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Target Faces Worst Losses in Years, Even More Bad News With Assessment by JPMorgan

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We’ve been following what’s been happening to Target and Bud Light since they’ve pursued their “go woke, go broke” strategies.

Bud Light has taken a tremendous hit, losing almost 30 percent in sales volume as well as 25.7 percent in sales revenue through May 20, and it’s still spiraling out of control. When we last left Target, they’d taken a huge stock plunge. At the close of business on Tuesday, they were down $12.4 billion in market cap. Not only hasn’t it gotten any better, but it’s also continued to get worse. It’s sunk to 131.23 at the time I’m writing on Friday morning, which means they’ve now lost over $13 billion. It’s now been on its longest losing streak in 23 years.

The stock ended Wednesday’s session down 2.2%, marking its ninth straight decline and the stock’s longest losing streak since an 11-day stretch that ended Feb. 24, 2000, according to Dow Jones data. Wednesday also marked the stock’s lowest close since Aug. 11, 2020.

Target TGT shares fell 1.7% in premarket trading Thursday. The stock has fallen 12.2% in 2023, compared with the S&P 500’s SPX gain of 8.9%.

“We continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods (51% of [Target’s] sales) is ongoing,” wrote JPMorgan analyst Christopher Horvers. Disinflation in grocery is also continuing to accelerate, according to Horvers.

On top of tall that, they were just downgraded to neutral from overweight by JPMorgan. They made that move citing “too many concerns rising” regarding Target.

Analysts pointed to the likelihood of a decline in sales due to consumers pulling back spending.

“We continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods (51% of [Target’s] sales) is ongoing,” wrote JPMorgan analyst Christopher Horvers.

“While still positive on a [three-year] basis, [Target] has been giving back share on a [one-year] view and we believe this share loss could accelerate into back to school and linger into holiday given consumer pressures and recent company controversies,” wrote Horvers. “This could turn [Target’s] traffic negative after an impressive run of 12 consecutive positive quarters.”

In other words, they hadn’t been taken a real fall before, the stock fell after the boycott against them began for LGTBQ-oriented items directed at children as well as their Pride design collection being associated with a designer who also made non-Target clothing items with Satan on it, such as “Satan respects pronouns.”

So far apart from claiming that they were moving controversial items, Target hasn’t seemed to do anything to try to ameliorate the controversy. Indeed, their CEO has doubled down saying they think their woke approach was “adding value” to their bottom line, as well as “the right thing for society, and it’s the great thing for our brand.” Cornell said. He claimed it was “building greater engagement” with their customers.

It would seem that the stock plunge and the JP Morgan downgrading would put paid to that argument. But if Target wants to keep digging, they may just find out how low they can go and the true power of the boycott against them.

NEW: That Target Stock Plunge Has Gotten Even Worse

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We’ve seen what has happened to Bud Light since they endorsed transgender influencer Dylan Mulvaney’s “365 Days of Being a Girl” as he mocked girls and women. As I reported earlier, they’ve now been reduced to trying to sell their beer for free (with rebates). Yet, their sales have plummeted by 28 percent, by volume, just as we go into Memorial Day weekend, and they still don’t seem to be able to offload the stuff. They’re even buying some back from distributors at this point if it’s gone past the expiration date. If they can’t recover over this weekend, the beer experts are saying they may have lost a permanent section of their customers who are just not going to come back.

Now, Target is feeling that same weight since outraged customers have turned the boycott on them. My colleague Bob Hoge reported on their plummeting stock over the past week up to Wednesday. But it’s gotten worse.

A week ago Wednesday before the controversy erupted, Target’s stock closed at $160.96 a share, giving the big-box chain a market capitalization of $74.3 billion.

As of early trading on Thursday, however, shares of the company were trading off 1% at $141.76 — capping a weeklong tumble that has shrunk the “cheap chic” discount retailer’s value to $65.3 billion.

That amounts to a 12% drop that has shaved a whopping $9 billion off the company’s market capitalization.

And it’s still going down on Thursday, it’s now at $139.15, according to Market Watch, at about 2:42 ET.

Despite reportedly removing or moving controversial items from their LGTBQ Pride Collection that were targeted toward children, Target CEO Brian Cornell was doubling down on the woke agenda, as I reported, claiming it was “adding value” to their bottom line. “I think those are just good business decisions, and it’s the right thing for society, and it’s the great thing for our brand,” Cornell said. He claimed it was “building greater engagement” with their customers.

Maybe “building,” if Cornell is talking about the “bottom line” on their ESG score, and “engagement,” if that means more people boycotting. But it’s not good when it comes to their stock, not good when it comes to their sales, and not good for the company in the eyes of the American people.

They appear to be trying to step into it even more with an internal email that has leaked about the anniversary of George Floyd’s death.

That’s a bit like jumping from the frying pan into the fire, as they explained how employees could get mental health care if they were upset. The internal email did not mention Memorial Day or any care that the workers might need or care that they should be expressing to customers over that occasion.

As Bud Light shows, Target may have a limited time to turn this around. But it doesn’t sound like the CEO is getting it — he just keeps doubling down. So grab the popcorn, this is likely to get worse for Target, just like it did for Bud Light.