Target Corporation
Securities Class Action
Overview
- Date:
- 7/15/2022
- Company Name:
- Target Corporation
- Stock Symbol:
- TGT
- Class Period:
- FROM 8/18/2021 TO 5/17/2022
- Status:
- Filed
- Filing Date:
- 3/29/2023
- Court:
- U.S. District Court: Minnesota
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Target Corporation (“Target” or the “Company”) (NYSE: TGT) in the United States District Court for the District of Minnesota on behalf of all persons and entities who purchased or otherwise acquired Target common stock between August 18, 2021, and May 17, 2022, both dates inclusive (the “Class Period”). Investors have until May 30, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Prior to the Class Period, Target experienced unprecedented double-digit growth in 2020 as consumers increased spending with funds provided from stimulus checks and shifted their spending away from services in favor of goods. In its 2Q 2021 earnings call, Target attributed its success to its “durable, flexible” business strategy, which it stated allowed the Company to stay nimble and quickly respond to its customers’ rapidly shifting preferences. Target touted its “balanced multi-category assortment” as a “key driver of flexibility” and a unique advantage that allowed the Company to “serve our guests, even when their wants and needs are changing rapidly.” To ensure that its assortment stayed in balance in a volatile environment, Target reviewed the data that it gathered from its 100+ million-member loyalty program, Target Circle, as well as other sources, on a weekly basis to gain insights and inform its merchandising decisions. Because these preferences were often changing “week by week,” these insights were essential to allow Target to “optimize [its] assortment.”
However, despite Target’s runaway success in 2020, the Company’s revenue was constrained by Target’s inability to keep its shelves fully stocked. In the first half of 2021, though inventory had meaningfully improved compared to the prior year, Target was still experiencing some headwinds which prevented the Company from maintaining optimal inventory. On August 18, 2021, during a Company earnings call where Defendants discussed second quarter 2021 results, Target attributed its inventory struggles to two pandemic-related factors: (1) unexpectedly greater demand due to changing consumer behavior; and (2) vendor constraints resulting in less product for Target to replenish. To mitigate the risk that replenishment of in-demand goods could take longer than usual going into the second half of 2021, Target announced during that earnings call that it had been ordering larger upfront quantities in advance of season to ensure that shelves were stocked with products consumers wanted, when they wanted them.
At the same time Target announced its early purchasing strategy, Defendants stated during the August 18, 2021, earnings call that consumer shopping preferences continued to shift. For example, while demand for home and hardline products—two of Target’s core product categories—skyrocketed in 2020, the Company was now noticing a softening in demand for those products. Nevertheless, Target falsely assured investors that its “unique multi-category assortment” enabled the Company “to flex between patterns in consumer behavior changes,” and that its inventory “perfectly positioned [Target] to serve our guests’ evolving wants and needs.”
As recently as March 1, 2022, Defendants continued to boast about Target’s “balanced” assortment and how the Company was “leveraging guest insights to enhance our assortment” and adapt to the rapidly changing consumer trends.
However, contrary to Defendants’ statements touting the flexibility of Target’s purported “durable” business model and “balanced assortment,” Defendants were aware that the Target’s strategy of buying early had resulted in the Company over-purchasing goods that were no longer in demand. As early as August 2021, Target’s “multi-category” inventory became out-ofbalance and overweight in home and hardline products — “bigger, bulkier products like furniture, TVs, and more” — due to waning demand. Target’s assortment problem only continued to grow throughout the Class Period as consumers began to “refocus[] their spending” away from home and hardline goods and into experiences.
By May 18, 2022, Defendants would admit when reporting on results for the first quarter of 2022 that contrary to their public statements, Target’s “durable, flexible strategy” was thwarted by its practice of ordering inventory before it was needed, resulting in overstocked, unsellable inventory taking up valuable store shelf space and leaving Target unable to quickly pivot to meet changing consumer preferences as represented. This resulted in Target’s inventory increasing by nearly $1.1 billion over the previous quarter and overweight in “bigger, bulkier” hardline and home products that the Company was now forced to markdown to “make room for fast-growing categories.” As a result, Target’s revenue and gross margin declined nearly 19% and 4.3%, respectively, for the quarter, and Defendants stated they expected the excess inventory to negatively affect earnings into the next quarter.
The price of Target’s common stock had been artificially inflated by Defendants’ misrepresentations about the Company’s “balanced multi-category assortment,” insight into consumer behavior, and ability to respond to shifting trends throughout the Class Period. Upon the news that Target’s sales growth was lower than expected and that Target was unable to sustain the more moderate growth the Company had anticipated just a few weeks earlier, the price of Target’s common stock plummeted as the artificial inflation was removed from the price.
On this news, Target’s stock price declined $53.67 per share, or nearly 25%, from a closing price of $215.28 per share on May 17, 2022, to a closing price of $161.61 per share on May 18, 2022.
If you purchased or otherwise acquired Target common stock and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
Case Updates
Retainer Agreement
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 8/18/2021 to 5/17/2022 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders, i.e., the “Class,” and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
No Special Treatment
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.