Target’s offensive Halloween costume is a stumble at a key moment

This isn't the first time Target has found itself facing criticism over diversity issues.

Justin Sullivan/Getty Images Target again finds itself in the cultural crosshairs — this time over an offensive Halloween costume.

The retailer quickly apologized, but the episode marks a stumble in a turnaround year.

The nature of Halloween merchandising can lead retailers to make embarrassing mistakes.

Target is again facing a storm of criticism over an unforced error on diversity as it tries to navigate a challenging turnaround.

The Minnesota-based retailer landed in the cultural crosshairs after it marketed a children's Halloween costume with imagery that bore a striking resemblance to racist minstrel show posters.

The retailer pulled the merchandise and issued an apology on Monday, but critics on social media have not been so quick to let the issue go.

"It's astonishing that they found themselves in the situation yet again," former Target vice chairman Gerald Storch told Business Insider.

On Tuesday, Target's stock closed nearly 4% below its price on Monday, before the story broke overnight.

A company spokesperson declined to comment beyond the statement.

"It's a very unfortunate misstep that interrupts a stream of good news from Target, because the business has been making progress," Global Data retail analyst Neil Saunders told Business Insider.

Target last week reported its second quarter of strong sales and traffic growth as it looks to mount a comeback after years of lackluster performance.

The company is now in the midst of a critical back-to-school shopping season.

"What they'll need to watch is whether this opens old wounds about DEI, whether it alienates some customer groups," Saunders added.