Target slashes outlook after tariffs, dei boycotts slam sales: ‘we’re not satisfied with these results’

Target lowered its full-year sales forecast after a tough first quarter marked by weak discretionary spending, tariff pressures and fallout from consumer boycotts stemming from its DEI

policies. The Minneapolis-based retailer now expects net sales to fall by a low single-digit percentage, abandoning earlier hopes for a modest increase, the company said in its earnings

report Wednesday. Comparable sales dropped 3.8% in the quarter ended May 3, exceeding Wall Street’s expectations for a decline and stoking doubts about CEO Brian Cornell’s ability to regain

momentum after two turbulent years. “We faced several additional headwinds this quarter, including five consecutive months of declining consumer confidence, uncertainty regarding the impact

of potential tariffs, and the reaction to the updates we shared on [DEI] in January,” Target CEO Brian Cornell told analysts on an earnings call. “I want to be clear that we’re not satisfied

with these results,” Cornell added. “We’ve got to drive traffic back into our stores and visits to our site.” Cornell declined to provide details on potential price increases due to

tariffs. Most tariff-related increases could be offset, he said, but acknowledged that raising prices could be a “last resort EXPLORE MORE Shares of Target fell 3% in early trading Wednesday

and are down 27% this year, compared to a modest 1% gain in the broader S&P 500. Cornell blamed the downturn on an array of challenges, including fragile consumer confidence, reduced

discretionary purchases, tariff-driven pricing pressures and public backlash over the company’s decision to scale back diversity initiatives. “We’ve got to move with a greater sense of

urgency,” he said, while pointing to e-commerce as a rare bright spot. The weak performance underscores Target’s vulnerability compared to competitors such as Walmart, which have larger

grocery operations that shield them from dips in discretionary spending. Nearly two-thirds of Target’s sales come from categories like clothing, home décor and other non-essentials — sectors

that remain under pressure as inflation-weary consumers tighten budgets. Analysts say the company has struggled to regain its footing following the post-pandemic demand shifts and

persistent inventory mismanagement. “We think it will be more difficult for Target in this environment given tariffs and Walmart’s substantial market share gains,” Jefferies analyst Corey

Tarlowe told Bloomberg News. Signs of internal strain are growing. Target announced a leadership shakeup that includes the departure of longtime executive Christina Hennington, once

considered a potential successor to Cornell. Chief Operating Officer Michael Fiddelke will head a new “multiyear acceleration office” tasked with reigniting growth. Target’s woes are not

just economic. The brand, once celebrated for its progressive image, has faced boycotts from both ends of the political spectrum after pulling back on diversity-focused initiatives. In May

2023, Target sparked widespread backlash after featuring LGBTQ-themed clothing — including items for children — in its Pride Month collection, prompting calls for boycotts from conservative

groups. The controversy intensified when the company removed some items and relocated displays, angering both critics of the products and LGBTQ advocates who accused Target of caving to

pressure. In January, Target announced a rollback of several DEI initiatives, including ending its Racial Equity Action and Change (REACH) program and ceasing participation in external

diversity assessments. This move sparked widespread criticism from civil rights activists and led to a 40-day consumer boycott beginning in March. The backlash also resulted in a

class-action lawsuit alleging that Target misled investors about the financial risks associated with its DEI policies. Tariffs are compounding the retailer’s problems. Executives noted that

higher import duties are influencing pricing, even as they avoided directly blaming levies as they did earlier this year. “We’re negotiating with suppliers and adjusting sourcing

strategies,” one executive told Bloomberg News, as the company reevaluates inventory and product mix. Despite the setbacks, Target is betting that value-driven seasonal events and

high-profile partnerships can help rekindle consumer interest. Chief Commercial Officer Rick Gomez touted the success of a recent collaboration with Kate Spade and strong holiday sales

during Valentine’s Day and Easter. Still, the company lost share in 20 of 35 merchandise categories last quarter, with only swimwear, flowers, essentials and produce showing gains. Looking

ahead, Target plans to introduce over 10,000 new items this summer, with prices starting as low as $1. “We recognize we have to win the everyday moment,” Cornell said, “not just the

holiday.” _With Post wires_