Target apologizes for children's clown Halloween costume after backlash

Target, which has had back-to-back strong quarters, is beginning to see results from efforts to cut prices and freshen its merchandise, with new CEO Michael Fiddelke so far earning plaudits from Wall Street.

But the company — which cannot compete with Walmart and Costco on price — has little room for error when it comes to managerial or optical missteps, said Brett Husslein, an analyst at Morningstar.

"As Target begins to gain traction in repairing its brand reputation, this is exactly the kind of stuff they want to avoid," he said, adding that any headwind — optical, managerial, or macroeconomic — "could lead to further market share losses."

Target's shares were up 2.7% in afternoon trading.

Target apologized on Monday and said it had pulled a Halloween costume from sale depicting a circus clown that critics said evoked Blackface and minstrel shows.