Target May Have ‘Lost Control Of Narrative’

Gee, d'ya think? In this morning's New York Post,

Target’s decision to move some of its LGBT pride apparel in some of its locations made national headlines, and it may have lost control of its own narrative in the process, a top consumer researcher says.

Notice how gingerly the Post is covering this story. As I noted a week ago, Target's own corporate flack Erik Castaneda told Reuters that products are being withdrawn at all locations, not just in some southern states.

The products Target is withdrawing are being removed from all its U.S. stores and from its website, Castaneda said.

And as I noted yesterday, a YouTuber went undercover, representing himself as someone who wanted to buy a "tuck friendly" swimsuit, and was able to speak with a manager who explained these were "out of stock". Clearly Target is doing this very quietly, but as I noted in yesterday's post, it appeared to be actively dumping its Pride products even before the start of Pride Month.

But let's get back to the Post story:

[Chief insights officer for Collage Group David] Evans said Target had a long history of connecting with the LGBT community, but in the time period since it came to light that it was moving some of its Pride displays due to what it claimed were “threats” against some staffers, it’s faced heat from both ends of the political spectrum.

. . . "they probably did lose control of the narrative a little bit, because what ended up happening was the press is all about ‘Target pulls the merchandise,’ as opposed to Target employees are being threatened by, in fact, a very, very small group of people who represent a very small minority of anti-LGBT sentiment,” he told Fox News Digital.

Here's the problem. It's generally assumed that the Target and Bud Light boycotts are equivalent and stem from the same large-scale customer dissatisfaction with corporate catering to radical queers. The most easily quantifiable measure of how effective the boycotts have been is Bud Light sales:

The sales volume of Bud Light dropped 29.5% in the week ending May 20 as compared to the same period last year, according to data provided to Newsweek by Bump Williams Consulting and Nielsen IQ. This data showed the sales revenue drop 25.7% in the same period.

The nearly 30% drop marks another increase in losses week to week since the boycott gained traction in April. Bud Light sales dropped 28.4% from last year for the week ending May 13.

Bud Light lost 24% of its sales and Budweiser fell 10.5% in the four weeks ending May 20, according to the data.

Current headlines suggest this level of decline threatens Bud Light's position as the top US beer brand. This is simply not the result of "a very, very small group of people who represent a very small minority of anti-LGBT sentiment". We simply don't have equivalent reports of Target sales, but we do hear from headlines that Target's stock has been declining at record levels:

Target’s stock has lost a whopping $13.8 billion over the past two weeks, hitting its lowest levels in nearly three years as the “cheap chic” discount retailer continues to face backlash over LGBTQ-friendly kids clothing.

. . . The ongoing losses are a result of an ongoing 14-day boycott that was triggered by Target’s release of “PRIDE,” an LGBTQ-friendly line that includes clothing for children and “tuck-friendly” women’s swimwear with “extra crotch coverage.”

What this simply means is that investors are shorting Target stock irrespective of published sales figures, which aren't available.

Short selling involves borrowing a security whose price you think is going to fall from your brokerage and selling it on the open market. Your plan is to then buy the same stock back later, hopefully for a lower price than you initially sold it for, and pocket the difference after repaying the initial loan.

The link makes it clear that shorting a stock involves considerable risk, and short sellers must already have margin accounts with their brokerages to cover that risk. In other words, these are experienced investors who are making informed bets about Target's future performance. Again, this is not a story about "a very, very small group of people who represent a very small minority of anti-LGBT sentiment". This is a story about experienced investors who are losing confidence in Target's management.

That Target should be keeping so quiet about withdrawing its "tuck friendly" swimsuit range is an indication that its management is doing all it can to conceal a disastrous mistake. The whole situation is starting to remind me of the scene in The Big Short where Mark Baum, the contrarian fund manager, accuses a credit agency analyst, shown wearing medical eyeshades in the picture at the top of this post, of refusing to recognize that the mortgage securities her agency rates are fraudulent.

The corporations that are facing the boycotts are basically hoping it'll all blow over before they're forced to capitulate with apologies and CEO departures. It can take a long time for investors to respond to market reality, as The Big Short makes clear, but eventually there's a reckoning. Legacy media, including the New York Post, is feeding the denial, at least for now.

UPDATE: JPMorgan Chase & Co. downgraded Target stock on Thursday from "overweight" to "neutral," with analysts citing the possibility of a decline in sales due to consumers pulling back spending amid persistent inflation.

This comes as the retailer struggles with the backlash from its Pride merchandising marketing campaign which offered merchandise that included female-style swimsuits that have the option to "tuck" male genitalia.

The downgrade has nothing to do with that, of course. Just thought they'd mention it.

What do you think might happen to the stock if they actually announced they were sending the swimsuits to the landfill and the CEO was resigning?