Target faces lawsuit over DEI push — accused of misusing funds for ‘political’ goals

Target shareholders filed a class action lawsuit against the retailer on January 31, claiming that it misused funds “to serve political and social goals.”

The legal action, led by the City of Riviera Beach Police Pension Fund, slammed Target for failing to disclose the risks of pushing diversity, equity, and inclusion initiatives that ultimately led to customer boycotts and a drop in stock prices — including a 22% dip on November 20.

‘Advancing “racial equity” for its own sake, even if it was “provocative.”‘

In May 2023, Target faced intense pushback from consumers for creating a “Pride” section in its store locations that featured “tuck-friendly” bathing suits, LGBTQ onesies for babies, and other “gender fluid” merchandise.

The fallout prompted the retail giant to pull some of the products from its shelves and relocate the section to the rear of its stores but not before some customers called for a boycott.

By June 2023, JPMorgan Chase had downgraded Target’s stock from a bullish “overweight” rating to “neutral,” blaming the change on “recent company controversies.”

Target admitted that the “negative reaction” to its controversial merchandise contributed to a decline in sales.

Brian Craig, a shareholder, sued the retail giant in August 2023, calling the blowback from its pro-LGBT products “disastrous.” He noted that his stock was valued at roughly $35,000 before the initiatives and dropped to $29,000 afterward.

Craig accused Target of misusing investors’ funds “to serve its divisive political and social goals — and ultimately lose billions.”

A similar class action lawsuit was lodged on Friday against the company that, too, claimed Target misused funds to push a political agenda.

It claimed that the retailer misled shareholders into purchasing stock at “artificially inflated prices.” The complaint accused the company of making fraudulent statements and failing to disclose the “known risks” of its DEI initiatives.

“This deceit, through misleading statements in the Company’s public filings, including its 10-Ks and proxy statements, caused Target’s investors to purchase Target stock at artificially inflated prices and to unknowingly support Target’s Board and management in their misuse of investor funds to serve political and social goals,” the complaint read.

“Target’s chief diversity officer also indicated her personal commitment to advancing ‘racial equity’ for its own sake, even if it was ‘provocative,’ and singled out ‘white women’ for special obligations to this cause,” the filing added.

Target did not respond to a request for comment from Reuters.

Editor’s note: A previous version of this article incorrectly stated the class action lawsuit was filed on Friday. The article has been corrected to state the lawsuit was filed on Friday, January 31, as reported by Reuters and local news outlets.

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