Go woke, go broke: Target sued, investors ‘misled’ on DEI efforts
Target faced intense opposition in 2023 when it released its Pride collection. This “caused Target’s sales to fall for the first time in six years,” the lawsuit says.
By Jenna Gloeb, Alpha News – February 7, 2025
Minneapolis-based Target Corp. is facing a class-action lawsuit from shareholders who allege the retailer misled investors about the financial risks associated with its diversity, equity, and inclusion (DEI) initiatives.
The lawsuit, filed by the City of Riviera Beach Police Pension Fund, claims Target directed investor funds toward social and political initiatives and failed to disclose the potential risks of its corporate policies.
The complaint argues that Target’s leadership did not adequately warn investors about possible backlash to its 2023 and 2024 Pride campaigns. As a result, the lawsuit claims, investors purchased stock at inflated prices without knowing the potential financial impact of the company’s social policies.
“As the truth of the negative effect of these campaigns came to light, Target suffered tens of billions of losses in its market capitalization from May 2023 through present. Beginning in May 2023 shortly after the Campaign was launched, Target’s stock price suffered precipitous declines and has never recovered,” states an excerpt from the complaint.
Items in the 2023 Pride collection at a Target store in Minnesota. (Shutterstock)
On Nov. 20, 2024, Target’s stock fell 22% in a single day, erasing nearly $16 billion in market value, the complaint says. The drop followed a series of public controversies surrounding the company’s DEI and Pride initiatives, which fueled investor concerns about its financial direction, the lawsuit contends.
The lawsuit points to declining sales in mid-2023 as evidence of the alleged financial fallout. Target reported a 5.4% drop in sales in the quarter ending July 2023, marking its first decline in six years, the complaint explains.
Target faced intense opposition in 2023 when it released its Pride collection, which included “tuck-friendly” swimsuits and items with gender-related messaging.
The backlash reportedly led to an internal meeting among executives who feared Target could face a situation similar to Anheuser-Busch, which saw financial losses after its partnership with transgender influencer Dylan Mulvaney.
Lawsuit alleges board prioritized left-wing support
The shareholders also allege that Target’s board focused primarily on appeasing left-leaning nonprofit groups rather than assessing the financial risks of its DEI and environmental, social, and governance (ESG) policies.
The complaint states that Target’s DEI policies were influenced by nonprofit stakeholders with whom the company had existing partnerships, creating a potential conflict of interest.
“Target further demonstrated its oversight of only left-wing ESG risks by engaging in an ideologically motivated campaign to restrict books on LGBT issues from a conservative perspective from its stores and other sales platforms. Target engaged in and continues to engage in this campaign for no rational purpose despite ongoing political backlash,” the filing states.
Target scales back DEI, faces backlash from activists
This is not the first time Target has faced legal challenges over the issue.
In December 2024, Target shareholders survived a motion to dismiss in a separate lawsuit related to the company’s promotion of pro-LGBT merchandise. U.S. District Judge John Badalamenti denied Target’s motion, stating that available evidence suggests the retailer may have misled investors about the risks associated with its Pride Month campaign.
In January, Target announced it was scaling back some of its DEI programs. In response, organizers of the Twin Cities Pride Festival recently stated that Target is no longer welcome at the Minnesota parade, citing the company’s decision to reduce its DEI efforts.
TOP PHOTO: Target Corporation participates in 2019 Pride Parade. (Susan Chou Photography / Shutterstock)