TAYLOR, Mich. -  While Masco second quarter sales increased 4 percent to $2 billion, cabinetry sales fell decreased 3 percent for cabinetry manufacturer Masco - maker of brands  KraftMaid, Merillat, and Quality Cabinets. 
 
Masco says the drop in cabinetry sales results from exiting lower margin business in the builder channel - about $10 -$15 million in sales was foregone - and that during the quarter this drop was partially offset by growth and improved mix in the retail channel. In fact cabinet profitability rose, suggesting the strategy is working. Repair and remodel activity accounts for 83 percent of Masco's total sales, so selling through big box stores is more important than to new construction.  
 
 
"Our Cabinetry segment continued to exceed expectations as it executed against its strategic plan to optimize sales mix and increase profitability," said CEO Keith Allman. During a conference call, he praised the cabinetry business management. "The team delivered yet another strong quarter, growing our leadership position at retail and continuing to optimize sales mix by exiting low-margin, direct-to-builder business." 
 
When asked who has picked up those sales to builders, Allman said, "In terms of who's getting that business, it's really not the big nationals. What we're seeing substantially more often than that is the regional players."
 
The decline was partially offset a strong performance for KraftMaid in the retail channel, with double-digit growth in year-over-year share gains.
 
"In the dealers' channel, we drove single-digit growth through increased volume and favorable mix with both our Merillat offerings and our dealer-exclusive KraftMaid Vantage program," said CFO John Sznewajs during the eranings conference call. He said the cabinet segment profitability rose $22 million or 147% over 2015. Sznewajs cited continued growth of the higher price point semi-custom KraftMaid offering. "If you just take a look at our core business that's excluding that builder walk away business that we did, our core business was up kind of 5 to 6 percent in the quarter," he said.
 
Compared to the Masco's business trend as a whole, the decline in cabinet sales is striking, coming as it does during a dramatic housing upswing.
 
Overall, including its other businesses such as Milgard doors, Liberty Hardware for cabinetry, Delta plumbing, Behr paint sold through Home Depot,  Masco operating profit grew 20 percent to $335 million, it's second highest since 2002. Masco pleased investors by cutting debt $400 million and purchasing its own shares, a step that makes earnings per share rise.
 
Separately, Masco said it continues in a multi-million dollar roll out of computerized ERP production operations at its Milgard Windows plants. Like some other firms putting in enterprise wide production computerization, is experiencing ups and downs in efficiencies during the roll out. It is also more costly than anticipated. 
 

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