“I see the risks with Amazon to be very small,” Party City Chief Financial Officer Daniel Sullivan told TheStreet in a phone interview. “This is largely about extending the reach of the Party City brand.”
Party City said this week it will begin a pilot program on Amazon ahead of this year’s key Halloween selling season. The focus at first: Party City’s bread and butter, Halloween costumes. Halloween season represents about 20% of Party City’s annual sales.
Party City’s website already accounts for roughly 8% to 9% of the company’s revenue, and Amazon will just be an addition to those sales says Sullivan. “In no way will Amazon replace or even represent a threat to that,” Sullivan said. This is a “very complimentary opportunity.”
To be sure, Party City could use some of Amazon’s magic.
The company’s stock has not had an ideal ride since going public in 2015. Since the initial public offering, shares are down roughly 26%. But after announcing the Amazon partnership and showing a good second quarter earnings report, the stock popped Thursday to an intra-day high of $16.47.
Revenue came in at $561 million, beating estimates of $560 million. Earnings came in at $0.40 a share, compared to expectations of $0.39. Sales and profit guidance for the year remained the same.
JPMorgan has maintained a bullish rating on the stock despite its troubles. Analyst Tami Zakaria says she likes Party City shares for the company’s solid e-commerce business and unique positioning in a crowded retail space.