With core customers buffeted by multiple economic pressures, Target reported a 5.4% drop in comparable quarterly sales -- its first decline in six years. The company also said some of the sales decline stemmed from angry conservative customers, who boycotted the company because of its Pride merchandise collection.
Second-quarter revenue decreased 4.9% to $24.8 billion, with digital sales sinking 10.5%. Net earnings, however, soared to $835 million, a 357% increase from last year’s $183 million, thanks to a much-leaner inventory position and the retailer’s agility in rapidly responding to shifting trends.
On a conference call webcast for investors, executives at the Minneapolis-based mass retailer painted a picture of shoppers who are making tough choices. Increasingly, they skip discretionary purchases, like clothing and home items, for purchases in high-frequency categories, including food, beverage and packaged goods.
“In addition, consumers are choosing to increase spending on services like leisure travel, entertainment, and food away from home, putting near-term pressure on discretionary products,” said Brian Cornell, Target’s chairman and chief executive officer, on the call.
“The rollback of government efforts to support consumers during the pandemic, including stimulus payments, enhanced child care tax credits, and the suspension of student loan payments, presents an ongoing headwind that consumers continue to manage.”
The backlash against Target’s Pride merchandise also bit into sales. The company has offered Pride merchandise for 10 years, and it has long promoted itself as an LGBTQ-friendly employer.
“After the launch of the assortment this year, members of our team began experiencing threats and aggressive actions that affected their sense of safety and well-being while at work,” Cornell said. “I want to make it clear, we denounce violence and hate of all kinds. And the safety of our team and our guests is our top priority. So, to protect the team in the face of these threatening circumstances, we quickly made changes.”
But the company is not backing away from Pride -- at least, not exactly. “Pride is one of many heritage moments that are important to our guests and our team, and we'll continue to support these moments in the future,” Cornell said.
Still, things will change. Customers say Target is their “happy place, somewhere they can go to escape and recharge,” Cornell added. Future celebrations will “navigate an ever-changing operating and social environment.”
Over on X, conservatives who had urged the boycott were taking a victory lap with plenty of “Go woke, go broke” posts.
“It’s impossible to say with any specificity how and whether Target’s Pride challenges led to recent market cycles,” says Bob Witeck, founder of Witeck Communications, which specializes in the LGBTQ market, in an email to Marketing Daily. “It’s painfully clear that the brand was aggressively singled out with in-store assaults and threats of violence against associates as well as online harassment. None or very little of this might have erupted without instigation and harmful intent.”
Cornell’s remarks are vague enough to draw a line under Target’s damned-if-you-do predicament. It’s hard to imagine any interpretation of Pride that will make conservatives think of Target as a happy place. And it’s equally difficult to envision how LGBTQ employees and shoppers will feel like smiling at the company’s decision to tone Pride down.
Witeck thinks if any brand can thread that needle, it might be Target. “Target’s legacy, policies and practices are still beyond reproach as a fair-minded and LGBTQ-friendly retailer and employer,” he says. He anticipates the company will find a “path forward to remain a successful retailer that welcomes all.”
