Several months ago, Target stores made an odd gamble. They risked alienating their primary customer base—moms with young kids—to win the praise of the transgender lobby. They announced their ill-conceived new bathroom policy on April 19, then recently announced their sales numbers for the first quarter since that policy.
How did it pay off? It’s bad news for Target and the trans activists trying to get other major retailers to degender their restrooms. Even though Target reported “better-than-ever profitability” for their second-quarter 2016 earnings, they are the only ones seeing it that way.
USA Today reported that Big Red’s second-quarter earnings fell 9.7 percent and it “lowered its sales estimate for the rest of the year.” Reuters explained that net sales plummeted 7.2 percent compared to last year. New stores open for less than a year saw their sales decline by 1.1 percent, not a good trajectory for building an essential early customer base off the local buzz of a shiny new store in the neighborhood.
The Wall Street Journal reported this is the first time Target sales have fallen at their more established stores in two years, and to expect further declines. CEO Brian Cornell told the Journal, “Our number one challenge was traffic, which affected sales in all of our merchandise categories.” Traffic—as in regular customers choosing to stay away from the store for some reason.
Target officials blamed their earnings drop on “a difficult retail environment,” but it was not so difficult for others. As Target was reporting flagging sales, CNBC reported that “the world’s largest retailer got even bigger during the second quarter.” Big Blue enjoyed its largest sales gains across same-store comparisons in four years, an increase of 1.6 percent for Walmart’s American stores.
Fortune reported a few factors that could have harmed Target’s sales numbers, such as selling off its pharmacy business to CVS and getting stung by a 20 percent decline in the sale of Apple products, but didn’t let the retailer off the hook for their very bad business decision: “So the last thing Target needed was to alienate any of its customer base, given that it is a $75 billion-a-year retailer that caters to a wide swathe of America, including socially conservative shoppers.”
A financial analyst for the UBS Group told CNBC, “It’s going to take a while for Target to turn this around. [Traffic’s] not an easy problem to fix.”
Target’s leadership refuses to concede their controversial bathroom policy has anything to do with their poor fortunes. However, the very day Target announced its sad sales figures, it also announced it would spend $20 million to install single-use bathrooms in the rest of their 1,800 stores. This is a ton of money to fix a serious problem they created by trying to fix a problem that didn’t exist in the first place. They won’t soon recover.