Dreher cited Kohl's slowing sales and its excess inventory as reasons to be skeptical of its near-term results. The excess inventory not only will likely lead to markdowns, it could also lead to higher prices paid to suppliers, Dreher said. Kohl's is already asking for money back from vendors to help cover its current inventory overload; vendors are likely to build that price into what they charge Kohl's in the future, he said. Meanwhile, Dreher noted that Kohl's new stores are not performing as well as they traditionally have. The company just opened a series of new stores in the Los Angeles area. The sales at those stores are about 70% those of mature stores. In contrast, new stores opened in recent years in the Boston and New York areas posted sales rates of 80% to 90% of those mature stores. "Clearly, Kohl's format is not being as well received in LA as it was in these other noteworthy markets," Dreher wrote, adding that "we would caution investors that when the first-year results in California are finally tallied next spring, it may not turn out to be as encouraging as originally estimated." Dreher compared Kohl's situation to Gap, Home Depot ( HD) and other retailers whose management teams expected quick turnarounds but instead had to endure months of stumbling. Gap, for instance, posted more than two consecutive years worth of same-store sales declines before finally posting a month of sales gains last fall. Not everyone is convinced of Dreher's thesis, however. Despite the company's May sales report, many sell-side analysts reiterated their "buy" or "outperform" ratings on Kohl's last week. Many cited the company's valuation, noting that its current multiple is far below its historic average. Kohl's is trading at about 24 times current-year earnings. In the recent past, it has traded at upwards of 35 times forward earnings.