Target Earnings Beat Despite Backlash From Political Donation
The retailer is receiving heat for its financial support of anti gay politician Tom Emmer, but still posted second quarter earnings of $679 million.
But just over two weeks ago, a Pioneer Press article implied that Target had suffered a financial backlash, having lost $1.3 billion in stock-market capitalization, since news broke about the retailer's political donation to a far-right candidate.
The man at the center of the controversy is Minnesota Republican gubernatorial candidate Tom Emmer, an anti-gay social conservative with strong ties to a Christian ministry called You Can Run But You Cannot Hide, which has publicly advocated violence against gay people. In 2008, Emmer's campaign donated money to the ministry whose leader, Bradlee Dean, claims homosexuality is an "abomination" and a "crime against nature," insists that homosexuals molest an average of 117 people before they're caught, and supports the execution of gay people.
Target's support of Emmer came in the form of a $150,000 donation to a business PAC called Minnesota Forward to help finance campaign ads for the aspiring governor. In addition, Target's CEO Gregg Steinhafel maxed out his personal contribution to Emmer under Minnesota law with a $2,000 individual donation.
It's the retailer's legal right to donate as much as it wants to political candidates, thanks to the Citizens United Supreme Court decision that lifted the ban on corporations using shareholder cash to finance political ads. President Obama called the ruling "a green light to a new stampede of special interest money in our politics."
Of course, the buying of elections is as American as the electoral process itself. And as far as Obama's presidency is concerned, it was Goldman Sachs's (GS) $994,795, Microsoft's (MSFT) $833,617, Google's (GOOG) $803,436, and Citigroup's (C) $701,290 among many other corporate contributions (via PAC, owner, employee, or immediate family money) that helped him get elected.
Just as corporations have the right to financially support political candidates, so can social and political organizations freely boycott corporations for donating to the political campaigns of candidates with whom they disagree. In the case of Target's support for Emmer, MoveOn has put all of its left-winged might behind a boycott that includes a TV spot urging people to hold Target accountable and warning other corporations against capitalizing on the Citizens United verdict and thus "throwing their weight around in our elections." A Facebook group called "Boycott Target Until They Cease Funding Anti-Gay Politics" has also emerged and is currently more than 65,000 supporters-strong. The LGBT advocacy group Human Rights Campaign is countering Target's donation with $150,000 of its own money toward electing a "pro-equality" Minnesota governor and legislature.
The Pioneer Press story reported that while other factors could have been at play, Target's stock fell 3.5% on July 27 -- the day the boycott began. Meanwhile, big-box rivals Walmart and Costco (COST) saw shares rise during the same six trading days. But Target's release of this new favorable earnings report indicates its public relations crisis may not have been as damaging as protesters would have hoped.
Left-leaning groups boycotting Target aren't likely to let the report discourage their efforts. In fact, the battle to prevent corporate involvement in public elections may be just beginning. A poll conducted by MoveOn reveals that 88% of Democrats and 70% of Republicans believe corporate election spending is akin to political bribery.
The next corporation on the progressive chopping block is likely to be Best Buy (BBY) for doling out $100,000 in support of Emmer's campaign. Although the electronics retail giant missed this round of attacks due to the timing of its campaign contribution disclosure statements, the 6,700-plus-member Facebook protest group has emerged and MoveOn's picket signs are no doubt at the ready.
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