By Sarah Nassauer

Target's troubles are mounting.

The retail giant said a laundry list of problems dragged down its quarterly sales, including a boycott by shoppers who disagreed with its decision this year to end some diversity programs.

Target's sales have been tepid for years. In the three months ended May 3, they got even worse, with comparable sales falling 3.8% -- a steeper drop than analysts expected. The company Wednesday lowered its financial forecast for the fiscal year, citing uncertainty around tariffs, the economy and consumer demand.

"We're not satisfied with these results," Target Chief Executive Brian Cornell said on a call with reporters.

Target's quarterly sales fell in part because of softer spending on discretionary items -- things that people want, but don't need -- and a broad decline in consumer confidence, Cornell said.

Target once was among the most outspoken corporate supporters of Black and LGBTQ rights. But in January the retailer ended its workforce and supplier diversity programs, after paring back its LGBTQ-themed merchandise in 2023.

Church pastors, a former state senator in Ohio, a Minneapolis civil-rights lawyer and other supporters of corporate diversity policies called for a Target boycott, and word spread on social media. Cornell said the boycott "played a role in our first-quarter performance" but that he couldn't estimate the size of its impact. Target is focused on being a place where "our guests and our teams and our partners feel included," he said.

The retailer aims to keep price increases as small as possible, as tariffs increase the cost of imported goods, Cornell said.

"We have many levers we can use to mitigate this impact, and price is the very last resort," he said.

Last week, Walmart announced that it would raise prices because of tariffs, prompting President Trump to criticize the company. Target said it would work to offset tariff-related costs by negotiating with suppliers, diversifying what it sells, adjusting the timing of orders, shifting production to other countries and, when necessary, raising prices.

Target has been losing ground for years to both Walmart and Amazon.com. Target's comparable sales growth -- a tally of spending in established stores and from online orders -- has lagged behind Walmart for 13 straight quarters.

Shoppers last year complained about Target's bare shelves, long checkout lines, dull merchandise and products locked to prevent theft.

At an investor day in March, Target executives said they wanted to bring back the chain's "Tarzhay" magic, with new products, improved store brands and a better store experience.

Target now plans to add thousands of interesting new products to its offerings, Cornell said. He said he has formed a group of top executives focused on "acceleration," and has shifted some executive roles to move faster toward growth.

Write to Sarah Nassauer at Sarah.Nassauer@wsj.com

(END) Dow Jones Newswires

May 21, 2025 06:31 ET (10:31 GMT)

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