Our view. Clearly the group is not seeing the easing of trading conditions it expected, and needed, to meet full-year profit expectations. With UK interest rate expectations moving higher and consumer confidence weak, it is not wholly surprising that profit guidance has been cut. The market’s focus is clearly moving to a poorer near-term trading outlook and earnings risks on macro issues. While less confidence in earnings estimates is understandable, we would caution becoming too negative as sector share prices would likely be boosted if the market’s expectations on interest rates prove to be too high and reverse. Toolstation trading is in line with expectations, with our profit cuts mainly hitting Merchanting. A flat H2, year on year, is now implied in our full-year estimates. Over the medium term we continue to be believe, as it delivers on its strategy, the group offers attractive value. We keep our BUY rating. Update summary. The group put out an unscheduled trading update, warning on full-year profits. Trading profit for the FY23 is now expected to be c.£240m, which was around 11% below consensus expectations. The warning is a result of the fact that the group has not seen the anticipated easing of market conditions in Q2 to date, with the implied H2 outturn looking too optimistic. Revised lower estimates. We have cut our profit estimates mainly on lower volume assumptions for the full year, but with gross margins cut by a smidgen too. Most of our cut relates to Merchanting, with a modest edging back of Toolstation UK profits, on lower market volume assumed. We adjust our FY23E underlying profit forecast (inc. property profit) to c.£240m, which is a c.11% cut. Valuation. Shares reside on a FY23E PE multiple of 11.3x, but the real value in the shares continues to be looking out to the medium term, with the expected benefit from a more mature Toolstation and with Merchanting performing well.