Target Reports 2.8% Sales Drop Cites Tariff Costs, DEI Backlash

Target reported a 2.8% drop in first-quarter sales, attributing the decline to consumer backlash over its rollback of diversity, equity, and inclusion (DEI) efforts and uncertainty caused by tariffs under President Trump's trade policies. The company lowered its full-year sales and earnings forecasts, expecting a low single-digit sales decline, citing decreased foot traffic and smaller basket sizes as key factors. CEO Brian Cornell warned of "massive potential costs" from tariffs, especially given Target's significant import reliance, but emphasized that price increases would be a "very last resort," with the company employing various strategies such as diversifying suppliers and reducing dependence on China-made goods. Target has decreased its share of China-made products from 60% in 2017 to 30% currently, aiming for below 25% soon to mitigate tariff impacts. The challenges from tariffs are compounded by ongoing shifts in consumer behavior amid economic pressures and the DEI-related boycott, which has also affected foot traffic and sales. Despite these pressures, Target aims to offset most tariff costs through operational adjustments rather than resorting to price hikes, contrasting with some competitors like Walmart that have warned of inevitable price increases.