Target sounds alarm on unexpected customer behavior | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Over the past few years, Target (TGT) has been pulled in two different directions.

The retail giant first faced boycott calls from conservative consumers in 2023 over its pride collection, which garnered backlash for containing items that were marketed toward children. Since then, Target has received criticism for its diversity, equity, and inclusion policies, and its sales have struggled for several financial quarters.

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Then, in January this year, after Target boldly decided to scale back its DEI program, it faced another wave of boycott threats from consumers who disagreed with the change. According to a recent report from Placer.ai, foot traffic in Target’s stores remained flat in January compared to the same month last year.

Despite the controversy that has been brewing over the past few months, Target recently revealed that it slightly increased its sales during the 2024 holiday season.

In its fourth-quarter earnings report for 2024, Target revealed that its comparable sales increased by 1.5% year over year, while digital comparable sales increased by almost 9%. However, Target’s operating income, a company’s profit after expenses, declined by about 21% year over year.

Target reveals grim outlook on future sales

Despite facing a small spike in comparable sales during the last few months of 2024, Target predicts that its net sales this year will only increase by 1%, reflecting flat comparable sales growth.

During an earnings call on March 4, Target Chief Financial Officer Jim Lee said that the company’s sales predictions for 2025 reflect “a wide range of potential scenarios and uncertainty” in the market.

A Target customer looks at a display of board games while shopping at Target store.

Justin Sullivan/Getty Images

“We’re going to be focusing on controlling what we can control,” said Lee during the call. “What we don’t know is potential consumer demand that’s across the board, across – based on how tariffs ripple across the economy, for instance. But we have that wide range for a reason.”

Tariffs are taxes companies pay to import goods from overseas, and the extra cost is often passed down to consumers through higher prices. On March 4, President Donald Trump doubled his previous 10% tariff on all goods imported from China to 20%. He also imposed 25% tariffs on all goods from Mexico and Canada.

To minimize the impact of tariffs, Target has been working on diversifying where it sources its products. It has pulled some of its production out of China, and is looking to move some of its production across Asia, the Western Hemisphere, Guatemala and Honduras.

Lee also warned investors during the call that Target has seen its sales “become more volatile” since the 2024 holiday season.

“In February, we saw record sales performance on Valentine’s Day,” said Lee. “But overall topline performance for the month was soft as cold weather affected Apparel sales and consumer confidence declined, impacting our discretionary assortment more broadly.”

Target faces another significant threat

As Target prepares itself for a challenging year amid several headwinds that can have a major impact on its sales, the retailer has another major threat on its hands.

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Starting today, Target is facing a 40-day boycott from consumers as a result of the company scaling back its DEI policies, which were first put in place in 2020 after George Floyd was murdered by a white police officer who assisted in his arrest.

In a new interview with CNN, the Rev. Jamal Bryant, a pastor from Atlanta who started the boycott, said that Black people deserve “some loyalty, some decency and some camaraderie,” as they spend over $12 million a day.

“We’re asking people to divest from Target because they have turned their back on our community,” said Bryant.