Target, one of the leading retailers, has experienced a significant decline in its market capitalization, with over $12 billion wiped off since mid-May. The company’s stock price took a nosedive following customer backlash directed at its decision to carry pride products in stores.
The controversy escalated when Bud Light featured transgender social media influencer Dylan Mulvaney in a marketing campaign, further fueling the backlash against Target. Former Target VP/Chairman Gerald Storch appeared on “Fox & Friends Weekend” and shed light on the specific factor that triggered the anger among customers.
Storch noted that pride items, such as plates with rainbow designs, can be found in various stores without causing much uproar. However, he pointed out a distinct feature of Target’s proud collection that stirred up a furious mob of dissatisfied customers. The former executive highlighted the tuck swimsuit as the root cause of the company’s misstep and subsequent fallout.
Reflecting on his experience handling crises, Storch shared an example involving Babies “R” Us. In an annual contest, the first newborn of the year won $20,000. However, controversy arose when it was discovered that the winning family was undocumented and lacked proof of identity for tax purposes. Storch emphasized the importance of empathy and finding a solution to address such issues, promoting a message of love and inclusivity.
Additionally, Storch acknowledged the financial difficulties faced by Target, as evidenced by the underwhelming performance of its stock, which has declined by 11% year-to-date. The ongoing boycott related to the pride products controversy has further exacerbated the company’s challenges. Storch highlighted environmental concerns, rising prices, and the changing consumer landscape as fundamental factors affecting Target’s business.
The decline in Target’s market value, exceeding $12 billion since mid-May, was attributed to the company’s inability to match Walmart’s impressive 7% increase in same-store sales. Storch explained that Target’s positioning as a high-end bargain retailer faces challenges in times when consumers are financially strained, leading them to flock to competitors like Walmart.
While acknowledging the impact of the boycott, Storch emphasized that the concerns of shareholders and investors revolve around the core aspects of running a business rather than solely focusing on the controversy. He emphasized that Target’s shareholders are closely monitoring the situation and its potential impact on sales.
Although Target’s handling of the situation was criticized, Storch predicted that the issue would gradually diminish over time. The company will need to navigate the challenges and regain consumer trust as it seeks to restore its market position.