Target Faces Shareholder Lawsuit Over Pride Campaign, DEI Initiative Fallout

Target was hit with a proposed class action lawsuit from shareholders who accused the retailer of misleading them about the risks posed by its diversity, equity, and inclusion (DEI) initiative.

Shareholders filed the suit on Friday, naming CEO Brian Cornell and the company’s board as defendants, according to a report by Quartz. The City of Riviera Beach Police Pension Fund in Florida claims it purchased Target stock at an inflated price between August 2022 and November 2024. The stock later tumbled after pushback against the retailer’s diversity efforts.

The lawsuit alleges that backlash to Target’s May 2023 Pride campaign hurt store traffic and placed employees at risk, reportedly contributing to a more than 21% stock drop in November. It also points to more substantial quarterly earnings from Walmart as evidence that the brand’s diversity initiatives continued to weigh on investor confidence.

In January, Target announced the end of its DEI goals and external reporting to DEI accountability organizations. According to an internal memo obtained by Quartz, it also discontinued a program emphasizing more products from black or minority-owned suppliers.

Chief community impact and equity officer Kiera Fernandez said the company’s decision was based on an “evolving external landscape” and “date, insights, and listening.”

Lawyers for the Florida-based pension fund allege their client was unaware the company was engaging in what they described as the “misuse of investor funds to serve political and social goals.”

Court documents detail how the plaintiffs claim they would not have purchased shares at specific prices had they known about what they interpret as looming financial hazards attached to these programs.

The suit, filed in the U.S. District Court for the Middle District of Florida, contends that Target’s disclosures masked the extent of possible fallout from consumer pushback. Its claims focus on the concern that executives allegedly withheld risks from investors, which plaintiffs say ultimately contributed to a steep drop in value when the broader public reacted negatively.

The complaint requests damages for alleged losses and highlights what plaintiffs view as a breach of the company’s responsibility to operate in the best interests of its shareholders.