Last Updated on February 22, 2025 by Bertrand Clarke
Target Corporation finds itself at the center of a heated cultural and legal storm as its diversity, equity, and inclusion (DEI) initiatives draw fire from both conservative groups and progressive advocates. The retail giant, long known for its progressive branding, is now grappling with lawsuits, consumer boycotts, and a polarized public response to its DEI policies and Pride Month merchandise. The controversy underscores the challenges corporations face when navigating socially charged issues in an increasingly divided political landscape.
The latest legal challenge came on Thursday when Florida Attorney General James Uthmeier, a Republican, joined forces with America First Legal, a conservative advocacy group founded by former Trump administration official Stephen Miller, to file a lawsuit against Target. The suit alleges that Target failed to adequately disclose the financial risks associated with its DEI programs and its 2023 Pride Month merchandise collection. The plaintiffs, representing a Florida board overseeing state pensions and investments, claim that Target’s actions misled investors and concealed potential risks to the company’s bottom line.
This lawsuit is part of a broader conservative effort to push back against corporate DEI initiatives, which critics argue prioritize social agendas over shareholder interests. The case also follows Target’s decision to scale back some of its DEI policies earlier this year, a move that came after sustained pressure from conservative groups and former President Donald Trump’s calls to roll back DEI programs in the private sector. However, Target’s retreat from its DEI commitments has not gone unnoticed by progressive advocates, who have accused the company of capitulating to bigoted pressure and abandoning its long-standing commitment to diversity and inclusion.
The backlash from both sides has placed Target in an unenviable position, caught between conservative legal challenges and progressive calls for accountability. Civil rights groups and even the heirs of one of Target’s founders have criticized the company for its perceived retreat from DEI, urging it to reaffirm its commitment to diversity as a core business principle. Meanwhile, conservative groups have seized on the controversy to challenge the legitimacy of corporate DEI programs altogether.
Pride Month Controversy and Its Fallout
The roots of the current legal battle trace back to Target’s 2023 Pride Month campaign, which featured merchandise designed to celebrate the LGBTQ+ community. Among the items were “tuck-friendly” swimsuits for transgender customers, which became the focal point of a heated debate on social media. Conservative media figures and online commentators falsely claimed that the swimsuits were being marketed to children, sparking outrage and calls for boycotts. Despite fact-checking by organizations like the Associated Press, which debunked the claims, the backlash escalated into violent threats against Target employees and instances of vandalism in stores.
In response to the hostility, Target removed some of the most controversial items from its shelves, citing concerns for employee safety. While the decision was intended to de-escalate tensions, it angered LGBTQ+ advocates and allies, who accused the company of caving to bigoted pressure. The fallout from the Pride Month controversy was reflected in Target’s financial performance, with the company reporting a rare decline in quarterly sales following the campaign. Although sales rebounded in subsequent quarters, the incident left a lasting impact on Target’s reputation and its relationship with both conservative and progressive consumers.
This is not the first time America First Legal has targeted the retailer over its Pride Month merchandise. The group previously filed a lawsuit alleging fraud related to the 2023 backlash, a case that remains ongoing. Legal experts suggest that these lawsuits represent a growing trend of using securities litigation to challenge corporate DEI programs, particularly by questioning whether companies have adequately disclosed the risks associated with social and cultural initiatives.
“This is part of a new and growing trend of using securities lawsuits to attack corporate DEI programs, challenging whether risk disclosures were adequate,” said Jason Schwartz, an attorney at Gibson Dunn. “This kind of public-private partnership with state attorneys general will likely pave the way for others to follow.” However, Schwartz noted that such cases are difficult to prove, particularly when they involve disclosures about risks tied to social issues.
Target’s DEI Retreat and Its Consequences
The lawsuit comes at a time when Target’s DEI policies are under intense scrutiny. In January, the company announced significant changes to its diversity initiatives, including the elimination of hiring goals for minority employees and the dissolution of an executive committee focused on racial justice. Target framed these changes as part of a new strategy called “Belonging at the Bullseye,” which emphasizes creating a sense of inclusion for employees, customers, and communities. The company also cited the need to adapt to an “evolving external landscape.”
However, Target’s decision to scale back its DEI efforts has drawn sharp criticism from progressive advocates, who argue that the company is abandoning its commitment to social justice. No other major retailer has faced as fierce a backlash from DEI supporters as Target, largely because of its reputation as a progressive brand with a customer base that values inclusivity. Companies like Walmart, John Deere, and Tractor Supply, which have also faced criticism over their DEI policies, have not experienced the same level of scrutiny as Target.
The fallout from Target’s DEI retreat may already be impacting its business. Recent data from Placer.ai, a firm that tracks foot traffic using phone location data, shows a noticeable decline in customer visits to Target stores over the past three weeks. While foot traffic has also slowed at Walmart and Costco, the drop has been most pronounced at Target. During the week of February 10, visits to Target stores fell by 3.9%, compared to a 1.4% decline at Walmart. In contrast, Costco, which has maintained its DEI policies, saw a 4.6% increase in foot traffic during the same period.
Analysts caution that the slowdown in foot traffic could be influenced by a variety of factors, including weather conditions, economic trends, and broader consumer behavior. However, the data suggests that Target’s DEI controversy may be contributing to the decline, particularly among progressive consumers who feel betrayed by the company’s recent actions.
A Broader Cultural Battle
Target’s predicament highlights the challenges corporations face when navigating contentious social issues. As DEI initiatives become increasingly politicized, companies must weigh the risks of alienating conservative consumers against the potential backlash from progressive advocates. For Target, the stakes are particularly high, given its reputation as a progressive brand and its reliance on a customer base that values inclusivity.
The outcome of the lawsuit and the broader debate over corporate DEI programs could have far-reaching implications for businesses across the country. As companies grapple with the complexities of social responsibility and shareholder interests, Target’s experience serves as a cautionary tale of the risks and rewards of taking a stand on divisive issues. In the meantime, the retail giant remains caught in the crossfire, struggling to balance competing demands from all sides.
