Target faces new backlash amid Minnesota ICE raids after boycotts over its DEI rollback. But don’t blame politics for falling profits, analyst says

Across Minnesota on Friday, people are participating in an economic strike to protest the Immigration and Customs Enforcement crackdown. The state is home to 17 Fortune 500 companies, including UnitedHealthcare, 3M and Best Buy. But one company, Target, has become the center of tension over ICE’s operations.

On January 8, immigration officials arrested two Target employees, both US citizens, during their shift in Richfield, Minnesota. Videos of the arrest quickly spread on social media.

Recent events have caused a renewed backlash against Target, nearly a year after a boycott began over the company’s rollback of its diversity, equity and inclusion initiatives.

Target CEO Brian Cornell was an outspoken supporter of DEI initiatives after the killing of George Floyd in Minneapolis in 2020, and the company has been seen as a strong advocate for Black and LGBTQ+ businesses and customers.

But Target canceled its DEI goals for three years and stopped participating in external diversity surveys, after the election of President Donald Trump, who opposes such policies.

In April, Cornell met with civil rights leader Al Sharpton and Jamal Bryant, an Atlanta pastor. Bryant shared his demands for Target to open locations on the campuses of 10 Historically Black Colleges and Universities (HBCUs), complete its 2020 pledge to spend $2 billion on Black small businesses, reset and promote its original DEI goals, and invest $250 million in 23 Black-owned banks.

Target did not adhere to these specific demands, but the company has continued to work with organizations like the Russell Entrepreneurial Innovation Center, which supports Black small business founders with education, mentorship, and access to retail opportunities. The company also supported HBCU programs under the “HBCU, Always” series, an effort to connect alumni with Target’s mentoring network.

Interruptions coincide with declining profits and traffic

“I think what Target hasn’t done well with the whole DEI situation is situational management and communication,” said retail analyst Neil Saunders, a managing director at GlobalData, citing Target’s work helping business founders, communities and charities. “None of that has gone away, and I think maybe it should have been brought to the forefront in the conversation.”

The boycott over Target’s DEI rollback coincided with a significant decline in traffic and sales for the company.

However, Saunders says there is more to the company than the company’s earnings falling 19% to $689 million in the three-month period ending November 1.

“Target is currently grappling with how to create a better customer experience, because over the last few years, the in-store experience is not as good as it used to be,” he said. “There are issues like out of stock on some products, and that actually turns customers away from going to Target as much as they did before, or spending as much there as they did before.”

Over the Fourth of July weekend, Saunders visited Target and posted 15 photos on LinkedIn documenting shelves that were understocked (or completely empty) and in disarray.

“There’s a lot of friction from this experience,” he said, adding that consumers have become more cautious about spending on discretionary items and are weighing shopping with other retailers. “Target seems to recognize that, and says they’re taking action, but certainly over the last year, this has been a real problem.”

On a third-quarter earnings call in November, Chief Operating Officer Michael Fedelke, who will take over as CEO, told analysts that the company is investing in resources to optimize in-store inventory, such as using machine learning to improve movement between suppliers and stores.

“It helps us move inventory more efficiently, improve our reliability for items that are purchased frequently daily, and continue to optimize inventories,” he said.

A new crisis, a new approach

And now Target is facing a new crisis, this time due to the ICE crisis.

The company has not issued any public statements about ICE operations at its stores or about the two employees who were arrested. Target said luck She had no comment on the strike in Minnesota or the backlash against the company.

The company’s security teams are working to increase communications with workers in Minneapolis about expected disruptions near its sites, Chief Human Resources Officer Melissa Cramer said Thursday in a memo to employees, Bloomberg reported. Senior leaders are reaching out to government officials, community partners, religious leaders and other stakeholders, Cramer said in the memo.

Bloomberg reported that employees are sharing frustration over the company’s silence on internal Slack channels. Some sent a letter to Target’s ethics team expressing concern about the lack of a statement from the company and requesting guidance on how to handle law enforcement operations. Sources told Bloomberg that employees from at least two stores told managers they were too afraid to go to work.

On January 15, more than 100 clergy and community members gathered at a Target store in downtown Minneapolis to make demands and ask to speak to the CEO. They urged the company to call for the immediate end of ICE operations in the state, ban ICE agents from entering stores without a signed warrant, and call on congress to defund ICE.

Cornell agreed to meet with protest representatives on Thursday, according to organizers. The clerics participating in the meeting did not respond to a request for comment.

Target often sees itself as a community retailer, so it’s important for the company to give community leaders a space to voice their opinions, Saunders said.

He added that Target’s messaging to employees about ICE was reasonable but everyone was hoping for a change in operational strategies and customer experience.

“For some people, that’s not going to be enough,” Saunders said. “The vast majority of customers are pretty much in the middle. They’re interested in politics. They may have views, but they don’t let them influence their shopping decisions, not for that sort of thing.”

This story originally appeared on Fortune.com

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2026-01-23 23:03:00