Party City is preparing to file for bankruptcy within weeks as its cash dwindled and inflation dampened sales, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Shares of the company fell about 58% to 15 cents in afternoon trade.
The party supplies retailer, which has a market capitalization of about $41 million, has been struggling with weaker sales as persistently high inflation has impacted the demand for its products.
The company is in discussions with its bondholders to convert debt into equity to trim the balance sheet, the report said.
The report further added that Party City has engaged AlixPartners LLP as a restructuring adviser.
Party City and AlixPartners did not immediately respond to Reuters requests for comment.
Separately, Bed Bath & Beyond was also preparing to seek bankruptcy protection in the coming weeks, people familiar with the matter told Reuters on Thursday, following poor sales and an inability to compete with large online and big-box retailers.