8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)      April 8, 2005

PARTY CITY CORPORATION

(Exact Name of Registrant as Specified in Chapter)

Delaware
(State or Other Jurisdiction of
Incorporation) 0-27826
(Commission File Number) 22-3033692
(IRS Employer
Identification No.)

400 Commons Way, Rockaway, NJ
(Address of Principal Executive Offices) 07866
(Zip Code)

Registrant’s telephone number, including area code:       (973) 983-0888

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EX-99.1: PRESS RELEASE

Item 2.02 Results of Operations and Financial Condition.

     On April 8, 2005, Party City Corporation (the “Company”) announced its sales results for the third fiscal quarter ended April 2, 2005.

     A copy of the press release issued by the Company announcing the foregoing is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

     (c) Exhibits.

     A list of exhibits is set forth in the Exhibit Index which immediately precedes such Exhibits and is incorporated herein by reference.

The information in this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, if such subsequent filing specifically references this Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 8, 2005	PARTY CITY CORPORATION
	By:	/s/ Gregg A. Melnick
		Name:	Gregg A. Melnick
		Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press Release, dated April 8, 2005, regarding sales results for the third fiscal quarter ended April 2, 2005.

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EX-99.1

NEWS RELEASE

Contacts:	Gregg Melnick
	Chief Financial Officer
	(973) 453-8780
	Edward Nebb
	Comm-Counsellors, LLC
	(203) 972-8350

FOR IMMEDIATE RELEASE

PARTY CITY CORPORATION ANNOUNCES
FISCAL 2005 THIRD QUARTER SALES RESULTS

ROCKAWAY, New Jersey, April 8, 2005 – Party City Corporation (Nasdaq: PCTY), America’s largest party goods chain, today announced its sales for the third fiscal quarter and nine months ended April 2, 2005, as compared to the prior fiscal year periods ended March 27, 2004.

Quarterly Results

     Net sales for Company-owned stores were $91.0 million for the third quarter of fiscal 2005, a decrease of 6.8% as compared with $97.7 million in the third quarter of fiscal 2004. Same-store net sales for Company-owned stores decreased 7.1% in the third quarter of fiscal 2005 as compared with the third quarter of fiscal 2004, while same-store net sales for franchise stores decreased 7.4% for the same period. Total chain-wide net sales (which include aggregate sales for Company-owned and franchise stores) were approximately $190.6 million for the third quarter of fiscal 2005, a decrease of 6.4% compared with $203.6 million in the third quarter of fiscal 2004.

     The fiscal 2005 third quarter net sales results for Company-owned stores reflected a decrease of 5.4% in same-store net sales of non-seasonal merchandise, and a decrease of 13.4% in same-store net sales of seasonal merchandise. Net sales of non-seasonal merchandise were lower primarily due to the transition to new product assortments. The decrease in net sales of seasonal merchandise was exacerbated by the timing of certain holiday selling periods (New Years fell in the second quarter of fiscal 2005, while Easter fell into the third quarter of fiscal 2005), as well as a decline in sales of Valentine’s Day merchandise versus last year.

Nine-Month Results

     Net sales for Company-owned stores were $356.4 million for the first nine months of fiscal 2005, a decrease of 5.1% as compared with $375.6 million for the same period in fiscal 2004. Same-store net sales for Company-owned stores decreased 5.9% for the first nine months of fiscal 2005 as compared with the first nine months of fiscal 2004, while same-store net sales for franchise stores decreased 4.0% for the same period. Total chain-wide net sales were approximately $749.6 million for the first nine months of fiscal 2005, a decrease of 3.7% compared with $778.4 million for the first nine months of fiscal 2004.

     The sales results for Company-owned stores in the first nine months of fiscal 2005 reflected a decrease of 6.7% in same-store net sales of non-seasonal merchandise, and a decrease of 4.7% in same-store net sales of seasonal merchandise.

Company Comment

     The Company noted that these results were due mostly to its in-store transition to new product assortments, most of which is now complete. In addition, some elements of its pricing and marketing policies have not been effective. To improve store traffic and net sales, the recently formed Executive Committee is implementing new marketing initiatives and a promotional stance in certain product categories. The Executive Committee also is evaluating certain of Party City’s other business strategies, as previously reported. At the same time, the Company continues to implement its logistics strategy.

     The Company believes that its margins and profitability in the fourth quarter of fiscal 2005 will be dependent on its overall sales volume, and will be reduced by the additional promotional activities, but should begin to benefit from its self-distribution initiatives. In light of its evaluation of other business strategies, the Company is withdrawing its previous financial outlook for the fourth quarter of fiscal 2005 and will not be providing an outlook for future periods.

Summary Information

	Quarter ended						Nine months ended
	April 2,			March 27,			April 2,			March 27,
($ in millions)	2005			2004			2005			2004
Total chain-wide net sales	$	190.6		$	203.6		$	749.6		$	778.4
Company-owned stores:
Net sales	$	91.0		$	97.7		$	356.4		$	375.6
Same-store net sales		(7.1	%)		(0.9	%)		(5.9	%)		2.5	%
Number of Company-owned stores, end of period		247			249			247			249
Franchise stores:
Same-store net sales		(7.4	%)		1.3	%		(4.0	%)		3.2	%
Number of franchise stores, end of period		259			254			259			254

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     Party City Corporation is America’s largest party goods chain. Party City currently operates 247 Company-owned stores and has 259 franchise stores in the United States and Puerto Rico. To learn more about Party City, visit the Company’s website at http://www.partycity.com.

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, the effect of price and product competition in the party goods industry in general and in our specific market areas, our ability to anticipate customer demand for products and to design and develop products that will appeal to our customers, our ability to open new stores successfully and/or to identify, execute and integrate acquisitions and to realize synergies, the availability and terms of capital to fund capital improvements, acquisitions and ongoing operations, our ability to manage successfully our franchise program, our ability to improve our fundamental business processes and reduce costs throughout our organization, our ability to attract and retain qualified personnel, changes in costs of goods and services and economic conditions in general. Please see our filings with the Securities and Exchange Commission for a more complete discussion and analysis of these and other risks and uncertainties. You are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this release, and we have no obligation or intention to update or revise such forward-looking statements.

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