Target shares drop 5% after Halloween costume backlash

Aug. 25 (Reuters) - Target TGT.N shares dropped about 5% in early trading a day after the company apologized for and rolled back a Halloween costume that critics said evoked Blackface and minstrel shows.

The product, sold as the "Kids' Glows Under Blacklight Circus Clown Halloween Costume", prompted backlash on social media as some consumers said it resembled a racist caricature.

The company said on Monday in a statement it was "deeply sorry", adding that the costume "should never have been part of our assortment. It is no longer for sale".

"We know this is especially hurtful for our Black guests, team members and partners," it added.

Despite Target's apology, some stakeholders remain upset. Sheletta Brundidge, a Minneapolis entrepreneur who gained prominence last year when she protested Target over DEI rollbacks, told Reuters the apology "truly did not" move her.

"Target keeps showing us who they are," she said.

Target shareholder SOC Investment Group, which has previously been critical of Target leadership, called the matter "another example in a chain of events where Target has lost trust with its consumer base."

“We’ve seen how those decisions (to pull back product) can lead to impact on sales over the long term," said Tejal Patel, executive director of the SOC Investment Group.

The recent backlash worsens challenges for the U.S. retailer, which has been navigating a tough consumer environment even as new CEO Michael Fiddelke deepens a turnaround push.

Target's shares have jumped about 70% so far this year as investors cheered early gains from Fiddelke's efforts to lower prices and freshen up merchandise. The stock hit a near two-year high on Monday.