US giant Target’s sales fall after homophobic harassment against the company

Police protect a Target store in Miami before the protests called against the company for its support for LGTBI rights.Lynne Sladky (AP)

The culture wars take their toll on Target. The American distribution giant was the object of a homophobic campaign and harassment against its establishments for the merchandise it sold, as every year, on the occasion of the Gay Pride celebration. The company has published its results for the second quarter of its financial year on Wednesday and in them sales fell by 4.9%, to 24,384 million dollars (about 22,300 million euros). The company has lowered its forecasts for the rest of the year, although it has surprised with higher-than-expected profits.

Target’s CEO, Brian Cornell, has admitted the damage of the homophobic campaign although he has not been able to specify its impact. The chain included some 2,000 products in its Pride collection this year, including clothing, books, music and household items. Among the items for sale were some from the Abprallen brand, which works with the transgender designer Erik Carnell ―controversial for his satanic creations―, and also children’s books such as Bye Bye, Binary or I’m not a girl. Those products and others like a swimsuit that was presented as appropriate to help transgender people hide their genitalia (and was falsely claimed online to be aimed at children) sparked a bullying backlash from some customers.

The chain withdrew the most controversial articles, to the chagrin of some LGTBI activists, and now says that it has learned its lesson and that it will be more prudent when selecting merchandise related to celebrations that can polarize society, as they have explained by teleconference its directors this Wednesday.

Target is one of the many companies that have been subjected in recent months to harassment campaigns by conservative groups in a culture war in which hoaxes and manipulations have been frequent. Disney, Budweiser and the Chick-Fil-A restaurant chain have also been among the victims of those attacks. Bud Light has ceased to be the best-selling beer in the United States due to the hangover of a campaign starring the transsexual celebrity Dylan Mulvaney.

Consumption habits

The sales of the large distribution chains also suffer the impact of inflation and changes in consumer habits. Walmart, which publishes quarterly results on Thursday, has fared better so far thanks to its low prices and more focused grocery shopping. Target, whose sales depend on consumer discretionary (clothing and home, mainly), has suffered more. “Clients go to concerts. They go to the movie theater. They have seen Barbie. They are enjoying experiences, and they buy discretionary goods very carefully,” Cornell explained by teleconference in statements collected by AP.

Despite the decline in sales, which is 5.4% in like-for-like terms, profits have increased by 356%, to $835 million, compared to the second quarter of 2022. A year ago, the change in consumer habits Due to inflation, it caught the company by surprise, which was left with abundant unsold inventories and had to apply rebates that eroded its margins. Its operating margin on sales then fell from 9.8% to 1.2% due to the liquidation of excess stock. Now, it has risen to 4.8% and the company has been very attentive to the management of inventories, which are down 17% year-on-year.

“Our second-quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we have seen better-than-expected profitability against weaker-than-expected sales,” Cornell said in a statement. . “Benefiting from a much healthier inventory position than a year ago, the team has been able to respond quickly to rapidly changing revenue trends throughout the second quarter while continuing to focus on the customer experience. customers,” he added.

Along with the shift in consumer spending toward experiences rather than purchases, businesses are also suffering from the end of the moratorium on student loan payments. The imminent resumption of payments will leave less money in the pocket of customers.

Target has lowered the forecasts for the whole year. He now expects adjusted earnings for the full year to be between $7 and $8 per share. The midpoint of $7.50 is 75 cents lower than the previous range average and below analysts’ median estimate of $7.81. Given recent sales trends, Target now expects comparable sales to be in a wide range around a 5% decline for the remainder of the year.

Follow all the information on Economy and Business on Facebook and Twitteror in our weekly newsletter

Five Days agenda

The most important economic appointments of the day, with the keys and the context to understand their scope.

RECEIPT IN TU CORREO
#giant #Targets #sales #fall #homophobic #harassment #company