Tuesday, March 5, 2024

Target’s LGBT Agenda Leads to Sales Drop; Execs Pivot but Say, ‘We’ll Continue to Celebrate Pride’

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Retail giant Target is feeling the pain of consumer backlash over the marketing of its LGBT Pride and transgender merchandise, and it’s happening right where it hurts – in the company’s earnings. 

The retailer’s second-quarter sales slumped for the first time since 2017. 

The Minneapolis-headquartered retailer expects high-interest rates, which make credit cards more expensive to use, and higher prices on food to continue to put a strain on customers. On Wednesday, the chain cut its profit outlook for the year saying it expects sales will decline for the remainder of 2023.

Pride Plunge

Target’s comparable sales fell 5.4% to $24.77 billion in total revenue which was 4.9% lower than last year. 

Negative reaction to Target’s Pride collection had a material impact on sales, Target CEO Brian Cornell admitted on a call with reporters, according to Fox Business.  

“As we navigate an ever-changing operating and social environment, we are applying what we learned,” he added. 

Target’s stock plunged 27% over the past year, from $177 per share to $135 per share on market open, according to The Daily Signal. 

Cornell explained Americans are choosing to spend their money on experiences after weathering the COVID-19 pandemic at home. So instead of buying home goods, they are choosing to spend their dollars on services like leisure, travel, entertainment, and food away from home. He also blamed inflation for contributing to the second quarter’s sales plunge. 

More than 50% of Target’s annual sales come from discretionary items like toys, fashion, and electronic gadgets, according to the company’s latest financial report.

The Target CEO also mentioned the rise in retail crime as a reason for the drop-off in sales. 

“Safety incidents associated with {theft} are moving in the wrong direction,” Cornell said. “During the first five months of this year, our stores saw a 120% increase in theft incidents involving violence or threats of violence.”

But the company’s executives also acknowledged Target’s Pride merchandising played a role, resulting in dismal sales for the quarter, The Daily Signal reported. 

Christina Hennington, Target’s chief growth officer, admitted that “the strong reaction to this year’s Pride assortment” affected sales.

“The reaction is a signal for us to pause, adapt, and learn,” she said. 

Executives said once the company made some changes, those incidents subsided. Overall sales improved in July from June.

Meanwhile, seven U.S. state attorneys general sent a six-page letter to Target last month warning that some of the clothes sold as part of the company’s Pride month campaigns might violate their state’s child protection laws, according to CBS News. 

As CBN News reported, Target began advertising gay pride products in early May including items for female-identifying transgender persons. 

Following intense pushback, billions of dollars in losses, and thousands of shoppers boycotting the retailer, the chain removed some pride merchandise from store shelves and in some locations moved flamboyant LGBT displays from the front of stores to the back.

Conservative Backlash

As we reported, Target said the controversy around their pride collection began with hostile behavior. The company said customers knocked down Pride displays at some stores, angrily approached workers, and posted threatening videos on social media from inside the stores.

But Christian conservative and social media influencer, Blake Guichet, said she is not entirely convinced that is the sole reason the retailer made the changes in all of its stores.  

“I yet again feel myself torn,” she wrote. “I really hate that conservatives have been harassing employees. The pride stuff isn’t their fault. They’re just doing their jobs. At the same time, you know it is not the ONLY reason they pulled it. They’re pivoting because people made enough of a ruckus.”

She added, “There’s space in the middle to say we want to be better but also draw a line in the sand.”

While Target Plunges, TJ Maxx Soars

Since rolling out its Pride collection, Target’s market value has plunged from $74 billion down to $57.7 billion, according to Fox Business.  

However, one of the company’s retail rivals, TJX – which includes T.J. Maxx, Marshalls, and HomeGoods – has so far stayed out of the culture wars. It reported on Wednesday a 6% jump in comparable sales in the same quarter and raised its sales growth and profit targets for the year, according to The Wall Street Journal.  TJX said it had strong foot traffic to its stores and demand for apparel and home goods. Shares gained 4% on Wednesday.

‘We’ll Continue to Celebrate Pride’

Cornell said Target has learned from the backlash and that it will be more thoughtful in merchandise offerings for its heritage months, which celebrate various ethnic and marginalized groups. 

“We’ll continue to celebrate Pride and other heritage moments, which are just one part of our commitment to support a diverse teams and guests,” he told reporters. “However, as we navigate an ever-changing operating and social environment, we’re applying what we’ve learned to ensure we’re staying close to our guests and their expectations of Target.”

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