Our view. It is clearly disappointing to see full year profit guidance cut again but not a complete surprise (albeit the scale of the warning was bigger than expected) given the weak market backdrop. The essence of the medium-term investment case remains unchanged, in our view, albeit with more disappointing near-term trading and recovery more likely coming from 2025, with the FY24 profit outcome expected to be weak. The balance sheet is very comfortable, supporting the Group in delivering its medium-term potential. Update summary. The Q3 update confirmed lower full year profit guidance, essentially on weaker pricing and gross margins in Merchanting. Group LFL revenue declined by 1.8% in Q3, with Merchanting LFL revenue down 2.9% in Q3. Merchanting volumes were flat in Q3, but pricing was -3% as the company adjusted pricing to be competitive in a weak market. Toolstation continues to trade as expected, with Q3 LFL growth of 4.4%. Full year adjusted operating profit is now expected to be £175-195m (from c.£240m). Estimate cuts. We make substantial cuts to our profit estimates and now expect adjusted operating profit (including property profits) of c.£181m for FY23E and c.£206m for FY24E. Our cuts are only in Merchanting to reflect stock losses and gross margin pressure with our Toolstation forecasts unchanged. We expect modestly lower FY24E profits in Merchanting on flattish volume, with lower gross margins offset by some cost efficiencies. FY24E profit growth comes from Toolstation. Our FY23E net debt forecast is broadly unchanged with IFRS 16 leverage at c.2.5x. Valuation. There clearly remains attractive medium-term potential value in the shares, trading at an FY24E PE of c.12x and EV/Sales of c.0.48x.