Retail giant Target is facing consumer backlash and legal trouble since it scaled back its diversity, equity, and inclusion (DEI) initiatives in January, resulting in a decline in store traffic. Further, a class-action lawsuit has been filed against the company, alleging misleading investors about the financial risks linked to its DEI initiatives.
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On January 24, the company adjusted its diversity strategy by reducing hiring targets for minority employees and stopping reports to diversity-focused groups. It must be noted that the financial impact of the DEI rollback has been substantial, with Target stock dropping 8.7% following the announcement.
Target Traffic Declines After DEI Policy Shift
According to the traffic analytics platform, Placer.ai, Target saw a 4% year-over-year drop in traffic the week after U.S. President Donald Trump signed an order to ban federal DEI policies. Also, traffic dropped another 9% in the following week, while its rival Walmart (WMT) saw a less than 3% decline.
Data indicates a decline in foot traffic at Target stores coinciding with a consumer boycott campaign due to the company’s retreat from its DEI policies.
It is worth highlighting that after Target cut back its DEI initiatives, civil rights leaders like Pastor Jamal Bryant started a boycott campaign. They urged consumers to shop at companies with strong DEI commitments. Social media also amplified the backlash, with many people expressing their disappointment and calling for boycotts.
Lawsuit Claims Target Misled Investors on DEI’s Financial Risks
On the legal front, the lawsuit against Target has been filed by Florida Attorney General James Uthmeier and the conservative group America First Legal.
The class action suit claims that Target misled investors about the financial risks of its DEI programs. It alleges that Target failed to properly disclose the potential economic consequences of its DEI efforts, causing major financial losses for shareholders.
Is TGT a Good Stock to Buy?
Turning to Wall Street, TGT stock has a Moderate Buy consensus rating based on 11 Buys and nine Holds assigned in the last three months. At $150, the average Target price target implies a 20.7% upside potential.
