By Naveen Athrappully
Mega retailer Target hasn’t recovered from consumer boycotts triggered after the company promoted Pride merchandise, with share prices and market cap declining significantly along with financial and popularity metrics.
American consumers started boycotting Target in May, after the retail chain rolled out its Pride collection, which included some items that targeted children, including books, home décor products, and transgender swimsuits for adults with a “tuck-friendly” feature.
In the first two weeks of May, when the company’s Pride controversy began to go viral, its market capitalization declined by $1.85 billion.
In the three weeks between May 15 and June 5, the market cap fell by an additional $11.66 billion.
Though the market cap recovered somewhat to $60.34 billion as of July 10, it’s still $11.7 billion less than what it was on May 1.
Amid the Pride Month controversy, institutional interest in trading Target stock has fallen as buying and selling of Target shares crashed in the second quarter.
Total institutional inflows for Target were about $35 million in Q2 compared with $2.14 billion in the first quarter, according to data from MarketBeat. Meanwhile, total outflows for Q2 were $91.4 million, down from $1.07 billion in the previous quarter.
Multiple brokerages have also downgraded their views on Target. On June 1, JPMorgan Chase downgraded Target from an “overweight” target to a “neutral” one—lowering the price target from $182 to $144.
On June 9, Citigroup changed its recommendation for Target from “buy” to “neutral.” A few days later, The Street downgraded Target from a “B-“ rating to “C+” rating.
In terms of popularity, the brand is at its lowest-ever level, according to a poll by YouGov.
In the second quarter, Target was ranked as the fifth most popular department store in the United States with a popularity score of 65 percent, which is the lowest score since YouGov began tracking data beginning in Q3 of 2020. At that time, the company received a 71 percent popularity score.
Target now ranks below Costco, Dollar Tree, Sam’s Club, and TJ Maxx.
Violating Child Protection Laws and Shareholder Interests
On July 5, seven attorneys general, led by Indiana Attorney General Todd Rokita, sent a letter (pdf) to Target, warning that the company’s Pride month collection targeting children may have violated child protection laws.
The letter pointed out that such laws penalize the sale or distribution of obscene matter, which refers to anything whose dominant theme “appeals to the prurient interest in sex.” This includes “material harmful to minors.”
It then highlighted Target’s recent Pride campaign, during which the company marketed and sold LGBT products to kids “as part of a comprehensive effort to promote gender and sexual identity among children.”
“This year, Target reportedly promoted and sold products in our states that included, among other products, LGBT-themed onesies, bibs, and overalls, t-shirts labeled ‘Girls Gays Theys,’ ‘Pride Adult Drag Queen Katya’ (which depicts a male dressed in female ‘drag’); and girls’ swimsuits with ‘tuck-friendly construction’ and ‘extra crotch coverage’ for male genitalia,” the letter reads.
Target’s Pride campaign and its financial support to organizations such as GLSEN that facilitate “secret gender transitions for kids” raises concerns regarding child protection laws of various states and also the economic interest of the company’s shareholders, it stated.
“Target’s directors and officers have a fiduciary duty to our States as shareholders in the company. The evidence suggests that Target’s directors and officers may be negligent in undertaking the ‘Pride’ campaign, which negatively affected Target’s stock price.
“Moreover, it may have improperly directed company resources for collateral political or social goals unrelated to the company’s and its shareholders’ best interests.”
The boycotts have put pressure on Target and are forcing the company to avoid angering its conservative customer base, a development that was visible in the recent incident involving conservative author and radio personality Mark Levin’s book “The Democrat Party Hates America.”
On July 6, Mr. Levin wrote on Twitter that Target informed his publisher it would not carry his book at stores. This kicked up a flurry of criticism online, with many accusing the retail chain of imposing censorship policies.
According to Mr. Levin, Target “claims that certain customers might be offended by the title.”
He wrote: “Imagine that! So, the corporatist leftwing censorship begins.”
In a later post on Twitter, Mr. Levin wrote that Target had reversed course and will sell his book, and he addressed his supporters, writing, “You folks are an immense force for free speech and market capitalism, and conservative authors and audiences everywhere will benefit from your patriotism.
“I could not be more proud of you—not only for how this specific case turned out, as there will undoubtedly be more of this—but because you’ve made it clear that you’ve had enough and will exercise your enormous power.”
Meanwhile, most Americans expect businesses to remain uninvolved in cultural issues, according to a recent survey conducted by the Convention of States Action/Trafalgar Group.
The survey (pdf) asked respondents, “With the public backlash against companies like Bud Light and Target, do you believe businesses should continue to promote political themes during pride month, or should businesses seek to be neutral on cultural issues?”
Almost 62 percent of participants said companies should be “neutral on the issue.” Only about 24 percent wanted firms to “continue to promote political themes.”