A global helium shortage is proving to be the ultimate party pooper.
Party City, the New Jersey-based party supply company, announced Thursday it will shutter around 45 stores in locations throughout the nation, citing a short supply of helium hitting its profit margin.
“This year, after careful consideration and evaluation of our store fleet, we’ve made the decision to close more stores than usual in order to help optimize our market-level performance, focus on the most profitable locations, and improve the overall health of our store portfolio,” Party City Chief Executive Officer James Harrison said in a release.
Party City had been closing 10 to 15 stores, on average, in recent years, but with the future of helium uncertain, those numbers have climbed to nearly 5 percent of all of the chain’s locations.
It's not just kids' birthday parties at risk from the helium shortage — the lighter-than-air, nonrenewable natural resource has many more crucial applications, from smartphones to MRIs to space shuttles and the Large Hadron Collider particle accelerator.
Although helium is the second-most abundant element in the universe, most of it in the Earth's atmosphere bleeds off into space, since it is lighter than air. Helium used for industrial purposes is a byproduct of natural gas production. Qatar, which produces around 75 percent of the world's helium supply, was forced to halt all exports of the gas in 2017 after Saudi Arabia imposed a blockade, tying a knot in the supply chain.
The U.S. itself used to be the world's largest helium producer, but ran into debt storing the gas and began selling off its reserves in the late 1990s at artificially low prices.
"The problem is, helium is being used up faster than it can be produced these days," wrote Anders Bylund, an analyst at Motley Fool in a recent note.
Party City worked to explain the global helium shortage to customers on its website, noting, “Helium supply has always been a little up in the air (pun intended). With only three sources producing 75 percent of the world's helium, any disruption causes a significant impact. Currently, helium supply is very low while demand is growing.”
A full list of the stores to be shuttered has not yet been released, but closings have been reported in Connecticut, Illinois, California, and Washington.
Party City has indicated it is working to identify new sources of helium.
“We have signed a letter of agreement for a new source of helium which, subject to final execution of a definitive contract, would provide for additional quantities of helium beginning this summer and continuing for the next 2.5 years,” Harrison said.
“We believe this new source should substantially eliminate the shortfall we are experiencing at current allocation rates and improve our ability to return to a normal level of latex and metallic balloon sales.”