Target's traffic to its stores and website has increased for 12 consecutive quarters, even eking out a small uptick of nearly 1% earlier this year when sales were flat and people were tight with their pocketbooks.
But as Target prepares to release its second-quarter earnings Wednesday, there are many Wall Street analysts and investors who think the controversy surrounding Target's Pride collection, which caused the retailer to pull some of its products from shelves in May, could have turned some consumers off and hurt the Minneapolis retailer's coveted traffic numbers and sales.
For retailers and other companies who have found themselves in the middle of national conversations that have become increasingly political and polarizing, Target's results could be another example of the complexities corporations face.
"If I'm Target, and I want to sell to two different people with different values, what do you do?... Inevitably when you do 'A,' there are going to people who don't like 'A.' There is no easy way to satisfy everybody," University of Minnesota marketing professor George John said.
The Minneapolis retailer usually has a knack for appealing to middle-class consumers who want to save money but also splurge on some indulgences, said Ethan Chernofsky, vice president of marketing at foot traffic analytics firm Placer.ai.
"They really get the middle," he said.
In the first half of the year — January to June — Target has seen shopper-visit growth of 3.1% compared to the same time last year, outperforming other big-box retailers like Walmart (-0.9%) and Costco (1.2%) as well as the wider retail sector as a whole (-0.3%), according to Placer.ai, which studies anonymized cellphone data.
However in recent months, Target numbers have dipped. Target's numbers, like Walmart, started slipping by almost 1 % in April, but then became more pronounced, according to Placer.ai. In May, visits to Target were down 3.6% year-over-year, and in June, they were down 4%. July saw an improvement from that but still a decline of 1%.
Target leaders said months ago they expected the company to see a low-single digit decline in comparable sales in the second quarter.
Some analysts said traffic has suffered because of Target's handling of a media firestorm in May centered on the merchandise the store put out to celebrate Pride month and the LGBTQ community. In the spring, a wave of angry customers began to call for a boycott due to items Target was selling from U.K.-based brand Abprallen, which critics accused of expressing "Satanist" views, and swimwear made for those who identify as transgender with "tuck-friendly" crotches that some critics incorrectly said were meant for children.
A few days after it reported flat sales growth for the first quarter, Target announced it was removing unspecified items from its Pride collection as a result of "threats impacting our team members' sense of safety and wellbeing while at work." The stock price dropped from nearly $161 per share on May 17 when Target reported its first-quarter earnings to under $131 on May 31, several days after Target went public on its Pride changes. On June 12, it was down to sub-$127.
This month, America First Legal — a conservative organization a former adviser to President Donald Trump leads — sued Target on behalf of a shareholder for the company for not adequately anticipating the risk of its Pride decisions, which the lawsuit blamed for losing the company money.
Target not only came under fire with conservative consumers, it also received pushback from LGBTQ advocates. In June, Minnesota Attorney General Keith Ellison and a group of 14 other attorneys general wrote a public letter to Target CEO Brian Cornell expressing concern the chain's removal of some of its Pride products "[sent] a message that those who engage in hateful and disruptive conduct can cause even large corporations to succumb to their bullying."
Target has remained silent on the controversy outside of its initial comment in May.
Some analysts said Target's actions hurt the chain's performance in May, June and July, when it usually starts to see a rush of shoppers preparing for the back-to-school season.
In a Friday note to investors, Joe Feldman, a research analyst at Telsey Advisory Group, said "We are lowering our 2Q23 estimates [for Target] to reflect softness in traffic, especially in late May to mid-June related to issues with the Pride assortment, along with softer consumer spending on select discretionary products, partly offset by the continued outperformance of essentials and gains from strategic initiatives, like digital and loyalty."
Edward Jones analyst Brian Yarbrough said some investors likely feared Target's decisionmaking on its Pride collection would have the same negative business impact as on Bud Light, which faced widespread backlash after the beer brand engaged in a digital promotion with transgender influencer Dylan Mulvaney this spring. Earlier this month, Bud's parent company, Anheuser-Busch InBev, reported its U.S. revenue declined 10.5% in the second quarter "with performance impacted by the decline of the Bud Light brand."
While Pride difficulties probably hurt Target, there are many other factors, Yarbrough said. Target is more dependent on discretionary categories — like home and apparel that consumers are pulling back on — than competitor Walmart, which relies more on grocery sales. A lot of consumers are also spending more money on restaurants and travel as opposed to products this summer.
Yarbrough said he thinks the possible negative impacts of the Pride fiasco will be short term as even hesitant shoppers likely won't be able to stay away from Target for long.
"The customer doesn't have a lot of different options," he said.
Carol Spieckerman, a retail expert and president of Spieckerman Retail, said she wouldn't attribute any significant traffic declines to the Pride controversy.
"Shopper memories are short and news cycles move fast," she said.
And amid all this, Target continues to focus on improving its in-person experiences and branding. It recently announced it was rolling out nationally a drive-up feature — first tested in the Twin Cities — so customers can receive Starbucks drinks and food with their orders delivered to their vehicles. Last month, Target named Lisa Roath, who most recently served as the company's senior vice president of food and beverage merchandising, as chief marketing officer.
Toopan Bagchi, a Twin Cities retail consultant who used to work as a vice president at Target, said even with companies facing backlash for being vocal on controversial issues, many will still continue to take stances.
"In the end, companies that lead with their values will succeed," Bagchi said. "So I would expect more careful planning and security rather than a pullback from leaning into social issues and inclusivity."
This story contains material from the Associated Press.