FRAMINGHAM (08/11/2000) - In a move aimed at giving itself a brick-and-mortar presence, online party goods retailer iParty Corp. this week announced a deal to buy 33 stores in the eastern U.S. from The Big Party Corp., a West Roxbury, Mass.-based retail chain that filed for bankruptcy protection earlier this year.
Under the agreement, New York-based iParty will acquire the leases on retail stores in Massachusetts, Connecticut, New Hampshire, Rhode Island, Florida and Maine, along with those stores' product inventories and fixed assets. The two companies didn't disclose the financial terms of the deal, which is expected to be completed later this month.
Officials at iParty - which launched its Web site last October and is still in start-up mode - didn't return calls seeking comment. In a statement issued last week, iParty CEO Sal Perisano said the acquisition of The Big Party stores "will allow iParty to operate as a complete multichannel retail provider."The brick-and-mortar stores are expected to be "significant traffic drivers" for both the iParty.com Web site and an off-line catalog business the company also operates, Perisano said. And the deal should give iParty a more solid revenue base that will improve its ability to acquire other direct-marketing companies within its retail niche, he added.
Seema Williams, a senior analyst at Forrester Research Inc. in Cambridge, Mass., noted that the deal is the reverse of the trend of brick-and-mortar companies purchasing dot-coms "as a cheap way to get in" to the Internet. But Williams said she doesn't see the iParty move as a sign of things to come.
"Because most dot-coms are in such bad financial shape," the move toward the clicks-and-bricks model will continue to mean Old Economy companies will be doing the buying, she said. "Nobody's going to be picking off a Kmart too soon," Williams said.
For this year's first quarter, iParty reported a loss of $5.5 million on sales of just $146,834. During the spring, the company said it had hired John Jolly, a former executive at Denver-based online toy retailer KBkids.com Inc., as chief operating officer.
The deal announced last week doesn't include 21 other stores run by The Big Party, which has annual sales of about $69 million. The agreement also has a twist: Perisano and his wife - who is also an executive at iParty - were two of The Big Party's co-founders eight years ago and worked at the company until 1998.