Canadian Tire to buy Party City’s Canadian assets

The retailer adds the party store's 65 locations and product portfolio to further diversify its seasonal selection.

Canadian-Tire-main

Canadian Tire plans to bolster its product portfolio and seasonal offerings, as well as build connections with millennial families, with an acquisition of Party City’s Canadian business.

In a deal worth $174 million, Canadian Tire will snap up Party City’s Canadian subsidiary, which includes 65 locations in seven provinces, with goals of further expanding its store network. The party supply retailer’s 45,000-SKU product line will also be made available nationally across Canadian Tire’s stores and online (through an associated wholesale deal with the U.S.-based company’s wholesale business Amscan), with plans to build Party City store-in-stores, pop-ups and “in-line” aisles.

The acquisition is expected to close in Q3, subject to standard closing and regulatory conditions.

According to a company statement, the acquisition gives Canadian Tire access to Party City’s catalogue, including licensed products from companies like Disney (Canadian Tire is making the products available in its stores through an agreement with Amscan, Party City’s wholesale business).  The company also pointed to the fact that Party City is “an expert in seasonal and micro-seasonal celebrations” in its release.

Allan MacDonald, EVP of retail at Canadian Tire Corporation, said in an announcement today that the company is well-positioned to more than double Party City Canada’s business by 2021, using its existing retail capabilities to drive more trips, improving seasonal offers and adding to the appeal with Triangle Rewards, the company’s multi-banner loyalty program which also includes CTC-owned stores Sport Chek, Mark’s and Atmosphere. The brand is also hoping to strengthen its relationship with millennials and young families, with the average household hosting four parties or celebrations per year, the company claims.

In a follow-up email to strategy, MacDonald said Canadian Tire is “acquiring the leading brand in a highly fragmented and underserved, high margin category that is new for Canadian Tire, making it a great natural extension for us with a lot of room to grow.”

MacDonald says it’s early to say how exactly the company’s new banner will be marketed, but offered Party City being included in the Canadian Tire’s flyer as one example as how an integrated strategy between the two banners might look.

Canadian Tire also posted its Q2 results today, boasting a revenue increase of 7.8%, and a consolidated comparable sales increase of 2.2%. As a breakdown, Canadian Tire was up 1.9% in Q2 (3.8% year-to-date), Mark’s climbed 2.6%, (3.9% year-to-date) and SportChek moved up by 3.7%, (3.6% year-to-date). Party City also posted its Q2 results, with U.S. retail sales increasing 2.9%, while total revenues increased 0.5%. Party City has also sold a number of its assets stateside as it attempts to pay down its approximately $2 billion US dollars in debt.

Party City stores and products add a high-margin product line to Canadian Tire, which has been working to expand and diversify its product portfolio. While much of that strategy has been through expanding private label brands in categories like furniture, or getting exclusive deals for products in categories such as mattresses and premium barbecues, it has also done that through acquisition: last year, the company purchased the Helly Hansen outwear brand.