Target released its second-quarter corporate earnings call Wednesday morning, showing that May’s pride backlash negatively affected sales for the quarter.
Key Details
- The retailer reports that it also expects its sales decline to continue into the third quarter, lowering its 2023 profit projections from $7.75 to $8.75 per share to $7 to $8.
- Revenue fell short of the expected $25.16 billion down to $24.77 billion, thanks to a 5.4% sales decline in the past three months ending on July 29.
- Target shares have fallen 16% year-to-date but increased after the earnings call by 4%.
- Retail rival TJX also reported its earnings Wednesday but conversely saw a 6% jump in comparable sales last quarter compared to Target, improving this year’s profit goals.
- The company plans to approach Pride Month 2024 with a more focused assortment of LGBTQ+ merchandise.
Key Details
Target’s revenues have declined consistently over the past several quarters, but a complex series of factors have conspired to reduce shoppers’ interest in home goods and apparel from the leading brick-and-mortar retailer. High inflation and reduced consumer spending are among these factors, but a sizable factor is the Pride Month backlash that drew the ire of culture warriors.
Even with inflation cooling and retail spending holding steady, Target is proving to be a difficult sell to consumers who feel their wallets tightenings and who are spending less on appliances and non-necessities.
Backing Up A Bit
As we previously reported, Smead Capital Management alleged in its investor letter earlier this month that Target’s Pride Month promotions aimed at children affected the company’s bottom line last quarter—involving controversy surrounding the marketing of Pride Month merchandise, including “tuck-friendly” swimsuits for small children and T-shirts saying “Satan Respects Pronouns.”
Target’s dip in sales was at least partially attributable to the boycotting efforts. It responded to criticism by removing specific items from stock or moving them to the back of the store, particularly after some store locations reported death threats. Erik Carnell, a transgender clothing designer who created the “Satan Respects Pronouns” T-Shirt, castigated the store for not standing by the LGBTQ+ community.
Notable Quote
“Multiple economic crosscurrents are putting pressure on consumers,” says Target CEO Brian Cornell. “As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials. So that’s absorbing a much bigger portion of their budget … As we navigate an ever-changing operating and social environment, we are applying what we learned.”