DEI boycotts | Target suffers sales slump after move to end diversity commitments

Target store logo exterior signage

Target now has a full reckoning of the cost of its decision to retreat from diversity, equity, and inclusion (DEI) commitments, with the retailer reporting a 3.8% drop in same-store sales for its first quarter and a sharp 6.8% decline in foot traffic.

CEO Brian Cornell pointed to the company’s DEI change, announced in January, as one of several headwinds that contributed to its sluggish performance.

Speaking during the earnings call, Cornell acknowledged the difficulty of isolating the precise impact of consumer response to the DEI changes, but conceded it was a factor alongside broader macroeconomic pressures and reduced discretionary spending.

“While we believe each of these factors played a role in our first quarter performance, we can’t reliably estimate the impact of each one separately,” he said.

The policy shift ended Target’s participation in high-profile DEI benchmarks such as the Human Rights Campaign’s Corporate Equality Index and scaled back its “Belonging at the Bullseye” initiative, which had previously guided hiring and supplier diversity efforts.

Boycotts and foot traffic slump increase pressure

The change did not go unnoticed. Advocacy group Black Wall Street Ticker spearheaded a 40-day boycott beginning March 5, urging consumers to refrain from spending at the chain. The campaign, which ended in April, was among the most visible responses to Target’s altered DEI stance.

While the company isn’t alone, with Walmart, Google, Meta, McDonald’s, Amazon, and Tractor Supply all making similar policy decisons, Target appears to be bearing the brunt of consumer backlash. By contrast, Costco, which reaffirmed its DEI commitments and was recognized in the NAACP’s “Black Consumer Advisory,” saw a 7% year-over-year increase in foot traffic during the same period.

HR and brand analysts suggest Target is struggling to retain its identity among consumers. “Target is very far behind,” said Roth Capital’s Bill Kirk. “Consumers aren’t compelled to use Target in the same way they once were… If you’re not compelled to use Target for a particular reason, it makes a boycott far simpler to execute.”

Limited investor reassurance raises concern

Unlike last year’s backlash over Pride merchandise, Target leadership offered little clarity about the scale or duration of the impact this time. CFRA analyst Arun Sundaram noted that “management couldn’t quantify the impact,” adding, “I don’t think Target gave much assurance that the DEI-related boycotts were limited to this quarter.”

The response from investors and analysts shows the broader risks for companies revisiting DEI strategies. Morningstar’s Noah Rohr cited a combination of “tough competition and a weak spending environment,” which he expects to remain challenging in upcoming quarters.

Meanwhile, Walmart’s more successful quarter - despite facing criticism from shareholders over its own DEI retreat - only heightened the contrast. Its US same-store sales rose 4.5%, outperforming expectations and reinforcing the view that Target may be losing ground not just to economic headwinds, but to strategic missteps in how it navigates DEI in the public eye.

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