Shares of L Brands (LB) are in focus in morning trading after the company, which owns the Victoria's Secret, Bath & Body Works, La Senza and Henri Bendel brands, cut its outlook for fiscal 2018 profit. Following the earnings report, Wall Street analysts were generally bearish, with one pointing to 10 "points of concern" in the first quarter.

Earnings 

After the market close on Wednesday, L Brands reported Q1 adjusted earnings per share of 17c, missing analysts' estimates of 18c, though its revenue of $2.63B came in slightly ahead of the $2.59B consensus. Comparable sales for Q1 increased 3% vs. last year, it said. L Brands previously forecast Q1 EPS of 15c-20c.

Looking ahead, the company now sees fiscal 2018 EPS of $2.70-$3.00, lower than its earlier estimate of $2.95-$3.25 and the $3.14 analysts were forecasting. L Brands sees second quarter EPS of 30c-35c, also below analysts' estimates of 45c. In presentation slides, L Brands forecast both Q2 and FY18 comps to be up low single digits. Sales in Q2 are expected to be about 5 points higher than comps, while sales growth for FY18 is expected to be about 2-3 points higher than comps.

'Not satisfied':

In earnings commentary posted to its website, L Brands said growth in operating income at Bath & Body Works over last year was more than offset by a decline at Victoria's Secret. "We are not satisfied with this result and are very focused on improving performance at Victoria's Secret," it stated. "The cumulative impact of the exit of swim and apparel and the discontinuation of the catalog and promotional offers drove a reduction in customer traffic, and the organizational changes were disruptive.

The PINK business was also impacted by these changes, with sales growth decelerating." The company also said it experienced sales and margin pressure in the business as a result of its efforts to grow the bralette, Sport and beauty categories through "aggressive" trial.

'Points of concern'

In a research note to investors this morning titled "The Terrible 10... Points Of Concern In 1Q," Jefferies analyst Randal Konik reiterated his belief that Victoria's Secret is "broken," PINK "is breaking" and Bath & Body Works "is peaking."

Konik, who sees continued downward earnings revisions and free cash flow compression going forward, believes a dividend reduction "could be a wake up call for current holders." Analysts at Piper Jaffray and Bernstein cut their price targets on L Brands to $30 and $47, respectively, as the company's guidance reflects a "challenging" competitive landscape and continued problems at Victoria's Secret.

Price action

L Brands is up 1.7% in morning trading to $34.63 per share.