Target is facing stock losses after a massive pushback over transgender merchandise in its stores.
Shareholders were hit with lowered projections, according to a report from Bank of America’s Global Research division on June 14, as Target faces the worse downgrade in three years.
Many customers have been boycotting Target over its pro-LGBT stance since May, ahead of June Pride Month, leading the retailer to take losses.
The backlash against corporate activists has forced many executives at other companies to think twice when it comes to potentially divisive issues due to fear of public backlash from all sides.
Target Offends Both Sides of Transgender Wars
A boycott by conservatives forced the retailer to remove or relocate several controversial items, including what was described as “tuck-friendly” children’s swimsuits, which are regularly worn by transgender individuals.
“It’s hideous. It’s exactly what a dude pretending to be a woman would wear,” comedian Chrissie Mayr told Fox News Digital.
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Other products, such as a “Gender Fluid” mug and a variety of adult clothing with slogans such as “Super Queer” among other items, were also targets of the boycott.
The retailer had already sparked an earlier boycott in 2016 after it publicly allowed “transgender team members and guests to use the restroom or fitting room facility that corresponds with their gender identity.”
After a social-media backlash and protests by conservative shoppers, Target pulled some of the objectionable LGBT retail displays from its stores, causing some gay and transgender activists to attack the brand for backing down ahead of Pride Month.
The move even sparked employee safety issues at several locations, including bomb threats from LGBT supporters.
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Retailer Loses Billions Over Conservative Boycott
Target had lost over $15 billion in losses at one point, as the protests began to affect its market value last month.
The company’s market value recovered slightly, to $63 billion, on June 15, after falling from its high of $74 billion at the beginning of May, right before the backlash, according to market data.
Meanwhile, Bank of America lowered Target’s price target from $180 to $145.
“Downside risks to our price objective are gross margin pressures from labor costs, investments, and the rapid growth of the lower-margin e-commerce channel as well as aggressive competition from competitors,” Bank of America analyst Robert Ohmes wrote in the report.
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Target’s CEO also warned last month in an earnings call that the company was expecting $500 million in losses for 2023, blaming violent crime and a surge in shoplifting in its stores.
“Worsening shrink rates are putting significant pressure on our financial results,” CEO Brian Cornell told investors, adding that “violent incidents are increasing” at Target and at other retailers.
Last week, Citi analyst Paul Lejuez lowered Target’s stock to “neutral” from “buy” and recommended that investors put their money into its rival Walmart, which he predicted would begin absorbing its market share.
“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,” Lejuez said a note.
To make things worse, JPMorgan Chase downgraded Target’s stock at the start of the month, as analysts predicted a decline in sales due to persistent inflation.
On June 5, KeyBanc Capital Markets reduced the retailer’s shares to “sector weight” from “overweight,” after the debt-ceiling agreement and the resumption of student loan payments led to projections of a sizable headwind regarding shoppers’ future discretionary spending.
Article cross-posted from our premium news partners at The Epoch Times.
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