Target was sued on Thursday by the state of Florida for allegedly hiding the risks associated with its diversity and social initiatives. The lawsuit claims these actions led to a customer backlash that erased billions of dollars from the retailer’s market value.
The State Board of Administration of Florida, which manages public pension funds that own Target stock, filed the securities fraud lawsuit in federal court in Fort Myers, Florida.
This marks the first shareholder lawsuit led by a U.S. state regarding Target’s alleged mismanagement of diversity, equity, and inclusion (DEI) efforts.
Florida accuses Target of deceiving investors and its core customer base of working families. The state claims the retailer made false and misleading statements in financial reports and proxy statements about its DEI agenda and environmental, social, and governance efforts.
Additionally, Florida alleges that CEO Brian Cornell downplayed the severity of customer boycotts following a “disastrous” and “exceptionally offensive” Pride Month campaign in May 2023, which worsened Target’s share price decline.
“Corporations that push radical leftist ideology at the expense of financial returns jeopardize the retirement security of Florida’s first responders and teachers,” stated James Uthmeier, the state’s Republican attorney general.
Target did not immediately respond to requests for comment.
The Minneapolis-based retailer argues in court papers that it consistently warned investors about the potential risks of consumer boycotts stemming from its social and environmental initiatives.
The backlash from the Pride Month campaign prompted Target to remove some LGBTQ-themed merchandise from its shelves. This decision came after in-store confrontations led several employees to fear for their safety.
As a result, Target’s share price has fallen, while rival Walmart’s (WMT.N) share price has approximately doubled.
Target’s stock is down more than 50% from its peak in November 2021. This includes a 22% drop on November 20, 2024, erasing about $15.7 billion in market value after the retailer projected disappointing profits and holiday sales.
On January 24, Target announced plans to end its DEI initiatives this year.
The company joined Walmart, Amazon.com, and several other firms in scaling back such efforts, which have faced criticism from U.S. President Donald Trump and numerous conservatives.
Florida’s lawsuit adds to similar proposed class actions filed on January 31 and in August 2023, both also in Fort Myers.
The case is titled State Board of Administration of Florida v Target Corp et al, in the U.S. District Court, Middle District of Florida, No. 25-00135.
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