Party City's innovation and unique specialty assortment to Canadians across the country and drive more trips and bigger baskets by becoming Canada's celebration store,” said MacDonald.