Party City Pop-Up Toy Stores Could Help Toymakers Stung By Toys 'R' Us Closures

Party City Holdco Inc PRTY announced Monday it will open about 50 pop-up toy stores for the holidays to seize the market Toys 'R' Us abandoned.

The Street responded to late reports with a 2-percent stock pop, but one analyst said Party City’s foray into toys wasn’t unexpected.

Why It Makes Sense

“I think it’s been well-understood by investors that other retailers would step up to the plate to take the opportunity to gain some of TRU’s 15 percent share of the toy retail market in the U.S., so the news about Party City’s action does not come as a big surprise,” D.A. Davidson analyst Linda Bolton Weiser told Benzinga in an email.

In fact, it makes a lot of sense.

“Part of TRU’s business was in functioning as a venue for birthday parties for kids, so that’s a role Party City could take over, as it sells the full range of party-related items,” Bolton Weiser said.

Ease The Pain

The new distribution channel is particularly meaningful for toymakers. The Toys 'R' Us bankruptcy had shaken Hasbro, Inc. HAS, Mattel, Inc. MAT, Funko Inc FNKO and JAKKS Pacific, Inc. JAKK.

Party City could ease the pain they felt after the sudden collapse of their well-known seller.

“It will help the toy companies offset some of the sales ‘hole’ in 2018 created by the TRU liquidation,” Bolton Wieser said.

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