Culp continues to focus on strengthening its balance sheet, ending 1Q09 with $6.4M in cash and $21.4M in total debt, compared to $4.9M and $38.6M, respectively, in the year-ago period. For 2Q09, Culp is expected to post net income of $0.06-$0.10, excluding restructuring costs of about 15 cents per diluted share.

The accompanying all-data stock price chart from 1989 to present illustrates that Culp (green line) traded with a high degree of correlation and even outpaced the Russell 2000 Small-Cap Index (red line) until early 1998 when the stock began a massive 3-year decline, erasing gains of nearly 400%. Since the 2000-2002 all-time stock price lows, Culp has staged three sharp, short-term rebounds of at least 100% (indicated by bold arrows on the chart), including the most dramatic rise of over 8-fold from around 2 bucks in November 2001 to over 17 bucks in July 2002. Culp is currently trading around $2.80 per share with a market cap below $36M as it has lost over two-thirds of its market value in the past year, compared to a 40% decline for the SPDR S&P Retail ETF (XRT), a 39% decline for the Homebuilders ETF (XHB), a 42% decline for Ethan Allen Interiors (ETH), a 53% decline for Furniture Brands (FBN), and a 28% decline for the iShares Russell 2000 Small-Cap Value Index (IWN).

With 12.65M shares outstanding and extensive insider + institutional ownership, Culp has a very low float which leads to the extreme stock price swings illustrated in the chart. However, enough shares still trade for the average retail investor to patiently establish a position over time with limit orders as the average volume is about 20,000 shares per day, and I think that now is a good time to start accumulating shares in anticipation of another major rebound in the stock price. As Culp continues to cut costs and shed debt during these lean times, the Company will emerge as a survivor poised to profit from the inevitable recovery in the economy and return to growth.