A Florida judge has allowed a shareholder lawsuit against Target to proceed, following backlash over its 2023 Pride collection.
The conservative group America First Legal (AFL) alleges that Target's Pride campaign, which included LGBTQ-themed merchandise and transgender-inclusive items, misled shareholders about potential risks, such as a drop in the share's price, reported USA Today.
This oversight, said the lawsuit, caused over $25 billion in market capitalization losses for Target.
When the Pride campaign initially launched, consumers reacted quickly, protesting against the products and boycotting Target stores, which drastically reduced in-store foot traffic, NPR reported.
AFL referred to the move as Target embracing "a radical transgender agenda targeting children and families" through merchandise.
AFL claims Target's board prioritized diversity, equity, and inclusion initiatives over financial stability, ignoring the potential negative reactions consumers may have about the campaign.
Target sought to dismiss the case or transfer it to Minnesota but was denied on Tuesday.
The lawsuit accuses the company of making "misleading statements and omissions" in its annual reports between 2021 and 2023.
Target countered that it had warned about risks of customer and shareholder backlash since 2018.
America First Legal is a conservative nonprofit led by Stephen Miller, an adviser to President-elect Donald Trump, according to Reuters. In November, Miller was appointed as the deputy chief and Homeland Security adviser.
Despite cutting costs on thousands of products and starting holiday sales early, Target stock plunged in earnings during the third quarter, failing to match investors' expectations.
