By Nathaniel Meyersohn, CNN
New York (CNN) — Target’s stock has lost about a fifth of its value over the past two and half weeks. It’s not about what you may have heard.
If you follow right-wing media or Twitter, you may have seen a lot of coverage recently about Target’s stock price falling because of outrage over its Pride Month clothing.
It’s conceivable that some investors sold Target because of the negative coverage on Fox News and other right-wing outlets. But Target’s stock went on a nine-day losing streak and hit a three-year low this week because of broader changes in the US economy, the possibility of a recession, and Target’s over-exposure to discretionary merchandise, according to corporate executives and retail and investment analysts.
Retail stocks sinking broadly
Target is just one of many retail stocks that is dropping right now, and it’s not even the biggest.
Since Target reported earnings on May 17, its stock dropped 19% through Thursday’s close.
The culprit for all these stock drops is not clothing for LGBTQ consumers and allies, said Berna Barshay, a veteran research and investment analyst. It’s “general retail and consumer jitters. Retail is just very out of favor right now, so all the stocks in the sector are overcorrecting.”
Shoppers, particularly Target’s primary shopping base of middle-income households, have been pinched by rising costs and inflation. They have made changes to their shopping patterns as a result.
More than half of Target’s merchandise is discretionary – clothing, home decor, electronics, toys, party supplies and other non-essentials. Shoppers have shifted away from discretionary goods and instead are spending more on food, household essentials, travel and other services.
These changes are hurting Target.
Target’s sales inched up just 0.5% last quarter. Target said sales of clothing, home goods and other discretionary categories dropped by up to low double-digits, while food and beverage sales increased by high single digits.
JP Morgan, which downgraded Target’s stock Thursday, said in a report that “we continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods is ongoing.” JP Morgan did not include a word about consumer backlash to Target’s Pride Month collection.
“Retail is in a strong downdraft. There is real panic about the state of the consumer,” said Barshay.
Reality vs. myth
Yet right-wing outlets and personalities have repeatedly claimed that Target’s decline was due to backlash over its Pride Month clothing. “Target shares hit three-year low as Pride backlash hits bottom line,” a Fox News headline said Friday.
Fox News aired more than 2 hours of coverage on Target’s Pride Month displays from May 23 to May 30, according to Media Matters, a liberal media monitoring group.
Target faced a homophobic campaign that went viral on social media over its annual Pride Month clothing collection. Fueled by far-right personalities, including self-described “theocratic fascist” Matt Walsh, and on social media platforms, the anti-LGBTQ campaign spread misleading information about the Pride Month products and Target’s business practices.
The campaign became hostile, with violent threats levied against Target employees and instances of damaged products and displays in stores. Target said on May 24 that it was removing certain items that caused the most “volatile” reaction from opponents to protect its workers’ safety.
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