Target Faces Worst Losses in Years, Even More Bad News With Assessment by JPMorgan

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(AP Photo/Alan Diaz, File)

We’ve been following what’s been happening to Target and Bud Light since they’ve pursued their “go woke, go broke” strategies.

Bud Light has taken a tremendous hit, losing almost 30 percent in sales volume as well as 25.7 percent in sales revenue through May 20, and it’s still spiraling out of control. When we last left Target, they’d taken a huge stock plunge. At the close of business on Tuesday, they were down $12.4 billion in market cap. Not only hasn’t it gotten any better, but it’s also continued to get worse. It’s sunk to 131.23 at the time I’m writing on Friday morning, which means they’ve now lost over $13 billion. It’s now been on its longest losing streak in 23 years.

The stock ended Wednesday’s session down 2.2%, marking its ninth straight decline and the stock’s longest losing streak since an 11-day stretch that ended Feb. 24, 2000, according to Dow Jones data. Wednesday also marked the stock’s lowest close since Aug. 11, 2020.

Target TGT shares fell 1.7% in premarket trading Thursday. The stock has fallen 12.2% in 2023, compared with the S&P 500’s SPX gain of 8.9%.

“We continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods (51% of [Target’s] sales) is ongoing,” wrote JPMorgan analyst Christopher Horvers. Disinflation in grocery is also continuing to accelerate, according to Horvers.

On top of tall that, they were just downgraded to neutral from overweight by JPMorgan. They made that move citing “too many concerns rising” regarding Target.

Analysts pointed to the likelihood of a decline in sales due to consumers pulling back spending.

“We continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods (51% of [Target’s] sales) is ongoing,” wrote JPMorgan analyst Christopher Horvers.

“While still positive on a [three-year] basis, [Target] has been giving back share on a [one-year] view and we believe this share loss could accelerate into back to school and linger into holiday given consumer pressures and recent company controversies,” wrote Horvers. “This could turn [Target’s] traffic negative after an impressive run of 12 consecutive positive quarters.”

In other words, they hadn’t been taken a real fall before, the stock fell after the boycott against them began for LGTBQ-oriented items directed at children as well as their Pride design collection being associated with a designer who also made non-Target clothing items with Satan on it, such as “Satan respects pronouns.”

So far apart from claiming that they were moving controversial items, Target hasn’t seemed to do anything to try to ameliorate the controversy. Indeed, their CEO has doubled down saying they think their woke approach was “adding value” to their bottom line, as well as “the right thing for society, and it’s the great thing for our brand.” Cornell said. He claimed it was “building greater engagement” with their customers.

It would seem that the stock plunge and the JP Morgan downgrading would put paid to that argument. But if Target wants to keep digging, they may just find out how low they can go and the true power of the boycott against them.

 

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