Modern Slavery Statement under the California Transparency in Supply Chains Act and UK Modern Slavery Act
This Statement describes the activities of Party City Holdco Inc. and its consolidated subsidiaries (collectively, the “Company,” “we” or “our”) to address modern slavery. We have provided this Statement on a consolidated basis because we employ the same policies and compliance procedures relating to modern slavery across our entire business. However, most of our consolidated subsidiaries are not subject to the California Transparency in Supply Chains Act or the UK Modern Slavery Act.
We are the leading party goods retailer by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. We have approximately 830 party superstore locations (including franchised stores) in the U.S. and Puerto Rico. We also operate multiple e-commerce sites, principally under the domain name PartyCity.com, and during the Halloween selling season we also operate a network of approximately 250-300 temporary stores under the Halloween City banner.
Addressing Risks of Modern Slavery in our Business and Supply Chain
We are committed to principles of ethical business practice and recognition of the dignity of others, including responsible labor practices.
We employ rigorous hiring and employment procedures in our own business. All of the recruitment agencies and labor brokers that we use have been vetted. In addition, they are not permitted to charge recruitment or other fees to the employees that we hire through them.
In addition, we have established the other policies and procedures discussed herein to mitigate the risks of modern slavery and human trafficking in our supply chains for the products we sell as a wholesaler and in our retail stores. Our approach is to focus on our direct suppliers, since this is the level of the supply chain where we believe that we have the most influence and can therefore be the most effective.
Employee Code of Conduct
Our Corporate Code of Business Conduct and Ethics (the “Code of Conduct”) applies to our employees, officers and directors. In addition to indicating that employees, officers and directors must comply with all applicable government laws, rules and regulations where the Company operates, which would include those relating to labor practices, the Code of Conduct indicates that we are committed to a work environment in which all individuals are treated with respect and that we prohibit workplace discrimination and harassment. New employees are provided with a copy of the Code of Conduct upon hire, which each employee must sign and acknowledge. A copy of the Code of Conduct is also available on the Company Intranet and on the Investor Relations page of the Company’s website at www.partycity.com. Failure to comply with the Code of Conduct may result in disciplinary action, up to and including termination of employment with the Company. For a copy of the Code of Conduct, please see here.
Human Rights Policy Statement
We have also adopted a Human Rights Policy Statement (the “Human Rights Policy”), which applies to our employees and our business partners, including our suppliers. The Human Rights Policy is a statement of our principles and commitments to labor rights and working conditions, ethical business practices and responsible sourcing. These principles and commitments include treating employees with respect and dignity, not tolerating human trafficking, slavery or forced labor and ensuring a safe, healthy and fair workplace. The Human Rights Policy complements our other policies and affirms our respect for human rights.
Our Vendor Standards Manual (the “VSM”), which is applicable to all of the Company’s suppliers, contains a Supplier Code of Conduct (the “Supplier Code”). It also incorporates the Human Rights Policy.
The Supplier Code expressly prohibits the use of any form of child labor or forced or involuntary labor, including prison, bonded, indentured or otherwise, in any stage of the manufacture of our products. In addition, the Supplier Code provides that our suppliers must comply with all laws and regulations regulating local wages, work hours and benefits, including those relating to minimum wages, overtime, maximum hours, piece rates and other elements of compensation. The Supplier Code also indicates that employees are to be provided with a safe and healthy workplace in compliance with all applicable local laws and regulations. The same standards of health and safety are required to be applied in any employee housing that is provided.
We communicate the Supplier Code initially as part of our supplier onboarding process and thereafter periodically from time to time, including by electronic correspondence when there are updates. Our suppliers are required to certify compliance annually with the Supplier Code. In addition, the Supplier Code prohibits our suppliers from using subcontractors without our approval, and our approval is conditioned on such subcontractors signing a written agreement indicating compliance with the Supplier Code. We do training with our suppliers on the Supplier Code in addition to the internal training that is done by our suppliers. Such training is verified by independent, third party auditing firms.
In the event of a violation of the Supplier Code, we reserve the right to either terminate our relationship with the supplier or to work with the supplier to implement corrective action to remedy the non-conformance.
For a copy of the VSM, including the Supplier Code, please see here.
Supplier Compliance Assessments
Supplier On-boarding. As part of onboarding a new product manufacturer, [we conduct a risk profile assessment, and based on such assessment we may conduct a survey of the manufacturer’s relevant facilities]. Among other things, the inspection and questionnaire is designed to help us determine the manufacturer’s compliance with our VSM and Supplier Code. In connection with our assessment, we take into account the manufacturer’s geographic location(s) and the nature of its manufacturing activities for us and whether these present a greater risk of modern slavery.
Factory Audits. Factory audits of selected manufacturers are conducted on our behalf by independent third-party auditors, including Intertek, SGS, Bureau Veritas and Elevate. The auditors conduct both announced and unannounced audits.
Third-party manufacturers are selected for audits each calendar-year based on an internal risk assessment, the results of prior audits and any requirements of our licensors or third-party retailer customers. As part of the audit, the independent third-party auditor evaluates, among other things, a manufacturer’s compliance with wage, hour and labor laws and health, safety and environmental regulations, as well as the working and other conditions within the facility. During the audit, the independent third-party auditor will visit and inspect the site, conduct interviews with supervisors, managers and workers of the facility, and review relevant books and records of the manufacturer.
In most instances, where a deficiency is identified, corrective action is required on a specified timeline, followed by a re-audit of the manufacturer to demonstrate that such deficiency has been remedied. In the case of a serious violation of the Supplier Code, termination of the Company’s relationship with the manufacturer may occur, particularly where corrective action is either not possible or determined to be an insufficient remedy.
Internal Accountability and Training
All employees are required to undergo compliance and ethics training, including with respect to the Code of Conduct and Human Rights Policy, upon hire and annually thereafter. Furthermore, all employees and management who have direct responsibility for supply chain management are expected to identify and address supply chain risks, including the risks of modern slavery in supply chains.
Employees are encouraged to raise any concerns and have multiple channels to do so, including through an ethics hotline staffed by independent third-party operators, which is available at (888)270-5937 or www.partycity.ethicspoint.com. The Company’s ethics hotline is also made available for external stakeholders at (888)270-5937 or www.partycity.ethicspoint.com.