Are Target Boycotts Starting To Take Their Toll?

Topline

Target just reported fourth quarter net sales declined 3% and warned that February topline performance was “soft,” after civil rights leaders called for a Target boycott in Black History Month for changing its position on DEI, followed by a sharp drop in traffic to Target stores and website during the Feb. 28 Economic Blackout.

Key Facts

Background

Experts generally agree grassroots consumer boycotts do not have a significant effect on a company’s results. However, this time Target may be particularly at risk. Boycott calls are coming from many different groups, including faith and civil rights leaders, and the People’s Union, which is spreading its protests widely across many big businesses. Professor Brayden King at Northwestern University’s Kellogg School of Management shared with USA Today that more than affecting consumer purchase behavior, boycotts put a “negative spotlight” on the company that can have “reputational consequences.” Consumer trust is a critical factor in where they choose to shop and a retailer’s reputation measures that.

Target’s Reputation Plunges This Year

Target has historically trended as a “reputationally strong” company, according to reputation tracking firm RepTrak. However, its reputation took a steep downward turn early this year, dropping from 73.8 on a 100-point scale in December to 66.3 in January, coinciding with the company scaling back its DEI initiatives which set off the first boycott call.

History Repeat Itself?

Target experienced its steepest reputational decline in 2023 after its Pride Month displays resulted in a consumer backlash and boycotts. It had a reputation high score of 76.9 in April that year, then plunged to a low of 60.9 in December 23. In fiscal 2023, Target revenues declined 2%.

What We Don’t Know

Target full-year 2024 revenues declined 1%, dropping to $106.6 billion from $107.4 billion previous year. For fiscal 2025, it is guiding on flat comparable sales with expectations of net sales growth around 1%, reflecting ongoing consumer and tariff “uncertainty.” The company fielded no analyst questions about boycott pressures, but on the subject of tariffs, it reassured investors that it has been “very proactive” on this issue to diversify its country of origin suppliers. While we must wait for any fallout from the gathering storm of consumer boycotts till next quarter earnings, the company credited soft February sales on declining consumer confidence and “uncharacteristically cold weather” across the U.S.

Crucial Quote

“Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter this year,” CEO Brian Cornell said in the company’s earnings statement.

Key Question

One wonders what Target was expecting in the fourth quarter after net sales declined 3% to $30.9 billion, operating income was off 21% to $1.5 billion and net earnings declined 20% to $1.1 billion?

Further Reading

Target Warns February Sales Were Soft, Adding To Concerns About Consumer Health (CNBC, 4/4/2025)

Civil Rights Activists Call For A Target Boycott After Retailer Backs Away From Diversity Programs (AP, 1/20/2025).

Target Foot Traffic Down For Fourth Consecutive Week After It Caved On DEI (Retail Brew, 2/27/2025)

Some Consumers Are Not Spending Money For Today’s Economic Blackout. Here’s What To Know. (USA Today, 2/28/2025)