Sales fell 5% from April to June compared to the same period last year, the first dip in six years.
The drop was precipitated by a backlash over some of the company’s LGBTQ Pride items.
It later removed merchandise from other stores due to employee safety concerns.
Target CEO Brian Cornell said the sales dip reflected the fact that buyers’ budgets are being stretched as the cost of living stays high.
The corporation stated that the impact of these pressures was difficult to disentangle from other issues, such as boycott calls for their Pride month range.
It caused damage to in-store displays and clothing inventory, which included rainbow-themed t-shirts, “gender fluid” mugs, and children’s books labeled “Pride 1,2,3” and “I’m not a girl.”
Certain artifacts were eventually deleted from the 2,000-piece collection. A few came from a partnership with transgender designer Erik Carnell’s Abprallen label, which attracted backlash for pieces incorporating pentagrams and horned skulls that were sold elsewhere.
Target consumers who celebrate Pride were outraged by the company’s decision to remove the goods, which it justified by claiming employee safety.
Mr Cornell said during a quarterly briefing to investors that the firm aimed to approach future partnerships with caution while still recognizing “heritage moments.”
“As we navigate an ever-changing operating and social environment, we are applying what we have learned,” Mr Cornell explained.
Following threats, Target has removed some LGBTQ merchandise.
Mr Cornell stated that following a significant decline in June, Target’s sales began to recover in July.
However, executives predict worse performance for the rest of the year, in part due to fears about the impact on buyers as a pandemic-era moratorium on student loan payments expires.
Target is the latest US corporation to face financial consequences as LGBTQ issues become more politically charged. Other brands that have encountered similar customer boycotts and criticism include Disney and Bud Light.
Its research also provided a fairly bleak outlook on the health of the American consumer, whose robust spending has been credited with helping the world’s largest economy defy predictions of a slump up until now.
Target reported that customers were cutting back on products like apparel and home decor as rising prices forced individuals to allocate more of their monthly expenditures to necessities like groceries.
Sales in the report were lower than predicted, in contrast to other recent statistics that showed solid consumer spending.
The Commerce Department reported a day earlier that retail sales increased 0.7% from June to July, which was higher than predicted.
These results were boosted by an increase in online sales, which occurred in conjunction with Amazon’s annual Prime Day sales event.
Despite the drop in sales, Target shares gained more than 6% in early trading, citing higher-than-expected profits.
