After fallout from its Pride collection earlier this year, Target CEO Brian Cornell addressed the controversy head on during the company’s second quarter earnings call on Wednesday.
In May, the big-box retailer introduced its genderless Pride 2023 collection celebrating the LGBTQIA+ community ahead of Pride Month in June. The line’s range of graphic and multicolored casual clothing, shoes and home goods, however, faced a range of criticisms upon release.
Target claimed at the time that some of its stores found customers knocking over Pride displays, directing anger at employees and posting threatening videos on social media while in-store; the most aggression appeared directed over private part-concealing swimwear made for transgender women who have not currently received their gender-affirming surgeries.
Now, Cornell is making the company’s stance on the matter clear. “We denounce violence and hate of all kinds, and the safety our team and our guests is our top priority,” the CEO said on Wednesday’s call. “So to protect the team in the face of these threatening circumstances, we quickly made changes, including the removal of items that were at the center of the most significant confrontational behavior.”
Cornell added that Pride is one of many heritage moments that are important to the company’s guests and its team, and said that Target will “continue to support these moments in the future” as it helps it to serve a “diverse set” of guests.
“As we talk to these guests, they consistently tell us that Target is their happy place, somewhere they can go to escape and recharge,” Cornell said. “So as we navigate an ever-changing operating and social environment, we’re committed to staying close to our guests and their expectations of Target.”
On today’s call, Oliver Chen, a managing director at investment bank TD Cowen, probed the CEO once more, asking Cornell for his thoughts in terms of appealing to the broad array of customers going forward and strategies, particularly around LGBTQIA+ individuals. Cornell responded that at the heart of Target’s purpose is its commitment to “bring joy to all the families” it serves. “We want to make sure Target is that happy place for all of our guests, a place where they can recharge and enjoy those shopping experiences, and you should expect to see us continue to do that over the years to come,” he added.
Looking ahead, Cornell said that Target is focused on building assortments that are “celebratory and joyous” with wide-ranging relevance, being mindful of timing, placement and presentation, while also reconsidering the mix of owned brands, national brands and external partners within these assortments.
“Our goal is to ensure we continue to celebrate moments that are special to our guests while acknowledging that, every day, for millions of people, they want Target to serve as a refuge in their daily lives,” Cornell added.
The retailer’s Pride line arrived during a moment of intense national backlash towards the LGBTQIA+ community, particularly the transgender community. Notable incidents include the online controversy over Kate Spade New York and Bud Light’s recent campaigns starring transgender influencer Dylan Mulvaney, as well as a record number of over 400 anti-LGBTQIA+ bills presented to state legislatures since January.
But Target’s Pride backlash was only one of the headwinds the retailer faced in its most recent quarter that led to a “temporary slowdown” in the pace of its business, Cornell said.
The company’s continued efforts to right-size its inventory, persistent inflation, shifting consumer spending habits, and the rollback of government assistance programs like pandemic stimulus payments, enhanced child care tax credits and the suspension of student loan payments all played a role in Target’s sales slowdown in Q2.
Total revenue in the second quarter fell 4.9 percent to $24.8 billion, with comp store sales down 5.4 percent in the period.
Given recent sales trends, Target lowered its full year sales and profit expectations on Wednesday. The company now expects comparable sales in a wide range around a mid-single digit decline for the remainder of the year.
