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Target’s Sales Hit by Pride Month Merchandise Backlash

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Target’s Sales Hit by Pride Month Merchandise Backlash

Target on Wednesday said its sales declined in the second quarter, a period in which the retailer faced boycotts and right-wing backlash over its Pride Month collection. The company also slashed its full-year guidance.

Target said its comparable sales fell 5.4 percent in the second quarter, which ended July 29, versus the same period last year. It said both the number of transactions and the average transaction amount declined during the quarter. E-commerce sales fell 10.5 percent.

Despite the sales decline, the company reported higher profit margins than analysts expected, as it offered fewer discounts and reduced its inventory costs.

Target’s stock rose more than 5 percent in early trading.

In May, Target faced criticism and calls for boycotts for its displays and products tied to Pride Month, the annual celebration for the L.G.B.T.Q. community.

Those opposed to the displays had posted themselves entering Target stores and calling out Pride-related children’s clothing and greeting cards. Others had thrown some of the merchandise on the ground.

In some locations around the country, the company moved Pride displays to the back of stores and re-evaluated some of its merchandise on its shelves. At the time, the company said it made the decision in the interest of employee safety.

Among the items angering some customers was a one-piece, tuck-friendly swimsuit — a bathing suit that has extra material for the crotch area for individuals who want to conceal their genitalia. Target said it was available only in adult sizes, though some critics erroneously claimed it was being sold to children. The collection also included children’s books about transgender issues and gender fluidity.

On a call with analysts on Wednesday, Target’s chief executive, Brian Cornell, addressed the backlash. “As we navigate an ever-changing operating and social environment, we’re committed to staying close to our guests and their expectations of Target,” he said.

“At the heart of our purpose is our commitment to bring joy to all the families we serve,” Mr. Cornell later said in response to a question about how the retailer was approaching inclusivity, particularly when it comes to the L.G.B.T.Q. community. “So we want to make sure Target’s that happy place for all of our guests.”

Target executives also said that the company saw a “sequential improvement” in foot traffic in July. That month, Target also ran promotions around Amazon Prime Day.

Spending growth has cooled somewhat since pandemic splurges in which big-box retailers like Target benefited from a significant boost in traffic. Target said it expected comparable sales to see a mid-single digit percentage decline for the remainder of the year.

Several major retailers are reporting their latest earnings this week. On Wednesday, TJX, which owns T.J. Maxx, Marshalls and HomeGoods, reported a 6 percent jump in comparable sales in the second quarter and raised its forecasts for the year. TJX said it had strong foot traffic to its stores and demand for apparel and home goods. Analysts expect comparable sales at Walmart, which reports earnings on Thursday, to rise about 4 percent in the second quarter.

Another company swept up in the current political and cultural environment in the United States, the beer-making giant Anheuser-Busch InBev, also recently reported a sharp fall in its second-quarter sales, as it counted the cost of a conservative-led boycott of Bud Light after the brand’s collaboration with a transgender influencer. The company’s revenue in the United States in three months through July fell more than 10 percent from a year earlier. During that period, Bud Light lost its spot as the nation’s top-selling beer, to Modelo Especial.

J. Edward Moreno contributed reporting.

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