The Financial Consequences of Target’s New Bathroom Policy

Target shareholders are taking a financial hit following a major petition drive calling for a boycott of the company over the discount retailer’s controversial chain-wide inclusive policy directed at transgender individuals allowing them to use the bathroom or fitting room that matches their gender identity.

Critics fear Target’s policy is ripe for abuse since it would allow men to identify as a woman in order to gain access to the women’s bathrooms or fitting rooms.

Target’s stock price plummeted about 5 percent following the announcement of the company’s new policy while its competitor Walmart is down around 3.5 percent over the same period.

The nation’s second-largest retailer is feeling a huge backlash from the boycott organized by the American Family Association (AFA). To date, the petition that pledges individuals not to shop at the big box retailer has over a million signatures.

The boycott, announced on April 20, has brought national attention to Target’s controversial policy and the company is also feeling pushback in social media.

The boycott by a conservative group marks a new development in political advocacy. For years, progressive activists have successfully pressured corporations, including Target, on a range of policy issues and the boycott by AFA shows conservatives are also now willing to mount a serious effort to punish companies.

Target’s inclusive policy seems to have been designed to appease a 2010 boycott by the LGBT community over the company’s political donation to a group that was supporting Tom Emmer- a Republican Minnesota gubernatorial candidate who opposed gay marriage.

At that time, gay activist groups slammed Target in the media and in social media charging the company was anti-gay.

Following the encounter with progressive activist groups, Target has aggressively promoted LGBT issues under its corporate diversity program including a #TakePride hashtag and a video titled, “Target’s Pride Manifesto.”

At this point, Target is holding firm and refusing to back away from its policy emphasizing its goal of inclusion, “We certainly respect that there are a wide variety of perspectives and opinions. As a company that firmly stands behind what it means to offer our team an inclusive place to work — and our guests an inclusive place to shop — we continue to believe that this is the right thing for Target, ” said company spokesperson.

The AFA says its boycott is not about transgender individuals but is based on concerns that sexual predators will take advantage of the policy to assault young girls and women.

Appearing on Fox Business Network’s “Risk & Reward,” Abraham Hamilton from AFA told host Deirdre Bolton that the AFA boycott was focused on the risk from sexual predators and not any specific concerns with transgenders, saying “there’s no one here at the American Family Association who believes that the transgender community is synonymous with sexual predatory behavior.”

Hamilton continued, “But if we don’t understand the realities of the risk of sexual predatory behavior – because these predators will stop at nothing to ply their dastardly trade – and we believe that Target’s new policy positions them to be the new location for sexual predatory behavior.”

Speaking from his experience as trial prosecutor Hamilton added, “I’ve had the unfortunate experience of working through attempting to restore a family after the children have suffered sexual abuse and as you can imagine, it’s not a pretty sight.”

Target’s social statement policy may be negatively impacting shareholders.

Ed Butowsky, Managing Partner at Chapwood Investments LLC, believes part of the decline in Target’s stock is attributed to the boycott and the share price will suffer going forward because of Target’s policy, “it is obvious that this is going to hurt earnings for the company and by pursuing this policy they are putting future earnings at risk.”

Butowsky elaborated, “It’s quite obvious that the million signatures against the policy from your customer base will have a negative impact on traffic flow to your company.”

Finally, Butowsky added Target should focus on creating shareholder value and not destroy it by “taking stands on social issues.”

In most cases, companies respond to public pressure especially when shareholder value is at stake. If Target feels a financial impact from the boycott, expect to see a change in its inclusion policy. (For more from the author of “The Financial Consequences of Target’s New Bathroom Policy” please click HERE)

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