As its retail rivals saw their sales slightly increase for Q2, retail giant Target saw its pummeled by consumers in the midst of not just Bidenflation, but also a massive boycott of it sparked by its “Pride” apparel, namely a “tuck-friendly” swimsuit and Satanist-designed clothes.
It’s not just the boycott that’s pushing the retailer’s sales lower. Credit cards have been made more expensive by interest rates, which didn’t help it. Higher food prices and gas prices rising again puts financial pressure on consumers, potentially pushing them away from the somewhat upscale and higher-priced retail chain. The student loan moratorium ending could have a similar effect on consumers, as could fears of a recession.
But those factors are impacting most all retailers right now, not just Target, and its competitors had far better results than it did. For example, Target’s sales fell by 5.4 percent for the three months ended July 29, whereas its main retail rival TJX, which owns T.J. Maxx, Marshalls, and HomeGoods, reported that it had a 6 percent jump in sales in the same quarter.
So Target was stung by something special, and that was likely the boycott. Target CEO Brian Cornell indicated as much when he noted that the chain “learned” from it, saying, “We’ll continue to celebrate Pride and other heritage moments, which are just one part of our commitment to support a diverse teams and guests. However, as we navigate an ever changing operating and social environment, we’re applying what we’ve learned to ensure we’re staying close to our guests and their expectations of Target.”
Cornell also tried to pin some of the blame on summer, saying, “Guests are out at concerts. They’re going to movies. They’ve seen ‘Barbie.’ They’re enjoying those experiential moments, and they’re shopping very carefully for discretionary goods.”
But that wouldn’t explain why sales are lower than last year for Target and increased for its rival. However, a boycott might, as that would explain why consumers aren’t showing up tot Target but are spending their money at other, similar stores.
The financial difficulties Target has endured since the boycott began have equity analysts revising their opinions on the company. For example, Citi stock analyst Paul Lejeuz downgraded the stock to a neutral position from a buy, citing concerns that Target’s competitor Walmart would take market share. Lejeuz noted, “We believe Walmart is likely to continue gaining market share, and Target’s high exposure to discretionary sales will not serve them well in the current macro backdrop.”
The analyst explained the decision to downgrade the stock, stating that Target shares had too much risk. “Despite the recent stock pressure, we cannot recommend investors buy the stock given these dynamics and now believe the risk, reward is more balanced, but risk is more to the downside near term,” he said. Lejeuz also pointed out that Target experienced a 13.9 percent decline in store traffic the last week of May, citing inflationary pressures on consumer spending.
So Target is facing slowing sales and stock market woes. Why? Well, there are numerous factors at play, but it sure looks like the boycott might be to blame.
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