Deflated By Helium Shortage, Party City To Close 45 Stores

A global shortage in helium is taking the air out retailer Party City. The company said this week that it hasn't been able to meet customer demand for helium-filled balloons, causing sales to drift lower.

An underlying factor for the shortage is roughly three-quarters of the world's helium comes from only three sources: Ras Laffan Industrial City in Qatar, ExxonMobil in Wyoming and the National Helium Reserve in Texas, according to Gasworld.com, an industry publication. 

Because of the limited helium sources, any disruption in supply causes a significant impact, according to Party City. "Helium supply has always been a little up in the air (pun intended)," the retailer explained in a notice to customers. "Because of this global helium shortage, fulfillment of balloon orders may be affected at your store."

Party City closing 45 stores

Due to the helium shortage, the company's total sales fell 1.4 percent in the first quarter of this year, compared to the same year-ago period. Party City ended the quarter nearly $2 billion in debt. The party supplier is shutting 45 of 870 stores this year, stepping up the pace of closures that in recent years have numbered 10 to 15 stores, the New Jersey company also said on Thursday.

The company has found a new source for helium that should give it a larger supply of the gas, starting this summer and continuing for the next two and a half years, James Harrison, Party City's CEO, said in a statement.

"While the average cost of helium is increasing over prior years, we have successfully put in place selective price increases, which will serve to mitigate these higher helium costs," he said Thursday in an earnings call with Wall Street analysts.

In the meantime, Party City suggests consumers throwing parties instead create "a balloon arch or balloon wall with latex and foil balloons," which don't require helium, or resort to "just some tape and creativity." In addition to making your voice sound like a chipmunk and filling up party balloons, helium is used to make many electronics, medical devices and rockets.