By Anuja Bharat Mistry, Nicholas P. Brown and Danielle Kaye
Aug 25 (Reuters) – Target shares slid as much as 5% after the retailer apologized for and pulled a Halloween costume criticized for evoking Blackface, renewing concerns about brand missteps just as its financial turnaround effort had begun to bear fruit.
In an internal email viewed by Reuters, Chief Merchandising Officer Cara Sylvester echoed Target’s public apology on Monday, telling employees the item “never should have been in our assortment” and that the company would “learn from this and do better.”
Still, Wall Street was spooked by echoes of a product misstep around 2023’s Pride Collection and a controversy last year over Target’s decision to roll back its diversity, equity and inclusion policies.
The Halloween costume is “another example … where Target has lost trust with its consumer base,” said Tejal Patel, executive director of SOC Investment Group, a Target shareholder that has long criticized company leadership.
Morningstar analyst Brett Husslein said the share drop reflected “the fragility of (Target’s) competitive positioning,” noting that it relies on consumer relations and shopping experience to compete with retailers like Walmart and Costco that win on price.
APOLOGY FAILS TO SWAY
The product, sold as the “Kids’ Glows Under Blacklight Circus Clown Halloween Costume,” prompted backlash on social media as some consumers said it resembled a racist caricature evocative of minstrel shows.
“We know this is especially hurtful for our Black guests, team members and partners,” Target said in Monday’s statement.
Some stakeholders remained upset.
Sheletta Brundidge, a Minneapolis entrepreneur who last year protested Target’s DEI rollbacks, said the retailer’s apology did not sway her. “Target keeps showing us who they are,” she said.
A post in BlackPeopleofReddit, a Reddit community with 1.6 million members, urged a Target boycott. Several users commented that they had boycotted the company since its DEI reversal.
One commenter wrote, “I don’t see how anyone could look at (the costume) and not notice what it was.”
Other commenters were slower to judgment, with one saying they were “trying to not attribute (the costume) to malice,” and another noting that boycotting Target could backfire by hurting Black-owned brands sold there.
Demonstrating to stakeholders that Target has improved its internal processes might prove more effective than an apology, said Angeli Gianchandani, adjunct instructor at New York University’s School of Professional Studies.
“The fix is a disclosed review process that checks new products and their marketing … before they reach a shelf,” said Gianchandani, adding that markets tend to tolerate single mistakes, but punish repeated ones.
FRESH CONTROVERSY REVIVES SCRUTINY
The backlash steepens the path for a U.S. retailer trying to turn around lagging sales.
New CEO Michael Fiddelke has cut prices and refreshed merchandise, and there are some positive results. The company has reported consecutive strong quarters, with shares up about 70% this year and reaching a near two-year high on Monday.
Target declined to comment on who designed the Halloween costume and did not provide details on the product approval process.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Devika Syamnath, Anil D’Silva and Cynthia Osterman)
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