New York
CNN
—

Target’s quarterly sales fell for the first time in six years as consumers retreated to discretionary goods and the hard right backlash to Target’s Pride Month collection hit hard on the brand.

Target’s sales at stores open at least a year fell 5.4% last quarter, including a 10.5% drop online. The company also lowered its annual sales forecast.

Target’s foot traffic fell 4.8% last quarter, “likely a function of a mix that skews too discretionary, as well as the Pride merchandise issues,” Michael Baker, an analyst at DA Davidson, said in a note to clients.

Target’s profit still came in higher than Wall Street’s expectations, and the stock rose 5% in early trading on Wednesday. Heading into Wednesday, Target’s stock was down 27% over the past year.

Target was one of the strongest retailers during the pandemic as consumers flocked to stores and its website while stuck at home. But Target has fallen as consumers change their spending patterns.

Americans are spending more on experiences, including concerts and movies, and less on non-essential items. Home Depot

(HD) said Tuesday that consumers took on fewer major home renovation projects.

Goal

(TGT) is overexposed to non-essential goods compared to competitors like Walmart

(WMT) and Costco

(COST). More than half of Target

(TGT)s merchandise is discretionary – clothing, home decor, electronics, toys, party supplies and other non-essentials. In recent years, the company has added more food and essentials to its stores.

“Consumers are choosing to increase spending on services such as leisure, travel, entertainment and food away from home, putting pressure on discretionary products in the near term,” CEO Brian Cornell said on a call with analysts on Wednesday.

Cornell said shoplifting and security have also become bigger problems.

“Security incidents related to [theft] is moving in the wrong direction, says Cornell. “In the first 5 months of this year, our stores saw a 120% increase in theft incidents involving violence or the threat of violence.”

Target has been embroiled in the political culture wars about gender and sexual orientation.

Beginning in May, Target also faced a homophobic campaign that went viral on social media during its annual Pride Month clothing line. Driven by extreme right-wing personalities, the anti-LGBTQ campaign spread misleading information about the Pride Month products.

The campaign turned hostile, with violent threats against Target employees and cases of damaged products and displays in stores. Target said on May 24 that it removed some items that caused the most “volatile” reaction from opponents to protect the safety of its workers.

But Target’s response frustrated gay and transgender rights supporters, who said the company caved to great pressure.

“The strong response to this year’s Pride lineup” impacted sales in the quarter, Christina Hennington, Target’s chief growth officer, said Wednesday.

Target will adjust its Pride Month collection next year, including potential changes to timing, store placement and the mix of brands sold.

“The reaction is a signal for us to pause, adapt and learn,” she said.

Other brands, like Bud Light, have faced right-wing backlash over attempts to be more inclusive.

America’s former best-selling beer has been targeted by right-wing media and anti-trans commentators since April, after sponsoring transgender influencer Dylan Mulvaney.

The controversy cost Bud Light’s parent company about $395 million in lost sales in the US and Bud Light lost its top beer spot to Modelo.