In a move aimed at reaching younger millennial customers, Canadian Tire Corp. (TSX:CTC.A) is buying 65 Party City stores across Canada for $174.4 million cash.
The Toronto-based retailer, which operates multiple banners including Canadian Tire, SportChek, Mark's and Helly Hansen, said the acquisition of Party City gives it a high-margin retail category that is popular with consumers under age 35.
In a news release, Canadian Tire said that it plans to add stand-alone Party City stores as well as sell its products across 500 Canadian Tire retail stores and online at Canadiantire.ca. Canadian Tire estimates that it will be able to double Party City's annual sales in Canada to $280 million by 2021.
Party City Holdco Inc. said that it will use proceeds from the sale to pay down debt. It will also have a long-term wholesale supply agreement with Canadian Tire through Amscan Inc., beginning with an initial term of 10 years.
The New York-based Party City has struggled in an increasingly competitive retail environment, including strong competition from online retailers. It announced in its second-quarter results earlier this week that it would shutter additional stores in the U.S. Its stock has fallen 60% in the past 12 months.
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