The boycott hitting Target right now delivered another whammy to the retail giant KeyBanc Capital Markets recently lowered their outlook the retail giant and downgraded their stock.
The analyst, Bradley Thomas, downgraded Target’s stock from overweight to sector weight, citing increasing consumer headwinds over the next 12-18 months. Thomas believes that this could not only put off the company’s margin recovery story for another year but could also lead to a negative impact to near-term sales. This outlook is shared by other companies, such as JPMorgan Chase, whose analysts cite “persistent inflation” as a potential factor in a drop in sales.
Inflation is part of it, but there is no denying that the company’s stock drop occurred when their woman’s “tuck” swimwear was promoted, causing a boycott.
Below is the past month of Target’s stock price; note the dates it dropped, which had nothing to do with inflation.
Target must grapple with the fallout from their Pride merchandising campaign, which offered up female-style swimsuits that are designed to accommodate male genitalia – a decision that has been widely seen as a misstep. Shares of the company have dropped by more than 20% within the quarter as the company works to address this and other issues.
The boycotts are working, from NBC News:
While it’s too early to say how successful these efforts will be in lowering sales at the companies recently drawn into this attack, damage has been done to the stocks already. And some on Wall Street expect that to continue with analysts recently downgrading Target’s and Anheuser-Bush’s ratings, citing in part the ongoing controversy.
“The main reason boycotts generally are effective is because they threaten the reputation of the company by putting the company in a negative media spotlight, and companies don’t want to have negative attention of any kind drawn to them,” said Brayden King, a professor of management and organizations, who has studied how boycotts impact company stock prices, in an interview.
King’s research focused on 133 separate boycotts launched between 1990 and 2005, in a study that was published in 2011. About a quarter of the 177 companies targeted by these actions offered a concession to protestors.
“They often concede to boycotter’s demands, not because they feel that there’s sales pressure on them, but rather because they don’t want to continue to be a target of negative media attention,” he said.
Target doesn’t seem to be doing anything except keeping their heads down, but the boycott is definitely taking effect, and the media is trying to make excuses to cover it up.