Yankee Candle Maker Accused of Manipulating Accounting, SEC Fines Company and Former CEO Millions

The Securities and Exchange Commission charged consumer goods giant Newell Brands Inc. and its former chief executive on Friday for manipulating its core sales growth figures.

During a period of “disappointing” sales in late 2016 and early 2017, Newell's then-CEO Michael Polk allegedly approved plans to “pull forward” sales from upcoming quarters in order to increase the company’s core sales growth rates, according to the SEC order. Polk described the growth to investors as “strong” and “solid” without disclosing the actions.

This misleadingly created the appearance that Newell had achieved sales growth in line with its targets, the SEC alleged, depriving investors of an “accurate and complete” understanding of actual sales trends.

Newell owns several major consumer goods brands, including Yankee Candle, Rubbermaid, Crockpot and Sharpie.

“Today’s order finds that Newell’s former CEO issued an instruction to ‘scrub’ the company’s accruals after he learned that the company was projecting a ‘massive’ and ‘disappointing’ miss for the quarter,” Mark Cave, associate director of the SEC’s division of enforcement, said in a statement. 

Newell will pay $12.5 million and Polk will pay $110,000 to settle the charges, without admitting or denying the SEC’s findings. Polk retired from Newell in 2019, after heading the company for 8 years.

In regulatory filings, Newell highlighted its “significant cooperation” with the investigation and improvements to its “control environment.” The SEC said in the order that Newell’s cooperation with the probe “substantially advanced the quality and efficiency” of the investigation and conserved commission resources.

Newell reported an 11.9% drop in core sales in its 2023 second-quarter earnings report, compared with the same period a year earlier. Its net sales were $2.2 billion, marking a 13% decline from a year earlier.  Newell President and CEO Chris Peterson pointed to a “challenging macro-economic backdrop” for the company’s performance.

Earlier this year, Newell announced a new restructuring and savings initiative that it expects will result in more than $200 million in pre-tax savings by reducing overhead costs associated with organizational structure, real estate and supply chain functions. The plan is expected to be nearly fully implemented by the end of this year, the company said in its report.