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The City has long been bearish on beleaguered headhunter Whitehead Mann, which recently conducted a £13 million rescue funding, and investors exposed to the stock are caught between a rock and a hard place. The troubled concern swung £8.9 million into the red in the first half and is forecast to lose £1 million for the year to March (after warning of a £4.5 million profits slump). Whitehead Mann desperately needed the money or it could have gone bust.

The shrunken stock market price tag of £12.75 million reflects a catalogue of recent disappointments, including poor trading, the post profit warning loss of chief executive Stephen Lawrence, cooled interest from US predators and a blow to its reputation with the failed selections for the J Sainsbury and British Land posts. All these shenanigans have prompted a dramatic share price fall to 45.5p from a 52-week peak of 306.5p.

There are some green shoots. The placing and open offer at 40p strengthened the balance sheet, and the existing business seems to have been stabilised under new management. But we are sceptics – sell/avoid.

Two gaming chips to cash in

Casinos group London Clubs International was recently knocked back by eight per cent to 100p on a profits alert, and we feel it is time to cut this firm loose.

In an alarming pre-close alert, London Clubs explained that a raft of problems would result in lower profits for the year to March 2005.

The group, which operates seven UK casinos, warned non-London venues in Southend and Brighton were still recovering from the impact of new money laundering regulations (where a verification of identity is required for any customer who wishes to make a cash transaction over 15,000, or £10,300).

In other areas, its joint venture, ‘Fifty’, experienced significant disruption due to refurbishment, and overseas casinos have had mixed fortunes. Although London Clubs is making forays outside London to prevent dependence on its highbrow casinos (two new provincial licences in Blackpool and Nottingham have been secured in addition to those obtained for Manchester and Glasgow), the delayed gambling bill and news that only one ‘super-casino’ region may get approval, could place further hurdles in its way.

The profit warning shocked broker Shore Capital into red-penning its profit forecast from £12 million to break-even. The broker does reckon that it could make £14.9 million pre-tax in 2006, but a cheap gaming stock this is not (and its debts stand at £105 million). In our view, it is time for players to leave the table. Sell.

It’s not so luxurious at Cubus Lux

We urge investors to take the same action at Croatian casinos punt Cubus Lux, which issued a nightmarish trading update before Christmas and has done little to allay fears since. In that update, the company flagged up a failure to prepare accounts for the quarter to September caused by ‘some confusion’ following last summer’s AIM float that raised £1.38 million from shareholders at 22.5p.

Cubus Lux, whose chairman David Gray has since resigned for personal reasons, also warned of significant losses for the year to December on very disappointing trading at its casinos (those numbers were eventually released showing losses of £453,000 on sales of £484,000).

The group’s glamorous strategy at float was to spread casinos around Croatia, replacing the thud of mortar fire with the click of roulette balls, and thus become a major player in the fragmented Croatian gaming industry. Thus far, all it has generated is a lot of disappointment â“ and there are a range of other, superior AIM gaming stocks to chose from. Avoid/sell.

Laura’s lame like-for-likes

Several plays in the private equity-stalked retail sector suffered corrections when Apax Partners pulled its £837 million takeover of Woolworths, and our sell in this slowing sector is Laura Ashley. The clothing and home furnishings outfit may be pulling in a profit, but once again, sales for the year to 29 January failed to inspire. The firm, which has suffered many management changes, posted a 11.4 per cent drop in turnover, although profits rose £1.7 million to £4.8 million.

What most disillusioned us was the like-for-like sales trend, which had fallen 10.2 per cent in total and 15.4 per cent in the UK. Once again, fashion sales let Laura Ashley down, plummeting 30.3 per cent in the UK. Home furnishings, traditionally a stellar performing part of the business, also moved the wrong way with a fall of 0.8 per cent. Sales in the current year are already off by 14 per cent.

For the current year broker Seymour Pierce suggests improved pre-tax profits of £5.5 million, giving earnings of 0.5p and leaving the 11.25p shares trading on a demanding prospective price/earnings rating of 22.5. That looks pretty pricey. Our advice is to move your cash elsewhere.

Nussey says ‘no’ on Homeserve deal

Our biggest sell is a firm that has been performing very well indeed: Homeserve. Yet we agree with Altium Securities’ Andrew Nussey, who was less than impressed with the latest £18.9 million acquisition from the provider of home warranties and repair networks. The FTSE 250 quoted counter has bought Chem Dry, a specialist repairer of damage to carpets and soft furnishings caused by fire and floods.

In his note entitled ‘Another direct repair acquisition – WHY?’, support services sage Nussey expresses concern that management is diluting the core business by acquisitively developing a direct repair network. Management’s desire to turn Homeserve into an ‘AA for the Home Emergency’ market carries greater financial risk, says Nussey.

For the year to March just ended, Homeserve should report improved profits of £40 million (£36.8 million), taking earnings to 43.5p (42.2p) and placing the 906p shares on a prospective multiple of 20.8. After a terrific run in 2005 and with the market concerned about its acquisitive strategy, that rating is starting to look stretched. Altium urged clients to reduce, and we think now could be the time to bank your profits. Sell.