Target slashed its annual earnings forecast after its quarterly sales dropped for the first time in six years, a decline attributed to inflation, retail theft, and the consumer boycott over the retail giant’s transgender-themed Pride Month collection.
The Minneapolis-based chain reported Wednesday that sales at stores open for at least a year fell by 5.4% while online sales dropped by 10.5%, the chain’s first decrease since 2016.
The missed revenue expectations during the three-month period ending July 29 prompted the chain to slash its annual sales expectations and forecast for earnings per share.
CEO Brian Cornell acknowledged the hit from the backlash over the store’s Pride merchandise, pointing on Wednesday’s earnings call to “negative guest reaction to our Pride assortment,” according to CNBC.
One of the nation’s largest retailers, Target was roiled by outrage starting in May over its Pride Month collection, which included a “tuck-friendly” women’s bathing suit with room for male genitalia and several items created by the Satanist-influenced U.K. designer Abprallen.
Target reacted by pulling the Abprallen products, while some stores moved the display from the front to the rear.
The response prompted criticism from LGBTQ advocates, fueling predictions of a second backlash, but Mr. Cornell said sales traffic recovered in July after the company addressed “safety concerns.”
Other factors pushing down sales on discretionary items included higher food prices and high-interest rates on credit cards, as well as a spike in theft incidents involving violence or threats of violence.
Target misses first quarterly revenue in six years:
“Target CEO Brian Cornell pointed to macro pressures including inflation for tempering sales but also ‘negative guest reaction to our pride collection.’” pic.twitter.com/Ep4SC9NxM3
— Citizen Free Press (@CitizenFreePres) August 16, 2023
Conservatives characterized the dismal earnings report as a warning to companies that embrace a left-wing agenda in their marketing and sales.
“The company cites inflation…and consumer BOYCOTTS,” tweeted Turning Point USA CEO Charlie Kirk. “May all other companies be on notice. Come for the kids and you’ll pay. Keep the pressure on!!”
Conservative commentator Rogan O’Handley, known as DC Draino, tweeted: “You come after our kids, we’re coming after your profits.”
The news for Target wasn’t all bad. Profits outperformed Wall Street’s previously downgraded expectations. Shares also rose by about 6% after the Wednesday conference call.
“Despite the weak guidance, Target shares are down more than 50% from their peak, and that discounted price seems to be enough of a reason to buy the stock on today’s report,” said the financial outlet the Motley Fool.
Mr. Cornell credited the company with quickly responding to “rapidly-changing topline trends throughout the second quarter, while continuing to focus on guest experience.”
“Our second quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we saw better-than-expected profitability in the face of softer-than-expected sales,” he said in a statement.
