By Arkansas Black Vitality Staff

May 22, 2025 – Target Corp. saw a big hit to its first-quarter earnings as the Minneapolis-based mass merchandiser said it is facing an “exceptionally challenging environment,” leading to declines in store traffic and sales across its 2,000 U.S. stores.

In addition to concerns about rising tariffs, inflation, and the impact of the U.S. trade war with China, Target has also faced recent boycotts following the company’s dismissal of diversity, equity, and inclusion (DEI) goals after legal threats from the Trump administration and other groups.

“On top of those ongoing challenges, we faced several additional headwinds this quarter, including five consecutive months of declining consumer confidence, uncertainty regarding the impact of potential tariffs, and the reaction to the updates we shared on Belonging in January,” Target CEO Brian Cornell said, referring to the company’s revamped inclusion initiative.

“While we believe each of these factors played a role in our first quarter performance, we can’t reliably estimate the impact of each one separately. I want to be clear that we’re not satisfied with this performance,” Cornell said during the company’s first quarter earnings conference call.

For the fiscal first quarter that ended May 3, Target reported adjusted earnings of $1.30 per share, down 36 percent from $2.03 per share a year earlier. Net sales fell 2.8 percent to $23.8 billion, compared with $24.5 billion in 2024. According to FactSet, Target’s first-quarter earnings were below Wall Street’s expectations of $1.61 per share and revenue of $24.23 billion. Same-store sales, an essential financial metric for comparable store growth, also fell short of expectations, declining by 3.8 percent in the quarter.

Trump administration’s legal threats purge corporate DEI programs

Following nationwide protests over the George Floyd killing in Minneapolis in May 2020, hundreds of U.S. corporations established DEI policies to create an equal playing field for racial and ethnic minorities. Minneapolis-based Target was among the first corporations to adopt a robust DE&I platform, citing its philanthropic commitment to fight racist disparities in Floyd’s hometown and the epicenter of nationwide protests.

However, after President Trump won the November election and issued an executive order on Jan. 21 essentially banning all DE&I programs and jobs at the federal level, corporations nationwide quickly began eliminating DE&I-related programs and jobs and stripping any mentions of “diversity, equity, and inclusion” from their websites and marketing materials.

Among the top Fortune 500 and large corporations that have taken the anti-DEI stance in the face of possible litigation include Facebook and Instagram parent Meta, Google, Microsoft, McDonald’s, Walmart, PepsiCo, Coca-Cola, Disney, Deloitte, Boeing, Ford Motor Co., Boeing, Harley-Davidson, John Deere, and Tractor Supply Company.

The list of companies fully supporting DE&I initiatives is much shorter, including Costco, Ben & Jerry’s, Delta Airlines, Apple, e.l.f. Cosmetics and JP Morgan Chase. In the lukewarm category, several companies such as Citigroup, Goldman Sachs, and Walmart have adopted watered-down policies that removed DE&I programs, hiring goals, and language. However, those companies have publicly reiterated their commitment to a diverse workforce and supporting diverse communities.

In a leaked memo sent to Target’s more than 400,000 employees across the globe, Cornell attempted to explain away the retail giant’s DE&I decision. He also sought to reinforce the company’s commitment to recapture its ‘Tar-zhay’ chic by investing billions of dollars in new stores and designer products,

According to media reports, in that message sent in early May, Cornell acknowledged that Target’s silence in addressing its commitment to DE&I and fighting back against the Trump administration’s legal threats led to uncertainty and backlash from employees and loyal Black customers.

“I recognize that silence from us has created uncertainty, so I want to be very clear: We are still the Target you know and believe in,” Cornell said, per the Minnesota Star Tribune, which first reported on the memo. Target’s values of “inclusivity, connection [and] drive” are “not up for debate,” he said.

However, in the hourlong quarterly conference call with Wall Street investors and analysts, Cornell and his executive never directly addressed the company’s DE&I stance, offering only that Target was taking necessary steps to return to its beloved

“Every day, in everything we do, we will continue to be anchored in the belief that creating an environment where people feel included, supported and respected makes us a stronger company,” said Cornell “It helps us build and support our talented team, serve millions of guests in all 50 states and be a valued partner in the communities we serve.  

“I’m proud of their resilience and long-term focus. I’m confident we’re taking the right steps to accelerate our progress, do more of what our guests love and to usher in the next chapter of Target’s growth story,” Cornell concluded.

Besides Target’s DE&I hit, Cornell stated that the reduced same-store sales reflected an average decline of 5.7 percent across the company’s approximately 2,000 stores, which was partially offset by comparable digital sales growth of 4.7 percent.

“As we’ve shared for multiple quarters, consumers have been choiceful in their buying decisions,” Target’s chief commercial officer, Rick Gomez, said. “And recent declines in consumer confidence have made them even more cautious.”

In addition to a new executive suite team to accelerate the company’s growth strategy, Target said it will continue to focus on expanding its drive-up and pickup services at local Target stores. That same-day delivery service accounts for half of the company’s total digital sales. Target also saw substantial gains in apparel sales categories, including women’s swimwear and toddler clothing, and growth in seasonal merchandise, books, produce, and floral products.

Going into the second quarter, Target said a key focus will be navigating the ever-changing tariff landscape. Cornell said the company’s merchandising teams have been working overtime to minimize tariff headwinds through multiple strategies, including negotiating with key vendors and partners, reevaluating assortment decisions, and changing country of production when possible. According to Bank of America retail analyst Robert Ohmes, Target has reduced its owned brand production in China from 60 percent in 2017 to 30 percent today and believes it can reach 25 percent by the end of the year.

Despite these internal changes, Target lowered its full-year guidance. It now expects a low single-digit decline in sales and earnings per share between $7.00 and $9.00, down from the previous range of $8.80 to $9.80. That means shareholders and investors will likely experience additional losses.

Not only is Target losing money at the check-out counters, but shareholders, investors, and top company executives with performance-driven stock and pay compensation are also losing money, as the retailer’s shares have underperformed the broad S&P 500.

At the end of this week’s New  York Stock Exchange trading session, Target shares closed at $94.29, down 77 cents. Over the past 12 months, Target shares are down 30.2% compared to the S&P 500’s 1.3% decline and the Dow’s 2.2% drop.