Target suffered a significant drop in second quarter sales after consumers rebelled against the retailer for its scandalous LGBT-themed merchandise.
“As we navigate an ever-changing operating and social environment, we are applying what we learned,” Brian Cornell, Target’s longtime chief executive, told reporters on a call. “Multiple economic crosscurrents are putting pressure on consumers.”
Sales dipped in June after the Target rolled out its Pride collection, which featured pro-gender transition clothing such as a “tuck-friendly” swimsuit to obscure male genitalia and children’s items from a brand that sells Satanist-inspired products.
Target was fully aware of brand Abprallen’s Satanist-inspired merchandise, some of which glorifies violence against alleged “transphobes,” when it approved the collaboration.
Target’s poor sales performance in July defied even company projections, clocking in at a 5.4 percent decline in the three months ending July 29.
In May, after news of Target’s 2023 Pride rollout reached consumers, the company lost billions in market value amid conservatives calling to boycott the retail giant.
Target lost $9 billion in market value in about a week, with the stock falling from just over $160.00 to about $141.00 a share, amounting to a 12 percent drop. Target stock has decreased 16 percent so far this year.
In early June, Target’s stock was downgraded by JPMorgan, the largest bank in the United States. It was demoted from overweight, which means the broker has a positive outlook on the company’s prospects due to its current share price and that the stock is considered a strong buy, to neutral, which means the broker believes the investor should hold the stock as its price may not change.
“We continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods (51% of [Target’s] sales) is ongoing,” JPMorgan analyst Christopher Horvers wrote at the time, according to Market Watch. The outlet said in June that Target stock’s downward trend since May had represented its longest losing streak in 23 years, according to its analysis of Dow Jones data.
The company expects the sales drag to continue into the third quarter.
Target will continue to offer Pride-month merchandise but will change the items on offer, Target Chief Growth Officer Christina Hennington said on the call.
“You will see us celebrate Pride, you will see us celebrate these heritage moments, but with these modifications,” she said.
In 2022, Target reported an annual $109 billion in total revenue, a 2.9 percent increase from the previous year.