Party City’s stock rockets after surprise profit, big revenue beat and upbeat outlook

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Shares of Party City Holdco Inc. rocketed 22% in premarket trading Monday, after the party goods and costumes retailer reported a surprise third-quarter profit, a big revenue beat and provided a upbeat fourth-quarter outlook. The company swung to net income of $239.7 million, or $2.24 a share, from a loss of $281.5 million, or $3.02 a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share came to 10 cents, compared with the FactSet per-share loss consensus of 32 cents. Revenue slipped 1.2% to $533.8 million, well above the FactSet consensus of $489.3 million. Same-store sales grew 8.3%, helped by strength in balloon, birthday and entertainment categories, to beat expectations of a 2.3% decline. October revenue fell 15.9% to $364.3 million, while same-store sales for the month declined 2.9%, as Halloween declines were partially offset by strength in core categories. “Our Halloween results were ahead of our expectations, driven by strong results within décor and better than expected sales of costumes, despite the challenges of a pandemic-impacted backdrop,” said Chief Executive Brad Weston. For the fourth quarter, the company expects adjusted EPS of 31 cents to 37 cents, above the FactSet consensus of 29 cents, and revenue of $675 million to $695 million, which is above expectations of $660 million. The stock was unchanged year to date through Friday, while the SPDR S&P Retail ETF has climbed 16.7% and the S&P 500 has gained 8.6%.
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