Discounting ConcernsThere are concerns about the level of required discounting at a time when the broader marketplace is becoming less-promotional.
Inventory ChallengesQ3 missed expectations as revenues fell short on weak sales of seasonal merchandise in the latter part of the quarter, driving higher SG&A deleverage and creating an inventory overhang which will bleed into Q4 and fuel significant GM contraction.
Valuation And VisibilityThe valuation remains discounted to history/peers, with visibility still muted, leading to a Neutral rating.