Lone Star state takes aim at Target over transgender stance

Target's (TGT) policy of letting transgender customers and employees use the bathroom of their choice is now drawing fire from Texas officials. The state's attorney general, Ken Paxton, wants the retailer to spell out how it will protect customers who he suggested could be endangered by the policy.

"Regardless of whether Texas legislates on this topic, it is possible that allowing men in women's restrooms could lead to criminal and otherwise unwanted activity," he said in a May 3 letter to Target CEO Brian Cornell. "As chief lawyer and law enforcement officer for the State of Texas, I ask that you provide the full text of Target's safety policies regarding the protection of women and children from those who would use the cover of Target's restroom policy for nefarious purposes."

The move by Texas to pressure Target comes as North Carolina faces the loss of billions of dollars in federal funding for passing related legislation that the Justice Department says violates civil rights law.

After states including North Carolina and Mississippi recently enacted anti-gay laws, Target last month reaffirmed its commitment to protecting gay, lesbian and transgender people from discrimination. The retailer's public stance drew a boycott effort by a conservative Christian group, along with a rebuke from an Alabama city that is home to a Target.

The national debate over LGBT rights is unlikely to abate anytime soon, but experts say the Target brand is unlikely to face any long-term damage.

"Target's policy is consistent with the message and core values that it's been projecting for years," Melissa Arnoff, senior vice president at Levick, a communications firm specializing in crisis and issues management, said, noting the company's past support of same-sex marriage and parenting, and its decision last year to stop labeling toy aisles by gender.

"Target is doing the right thing to what it has been as a brand," Arnoff said. "I'm sure they are looking at the data and sales. As a smart company they will pay more attention to that kind of data than the number of names on a petition."

The move by Texas to pressure Target comes as North Carolina faces the loss of billions of dollars in federal funding for passing related legislation that the Justice Department says violates civil rights law.

"This topic is not going away," added Ted Marzilli, chief executive officer at YouGov BrandIndex, which conducts daily surveys to monitor public views of 1,500 brands.

"Target has been pretty balanced in terms of how they've been communicating with the media," he said. "They are not being combative, they are just saying look, this is our policy, I don't think they are stirring up the pot, or trying to pick a bigger fight."

Still, while consumers' perception of Target fell to an eight-month low after the retailer found itself in the headlines, it's doubtful the company will remain a focus of the story, Marzilli said. Any negative impact is likely to pale in comparison to the retailer's effort to regain consumers' trust after a security breach compromised customer information in late 2013. "That was a much, much bigger deal," he said.

Target spokeswoman Molly Snyder acknowledged getting the Texas attorney general's request to spell out its safety practices. The company has "robust procedures, policies and training in place to ensure that our stores are safe places to work and shop," she said, declining further comment.

Marc Rylander, Paxton's communications director, said Target had not yet responded to the attorney general's request. "We asked them for safety policies, and we hope to hear from them."

Paxton on Monday voiced support for North Carolina in its legal fight with the U.S. Department of Justice, saying in a statement that he backs "the principle that persons should use restrooms and other intimate facilities that correspond with their biological sex."

The Equal Opportunity Employment Commission last year called equal access to restrooms "a significant, basic condition of employment" and said that denying access to transgender individuals was discriminatory.

The federal government and North Carolina Governor Pat McCrory sued each other on Monday, the deadline McCory had been given to confirm his state would not implement the law he signed in March.

North Carolina stands to pass up $4.8 billion in funds, mostly educational grants, if it refuses to reverse course, according to an analysis by lawyers at the University of California, Los Angeles Law School, who estimated 37,800 transgender people live in the state.

As for the financial hit Target may or may not take as a result of its policy, Marzilli said he thinks it's likely the retailer would suffer a one-to-two month impact on its bottom line, and quickly recover.

"While there a lot of people who are very vocal saying they won't shop at Target, some may shop more at Target," he said. "A year from now, Target may be remembered for being one of the first to step up to the plate, which history might prove was the right stance to take."