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Factory Card Outlet was facing mounting inventory in both their stores and their Distribution Center, plus high markdowns on old, dated inventory (usually seasonal cards) in both locations.

On top of that, competition from Party City and Walmart on their core business and poor execution and store upkeep especially in urban areas was hurting sales. Lastly, they were reluctant to increase prices on their (at that time) $.39 cards. All of this plus mounting debt and the inability to get favorable loan terms led to their reorganization.

When they declared bankruptcy, it allowed them to get a lot of old merchandise and bad leases off the books. For instance, at one time there were over two dozen stores in the Baltimore/ DC area. Now there are only a handful, and none in some of seedier locations they used to do business in. With new ownership, margins are undoubtedly better as well.

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