A Target shareholder whose shares lost over $20,000 after the retailer’s disastrous Pride Month collection that featured “tuck-friendly” swimwear and LGBTQ-friendly gear for infants and children is suing the store for allegedly misleading investors.
The lawsuit was filed by anti-radical left group America First Legal on behalf of investor, Brian Craig, who spent around $50,000 for 216.450 shares of Target in April 2022.
By April 2023, the value of Craig’s holdings fell to $34,839, and then dropped to $28,896 by June 14 — in the middle of Pride Month, as Target was in the middle of a boycott triggered by a collection that included children’s book titled “‘Twas the Night Before Pride,” and a handful of T-shirts donning LGBTQ-friendly slogans, like “live laugh lesbian.”
Target’s “board of directors betrayed both Target’s core customer base of working families and its investors by making false and misleading statements concerning Target’s environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) mandates that led to its disastrous 2023 children-and-family themed LGBT Pride campaign.”
These “false and misleading statements,” the court documents argued, led “shareholders to unknowingly support Target’s board and management in their misuse of investor funds to serve its divisive political and social goals — and ultimately lose billions.”
Even after Target was getting fierce backlash from its conservative consumers over its Pride-themed merchandise, it “continued the LGBT-Pride campaign and continues to sell products associated with the campaign, causing further damage to Target’s stock price,” the suit alleges.
As of Monday morning, Target’s website still touted Pride apparel for sale.
American First Legal vice president and general counsel Gene Hamilton said in a press release: “Federal law requires publicly-traded corporations to provide certain information to shareholders in their proxy statements that allow those shareholders to make informed decisions. As alleged in our complaint, Target failed to execute its duty to its shareholders.”
As a result, Craig is requesting that Target admit to violating rules in the Securities Exchange Act of 1934, which governs transactions in the secondary market, and award financial damages.
Should Craig win the case, the sum he receives would be determined at a later trial.
Representatives for Craig at American First Legal did not immediately respond to The Post’s request for comment.
The Post has also sought comment from Target.
Following Target’s release of its rainbow-clad collection, “PRIDE,” in May, Target’s stock lost nearly $14 billion as the controversy grabbed headlines.
The court documents, which were filed in Florida federal court earlier this month, claim that the steep drop in market value is a “direct and predictable result of management’s calculated decisions to promote sexualized material to children.”
About $10 billion of market cap was lost between May 18 and 28, the filing said, referencing a New York Post article — the cheap-chic retailer’s “longest losing streak in 23 years.”
“The stock value remains depressed,” the suit added, noting that Craig still owns 216 shares of Target.
As of Monday morning, the Minneapolis-based retailer’s share price fell nearly 0.4%, to $130.72.
Over the past three months, Target’s stock has slipped about 14%, though shareholders have been losing money from their investments in the retailer long before it released the Pride collection.
However, after Target reported that its quarterly sales for the first time in six years for the three-month period ended July 29, it was attributed customers’ “negative reaction” to its spring Pride clothing.
Sales at stores and digital channels open for at least a year were off 5.4% from a year earlier, according to Target’s Q2 earnings report released last week, while digital sales slipped 10.5%.
Target’s CFO Michael Fiddelke addressed Target’s disastrous rainbow-clad collection in an earnings call on Wednesday, saying: “Traffic and top line trends were affected by the reaction to our Pride assortment.”
Fiddelke said on the call that the retailer couldn’t quantify the impact the Pride collection alone had on comparable sales.
