Boycotts Hurt Target and Bud Light Sales. Why They’ll Likely Ebb Soon.

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*** ONE-TIME USE *** Pride Month apparel is seen on display at a Target store on June 06, 2023 in Austin, Texas.

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As earnings season slowly inches to a close, investors have a clearer idea on how the culture war controversies that rocked



Anheuser-Busch InBev

this summer affected the companies’ financials. Spoiler alert: sales took a hit.

AB InBev (ticker: BUD) said U.S. revenue declined by 10.5%, as Bud Light sales were still under pressure. Still, the company reported a strong quarter overall, boosted by sales growth across other global markets. Target (TGT) had a rougher go of it. The company missed revenue expectations and cut guidance for the fiscal year, saying that revenue and traffic “were affected” by the reaction to its Pride assortment, launched in mid-May. Target can’t isolate the Pride impact from other factors at play in the quarter, a company spokeswoman told Barron’s, including ongoing inflation, pressure on consumer spending, and discounting activity. As a refresher, AB InBev faced boycott calls over a Bud Light promotion featuring transgender influencer Dylan Mulvaney. Target removed some items from its yearly Pride collection in response to threats from some of its customers, spurring criticism from consumers on both sides of the political spectrum. On a call with investors Wednesday, Target’s management stood by their decision. “To protect the team in the face of these threatening circumstances, we quickly made changes, including the removal of items that were at the center of the most significant confrontational behavior,” said CEO Brian Cornell on Wednesday. “Pride is one of many heritage moments that are important to our guests and our team and we’ll continue to support these moments in the future.”  Target’s Pride month brouhaha could continue to weigh on the company’s ability to boost revenue in the short term, especially because the company is also struggling with slowing consumer demand for discretionary purchases, wrote D.A. Davidson analyst Michael Baker in a note Wednesday. Encouragingly for investors, there are signs that this, too, shall pass. Bud Light’s sales decline started to level off at the end of the second quarter, and Target’s same-store sales trends improved meaningfully in July, a company spokeswoman said. Markets may be betting on a turnaround. Target stock has gained 2.3% since the company reported earnings Wednesday, outperforming the

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S&P 500

‘s 2.3% drop. “The market is looking beyond the recent Pride marketing missteps and expectations that Target’s trends could be turning, especially with profitability and margins improving on lower markdowns, lower freight costs, and the benefits of higher retail prices,” wrote Ivan Feinseth, chief market strategist of Tigress Financial Intelligence. AB InBev is down 2% since its report on Aug. 3, but it has also outperformed the S&P 500. Barron’s recommended the stock this spring.

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Consumer-facing companies are no strangers to falling askance of public perception and coming out on the other side in one piece. This summer alone,




(ADDYY), and The North Face, owned by


(VFC), were also under fire for their Pride campaigns. Share prices took an initial hit in May, but have since rebounded.


stock, which fell 16% in May, has gained 57% since June 1. Adidas and VF stock are up 24% and 18%, respectively, in that time—all faring better than the S&P 500’s 3.4% gain. Research suggests the long-term impact of politically motivated boycotts is muted. A team of researchers at Northwestern University studied the aftermath of calls to boycott Goya, a privately owned Latin food brand, after the company’s CEO praised then-President Donald Trump. The researchers estimate that Goya’s sales rose by 22% immediately after the boycott calls, boosted by a counter-boycott. The counter-boycott benefit “fully dissipated” within three weeks, and the any boycott drag lasted around nine weeks, the study found. “Despite significant buzz around the Goya scandal, we find that its effect on sales was modest and only lasted for a few weeks, suggesting that both the risks and benefits to a firm of engaging in political discourse may be overblown,” the study concluded. Write to Sabrina Escobar at [email protected]

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