America First Legal (AFL) filed a shareholder lawsuit against Target on Tuesday in response to the retailer’s Pride merchandise that resulted in significant backlash, boycotts, and a drop in stock price.
Target locations across the country famously stunned customers in May when massive June Pride month displays were unveiled featuring everything from female-style swimsuits that can be used to “tuck” male genitalia to mugs that said “gender fluid.” The polarizing Pride merchandise also includes onesies and rompers for newborn babies, a variety of adult clothing with slogans such as “Super Queer,” party supplies, home decor, multiple books and a “Grow At Your Own Pace” saucer planter.
Many customers were outraged, and boycotts caused a variety of banks to downgrade Target’s stock. Target’s market value was over $74 billion before the Pride displays made national news, as tracked by Dow Jones Market Data Group. As of Wednesday, Target is valued at $60.3 billion.
AFL, along with co-counsel Boyden Gray PLLC and Lawson Huck Gonzalez PLLC, filed the lawsuit against Target and its board of directors on behalf of Brian Craig, a Target shareholder, for “betraying Target’s customers and shareholders with misleading representations about its Environmental, Social, and Governance (ESG) and Diversity, Equity, and Inclusion (DEI) mandates, and for causing Target shareholders to lose billions of dollars.”
AFL indicated that Target’s 2022 and 2023 Proxy Statements assured shareholders and investors that the board was monitoring for social and political issues and risks arising from the company’s ESG and DEI mandates.
“However, management only cared whether its leftist ‘stakeholders’ were satisfied, disregarding the possibility that its customers and shareholders might feel differently. Thus, in May 2023, Target embraced the radical transgender agenda with its children-and-family-themed ‘Pride’ marketing and sales campaign – the corporation’s infamous ‘Pride’ collection included clothing for young children… this predictably caused more than a $12 billion collapse in share value, the largest stock price decline in over 20 years,” the group wrote when announcing the suit.
“Target’s management has misled investors, assuring them that the corporation oversees social and political issues and risks to protect shareholders, when behind closed doors, it works for its extremist hard-left ‘stakeholders’ at the expense of its customers and shareholders,” AFL continued. “For far too long, large corporations have recklessly pandered to the left and ‘bent the knee’ to serve the woke elites. Today, however, America First Legal says enough is enough.”
Since mid-May, when the controversy hit Target’s market value, and the company had lost over $15 billion at one point. In June, Bank of America lowered its price objective from $180 to $145 while saying the reduction is a response to weakened peer multiples, decelerating traffic and modest mobile app engagement. As of Wednesday morning, shares of Target were trading at $130.
AFL, a group led by senior members of the Trump Administration including senior advisor Stephen Miller, who serves as president, says it is dedicated to defending Americans from unconstitutional executive overreach, corporations that restrict free speech and anyone who violates the civil rights of citizens.
“Federal law requires publicly-traded corporations to provide certain information to shareholders in their proxy statements that allow those shareholders to make informed decisions,” AFL vice president and general counsel Gene Hamilton said.
“As alleged in our complaint, Target failed to execute its duty to its shareholders by making statements that led them to believe that political and social risks were being assessed–when in reality, the only thing Target’s Board and Management cared about was how effectively they fulfilled the desires of various metrics advanced by leftwing ‘stakeholders,’” Hamilton continued. “In so doing, they caused our client to lose a substantial amount of money, and we will vindicate his rights in federal court.”
According to court documents, AFL had requested a “declaration that Defendants violated Section 14(a) and Section 10(b) of the Exchange Act,” a “declaration that Target’s 2023 director election was void,” “an order awarding to Plaintiff the damages he has sustained as a result of the violations set forth above from each Defendant, jointly and severally” and “such other and further relief as the Court deems just and proper, including reasonable attorney’s fees and costs.”
AFL demanded a trial by jury.
Target did not immediately respond to a request for comment.
Target confirmed “adjustments” to the Pride merchandising plans were underway in May after Fox News Digital learned it rolled back displays at some of its locations. A Target insider told Fox News Digital that some southern stores were told by the corporation to move LGBTQ Pride merchandise away from the front of their locations after customer outrage to avoid a “Bud Light situation.” Target said the displays were dialed back to protect employees against threats from angry customers.
The retailer took heat from both sides, as some in the LGBTQ community became outraged when the displays were dialed back ahead of Pride Month.
FOX Business’ Joe Toppe and Suzanna O’Halloran contributed to this report.
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