Target’s first-quarter earnings reveal a perfect storm of economic and political backlash, with the company caught between ideological battles and the broader turbulence of an evolving consumer landscape.
Sales fell more than expected, down 2.8% to $23.85 billion, missing Wall Street projections by nearly half a billion dollars. The causes? A combination of boycotts over DEI policy reversals and the early economic impact of President Donald Trump’s revived tariff regime.
Earlier this year, Target scaled back its diversity, equity, and inclusion (DEI) initiatives, a move widely interpreted as a concession to political pressure from the returning Trump administration. But rather than calming tensions, the reversal appears to have alienated a significant portion of its core customer base, many of whom viewed the DEI programs as fundamental to the brand’s identity and values.
The result? A consumer backlash and localized store boycotts, adding to Target’s growing reputational and financial woes. The company’s decision to walk back DEI policies has exposed it to criticism from both sides of the cultural divide—a worst-case scenario for any national retailer.
Target is also contending with the tangible effects of Trump’s new tariffs, part of his broader trade offensive aimed at reshaping U.S. supply chains and penalizing reliance on imports, particularly from China. CEO Brian Cornell, along with the heads of Walmart and Home Depot, reportedly warned the Trump White House that the trade policy risked spiking prices and causing supply chain disruptions.
That warning is already bearing out. While Target has yet to release detailed tariff-related pricing adjustments, Cornell noted that pricing is being recalibrated weekly, with some goods going up and others down.
Walmart, meanwhile, has openly acknowledged price increases across everyday items, citing Trump’s trade war as the cause. The price of bananas, for instance, has climbed from 50 cents to 54 cents per pound—an 8% increase. That may seem small, but analysts warn that similar bumps across a range of imported goods could hit low- to middle-income consumers hard.
With store traffic down and shares sliding more than 6% on Wednesday morning, Target is pivoting back to basics. The company announced it will introduce 10,000 new budget-friendly items, most under $20, with some starting at just $1. This aggressive push toward affordability reflects both a nervous retail environment and the need to rebuild brand loyalty in the wake of political and economic blowback.
“We’re not satisfied with these results, so we’re moving with urgency,” Cornell said during the earnings call. “We’ve got to drive traffic back into our stores or visits to our site.”
