By Jonathan Stempel
(Reuters) -Target was sued on Thursday by the state of Florida for allegedly concealing the risks of diversity and social initiatives that led to a customer backlash and wiped billions of dollars from the retailer’s market value.
The securities fraud lawsuit by the State Board of Administration of Florida, an agency overseeing public pension funds that own Target stock, was filed in the federal court in Fort Myers, Florida.
It is the first shareholder lawsuit led by a U.S. state over Target’s alleged mismanagement of diversity, equity and inclusion (DEI) matters.
Florida accused Target of betraying investors and its core customer base of working families by making false and misleading statements in financial reports and proxy statements about its DEI mandate and environmental, social and governance mandate.
It also accused Chief Executive Brian Cornell of downplaying the intensity of customer boycotts following a “disastrous” and “exceptionally offensive” May 2023 Pride Month campaign, prolonging the decline in Target’s share price.
“Corporations that push radical leftist ideology at the expense of financial returns jeopardize the retirement security of Florida’s first responders and teachers,” James Uthmeier, the state’s Republican attorney general, said in a statement.
Target did not immediately respond to requests for comment.
The Minneapolis-based retailer has said in court papers that it repeatedly warned investors about the risk of consumer boycotts from its social and environmental initiatives.
Backlash from the Pride Month campaign led Target to remove some LGBTQ-themed merchandise from shelves, after in-store confrontations left some employees fearing for their safety.
The retailer’s share price has fallen since the removals began, while rival Walmart’s share price has approximately doubled.
Target’s share price is also down more than 50% from its November 2021 peak.
That included a 22% drop on November 20, 2024 that wiped out about $15.7 billion of market value, after the retailer forecast disappointing profit and holiday sales.
On January 24, Target said it will end DEI initiatives this year.
It joined Walmart, Amazon.com and many other companies in curbing such initiatives, which U.S. President Donald Trump and many other conservatives have attacked.
Florida’s lawsuit joins similar proposed class actions filed on January 31 and in August 2023, both also in Fort Myers.
The case is State Board of Administration of Florida v Target Corp et al, U.S. District Court, Middle District of Florida, No. 25-00135.
(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Richard Chang)
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