TAYLOR, MI — Problems in sales of kitchen cabinetry and vanities followed Masco Corporation (NYSE: MAS) into the third quarter, with sales in the category down 5 percent. Positive results in the rest of Masco's home improvement and building products categories - including Milgard windows and doors - reported operating profit growth and flat net sales in the third quarter of 2015. Adjusted operating margins expanded to 14 percent, representing a 190 basis point increase over prior year.
Masco’s CEO Keith Allman rewarded shareholders by returning over $230 million to through dividends and share repurchases during the quarter, but a shift in strategy in kitchen cabinets - from selling ton price point to moving up to higher quality offerings - is still a work in progress, as Allman explaiend during a conference call (trascribed by Seekingalpha.com):
"Let's begin with Cabinetry. This business once again exceeded our expectations and continues to write an impressive turnaround story. KraftMaid reaffirmed its leadership position and grew in both the retail and dealer channels. KraftMaid led category sales at big box retailers and had top-line growth of 9 percent at dealers as consumers moved up the price continuum with KraftMaid Vantage. Offsetting this top-line growth was our deliberate exit of low-margin builder business. This is an important element of the turnaround plan and lays a stronger foundation for the business to profitably grow in 2016.
"Given Cabinetry's performance against their turnaround plan, we now expect this segment will achieve operating profit of approximately $40 million in 2015. I'm proud of our accomplishments in this business and the important momentum we have established for Cabinetry going into 2016."
Overall, Masco net sales were flat at $1.8 billion, though the robust North American market sales increased 3 percent. International sales decreased 9 percent in U.S. dollars due to exchange rates, but increased 4 percent in local currency
Allman said,"We believe we will continue to see steady demand for our market-leading products as both repair and remodel demand and new home construction continue to improve.”
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