Target Sales Decline in Second Quarter Amid Backlash Over Pride Month Collection
Target, the popular retail chain, announced on Wednesday that its sales in the second quarter had declined, citing boycotts and right-wing backlash over its Pride Month collection as contributing factors. The company also lowered its full-year guidance in light of these challenges.
During the second quarter, ending July 29, Target reported a 5.4 percent decrease in comparable sales compared to the same period last year. Both the number of transactions and the average transaction amount also experienced a decline. Additionally, e-commerce sales fell by 10.5 percent.
Despite the overall decline in sales, Target surprised analysts by reporting higher profit margins than anticipated. This was attributed to the retailer offering fewer discounts and reducing its inventory costs.
In response to the news, Target’s stock closed up 3 percent on Wednesday, indicating investor confidence in the company’s ability to navigate through these challenges.
The backlash against Target began in May, when the company faced criticism and calls for boycotts due to its displays and products related to Pride Month. Detractors took to social media, posting videos of themselves entering Target stores and expressing their disapproval of Pride-related children’s clothing and greeting cards. Some even threw merchandise on the ground.
In response to the controversy, Target made changes in some locations, moving Pride displays to the back of stores and evaluating merchandise choices. The company cited employee safety as the primary reason for these adjustments.
Among the items that angered customers were one-piece swimsuits designed for individuals who wished to conceal their genitalia. Target clarified that these swimsuits were only available in adult sizes, contrary to claims that they were being marketed to children. The collection also included children’s books discussing transgender issues and gender fluidity.
During a call with analysts, Target’s CEO, Brian Cornell, addressed the backlash, emphasizing the company’s commitment to meeting customer expectations and fostering inclusivity. He stated, “At the heart of our purpose is our commitment to bring joy to all the families we serve,” highlighting Target’s dedication to being a welcoming environment for all guests.
Executives from Target also noted a “sequential improvement” in foot traffic during July, pointing to promotions launched during Amazon Prime Day as a contributing factor.
While big-box retailers like Target initially benefited from increased traffic during the pandemic, spending growth has since cooled off. Target expects comparable sales to continue declining by a mid-single digit percentage for the rest of the year.
This week, several major retailers, including Walmart and TJX, are reporting their latest earnings. TJX, the parent company of T.J. Maxx, Marshalls, and HomeGoods, reported a 6 percent jump in comparable sales for the second quarter and raised its forecasts for the year. Analysts predict a 4 percent increase in Walmart’s comparable sales for the same period.
Another company facing similar challenges in the current political and cultural environment is Anheuser-Busch InBev, the beer-making giant. They recently reported a significant fall in second-quarter sales, attributing it to a conservative-led boycott of Bud Light following the brand’s collaboration with a transgender influencer. Revenue in the United States during this period dropped over 10 percent, resulting in Modelo Especial surpassing Bud Light as the nation’s top-selling beer.
Despite the setbacks, Target remains committed to its mission of inclusivity and plans to navigate the ever-changing social and operating environment while continuing to provide a happy place for all its guests.
– J. Edward Moreno contributed to this report.