By Mark Seavy   

Coming off a sales decline in 2024, the Halloween industry is banking on a comeback this year amid a broader mix of licensed merchandise and a more favorable movie slate.  

And while costumes are unlikely to be displaced as the top-seller, inflatables—both costumes and lawn decorations—have gained favor with consumers.  

Jazwares, for example, promoted an inflatable Captain America costume at the recent Halloween & Party Expo in Las Vegas in advance of a new film being released on February 14th. Disguise Costumes, which fielded Minecraft inflatables last fall, will expand its efforts this year with items inspired by videogame developer Innersloth’s Among Us. And Trick or Treat Studios showed a six-foot Michael Myers animatronic figure replete with motion sensors and the ability to play “Laurie’s Theme” from the Halloween film soundtrack.  

Beyond inflatables and animatronic figures, Trick or Treat is also focused on developing action figures based on mask designs after it acquired the creators of the first latex masks, Don Post Studios, in 2023. Among these are more niche properties, including the “Death Cyborg” mask that was created by Don Post Studios in 1977 and  the “Nuclear Death” mask that was released two years later.   

“The characters always existed in masks, but we wanted to create a character with action figures because, that way, you can tell a story,” said Justin Mabry, Director and Lead Sculptor at Trick or Treat. “The story has always stopped at the mask, but you can expand if you turn the characters into a brand.”  

That expansion comes as costumes are increasingly a year-round business rather than limited to Halloween. In fact, there were costumes on display at the Halloween & Party Expo that were designed like sandwich boards to ease the dressing up process no matter when, in the calendar year, it takes place. Christmas, in particular, appears to be a focus for companies working to extend beyond Halloween.   

Spencer Gifts’ Spirit Division, which operates about 1,400 seasonal Halloween pop-up stores, opened Spirit Christmas locations late last year while TransWorld, which operates regional Halloween & Attractions trade shows, has added expos for Christmas. Additionally, several exhibitors at the Halloween & Party Expo displayed holiday-themed inflatables.  

These changes in the Halloween business come as one of its largest retailers liquidates. Party City initially filed for bankruptcy in early 2023, emerged, and then sought bankruptcy a second time in late 2024. Party City operated more than 800 locations but also had 200 seasonal pop-ups under the Halloween City banner.   

Suppliers we polled at the Halloween & Party Expo said they expected smaller specialty stores will fill some of the void in the market left by Party City’s departure, along with Spirit Halloween, Target, and Walmart. Other opportunities could include Home Depot and Lowe’s, both of which have carried lawn inflatables in recent years. Also expected to benefit is online business, including Amazon’s Marketplace as well as NECA’s Rubies II, which has expanded its direct-to-consumer (DTC) business since acquiring BuySeasons in 2019.   

Some of Party City’s downfall, in addition to its debt, was tied to an increased reliance on DTRs, which carried royalties and minimum guarantees. About 70% of costume sales are through brick-and-mortar retailers, with online accounting for the remainder, industry executives said. And approximately 60% of sales of children’s costumes featured licensed IPs with the remainder being generic designs, according to executives. With adults, the percentage is reversed.  

“Online is the new specialty retailer in some cases because of the wide variety of costumes that are available,” an executive at a costume supplier said. “And sometimes with the DTRs in costumes it is hard to balance paying minimum guarantees if you have shortfalls. It can cripple you and may not always be as productive as it seems.”  

Despite these challenges, the Halloween industry appears poised for a turnaround this year, especially since October 31st falls on a Friday, which typically means a boost in business. 

“There is lot of new content coming, so I think this year will be fine and 2026 will be great,” said Tara Cortner, President and General Manager at Disguise. “The business is going to turn around, but it is a slow-moving ship coming off years in which retailers sold out [and] then overbought and had to work off inventory.”