Target is facing legal challenges from Florida and the conservative group America First Legal over its diversity, equity, and inclusion (DEI) programs, including the 2023 Pride Month merchandise collection.
The lawsuit, filed on Thursday, accuses the company of failing to disclose the financial risks associated with these initiatives, which allegedly contributed to a decline in sales during that period. The legal action was brought by Florida Attorney General James Uthmeier and America First Legal, representing a board overseeing state pensions and investments.
The controversy surrounding Target’s 2023 Pride Month merchandise, which included “tuck-friendly” swimsuits and other items marketed to the LGBTQ+ community, ignited significant backlash from conservative media and groups. Some products, including the swimsuits, were falsely claimed to be marketed to children, resulting in protests and threats against Target employees. In response, the retailer removed certain items from stores but faced criticism from both sides—those supporting LGBTQ+ rights and those opposing the merchandise.
The lawsuits point to this backlash as a key factor in the company’s sales decline during that quarter. Target executives acknowledged the strong reactions to the Pride collection during an earnings call but also noted broader economic conditions like inflation that may have contributed to the sales drop. This marks the second lawsuit filed by America First Legal, which alleges that Target misled investors about the potential risks posed by its DEI initiatives. The first lawsuit remains ongoing.
The legal action comes at a time when Target has made significant changes to its DEI policies. In January 2024, the company announced the end of hiring goals for minority employees and removed an executive committee focused on racial justice. Instead, Target introduced a new strategy, “Belonging at the Bullseye,” which it says aims to foster a sense of inclusion while remaining adaptable to the evolving external landscape.
Target is facing significant scrutiny over its DEI retreat, particularly from conservative voices that have actively criticized such corporate initiatives. At the same time, the company has also encountered backlash from supporters of DEI who view these changes as a step backward. As the retailer attempts to balance these opposing pressures, its efforts to address DEI have impacted customer visits, with data showing a decline in foot traffic compared to competitors.
