Newell Brands Inc. (NWL) Accused of Hiding Truth Behind Sales Decline

According to the filed shareholder derivative complaint against the company's officers and directors for breaches of their fiduciary duties from February 6, 2017 through the present, Newell Brands Inc. (NWL) failed to disclose that the company's retail channel was loaded with extremely high levels of unsold product, which made it more likely that the company would experience slower sales growth. On November 2, 2017, the company announced that its core sales growth was below Wall Street estimates because "retailers were pull back on order rates and rebalanced inventories" in order to reduce previously undisclosed buildup of inventory in the retail channel. On January 25, 2018, Newell announced that its estimated core sales growth for fiscal year 2017 would be 0.8%, below previously issued guidance of 1.5% to 2.0%. Newell further indicated that the company was considering a divestiture that would result in a 50% reduction in both Newell's customer base and its global factory and warehouse footprint. On this news, Newell's stock fell nearly 21% to close at $24.81 per share on January 25, 2018, and has yet to recover from this decline. The stock has continued to decline and currently trades at just $16.55.

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