Are Q3 issues just “transitory”? Whilst it is tempting to believe that boohoo’s issues are only transitory, we worry that until localised warehousing is installed in both the US and ROE regions, sales growth is likely to remain subdued with lead times remaining uncompetitive versus peers. Worse still, given localised warehousing is unlikely to materialise until 2023, boohoo risks losing International customers for good – especially in light of growing competition from up and coming brands like Shein, in our view. We fear that this is already the case in ROW territories. Not just a margin issue: Bulls may highlight that if “transitory” elevated freight costs (inbound and outbound) fall away, the recovery in earnings would be substantial. However, this is debatable, in our view. Are International shipping costs really likely to fall away any time soon? And has the switch back to dresses and “occasion wear” fundamentally impacted return rates for good? We are also increasingly worried that elevated marketing costs are simply failing to ignite demand. We estimate customer acquisition costs have nearly doubled versus two years ago. Furthermore, we suspect that growth in the UK is being funded by elevated marketing spend, implying that growing the newly acquired brands or maintaining growth for the established brand is costly. Can boohoo become a marketplace aggregator? We are not convinced boohoo’s acquisition of Debenhams marketplace is able to compete with established platforms such as ASOS and Next, where progress on extending fulfilment and showcasing 3rd party brands has been eye-catching. In which case, growth is becoming overly reliant on the maturing UK business as well as a US business with a proposition not without problems. Valuation: On newly downgraded numbers, valuation is less compelling and we believe sentiment is likely to be driven by earnings momentum on which we have little visibility.