Target, Walmart still trying to weather DEI stormTarget, Walmart still trying to weather DEI storm

Target continues to face lawsuits following the retailer’s decision to scale back its diversity, equity, and inclusion (DEI) initiatives. Meanwhile, Walmart shareholders are split about whether the retailer’s move to pull back from DEI is a good one.  

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Florida Attorney General James Uthmeier is the latest AG to take action, filing a lawsuit in federal court on Thursday. Uthmeier said Target misled investors by promoting DEI policy before abruptly ending it, which has hurt sales and caused shareholders to bear the consequences.

Uthmeier’s lawsuit follows several other DEI-related lawsuits from attorneys general in the states of Missouri and Texas. 

Target did not respond to a request for comment.

The Florida attorney general claims Target violated the Securities Exchange Act by failing to disclose known risks associated with its DEI and Pride Month initiatives.

“Corporations that push radical leftist ideology at the expense of financial returns jeopardize the retirement security of Florida’s first responders and teachers,” Uthmeier said in a statement. “My office will stridently pursue corporate reform so that companies focus on business, not political theater.”

Target announced on Jan. 24 that it was ending its three-year DEI goals and its Racial Equity Action and Change (REACH) initiatives. As part of its “Belonging at the Bullseye” strategy, Target said it will evolve its Supplier Diversity team into a Supplier Engagement team to “better reflect our inclusive global procurement process across a broad range of suppliers, including an increased focus on small businesses.”

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Earlier this month, the Minneapolis-based retailer was sued by a shareholder group that included the City of Riviera Beach Police Pension Fund in Florida. The proposed class action lawsuit, filed on Jan. 31, accuses Target of defrauding shareholders into paying inflated prices for its stock while unknowingly supporting the misuse of investor funds to serve political and social goals.

The lawsuit also accuses Target of failing to disclose the risks of shifting its stance on DEI and REACH initiatives.

24-hour DEI boycott set for Feb. 28

The fallout from Target’s decision regarding DEI and REACH has been significant. The retailer, along with top competitor Walmart, has faced ongoing criticism from shoppers, celebrities, and officials on social media.

A 24-hour boycott of Target, Walmart, and other retailers that have backtracked on DEI policy has been scheduled for Feb. 28. Organized by a group called The People’s Union USA, the “24-Hour Economic Blackout” urges shoppers to support local, small businesses from midnight on Feb. 27 to Feb. 28. The group is also calling for an Amazon boycott from March 7 to March 14.

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Walmart shareholders: both for and against DEI

Walmart shareholders are largely expressing support for the Bentonville, Ark.-based retailer. A letter written in late November by the conservative group Alliance Defending Freedom and signed by 60 Walmart investors, advisors, and proxy consultants, encouraged the retailer to stand by its decision to scale back DEI and LGBTQ initiatives, according to Fox News.

But this letter came on the heels of another—this one signed by 30 Walmart shareholders who called the pivot away from DEI and LGBTQ policies a poor one. A group of 13 Democratic state attorneys general expressed similar sentiment in a separate letter sent to Walmart CEO Doug McMillon.

Will more lawsuits follow?

All the legal action stemming from retailers’ DEI pullbacks is expected, according to analysts who spoke with Supermarket News, and future lawsuits may also target retailers like Costco for retaining their DEI policies.

“Retailers rolling back their DEI commitments are making their employees, customers, and businesses vulnerable to costly litigation,” Shaun Harper, a professor of business, public policy, and education at the University of Southern California, told SN. “Some lawyers believe that maintaining DEI initiatives actually makes companies more susceptible to lawsuits.”

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Target and Walmart, however, may reverse course again in a few months.

“I imagine they’ll probably stick with their decision until the winds change, until it becomes fashionable to focus on DEI again,” Marcus Collins, clinical assistant professor of marketing at the University of Michigan’s Ross School of Business, said. “The strongest brands transcend their category and operate at an ideological level, but when you backpedal or step back from what you said you were all about, it reduces you to just a place.”