Inditex Deal a Vote of Confidence in Renewcell After CEO Shakeup, Circulose Warning
Renewcell’s stock was up nearly 43 percent Friday morning after Inditex threw its support behind the Swedish maker of Circulose, the fiber produced from cotton-rich textile waste.
News of the Zara owner’s commitment to purchase the “first available” 2,000 metric tons of Circulose comes amid a period of fits and starts for the nearly three-year-old public company. Though it has steadily added mills and more to its Circulose supplier network since it launched this summer, Renewcell quickly installed a new CEO earlier this month after warning that Circulose sales aren’t performing up to snuff.
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“With a slower adoption in the value chain, and thus lower sales growth than expected, the Board has decided that a new leadership in the company is necessary,” said Michael Berg, Renewcell board chairman, in a statement dated Oct. 16. “I would like to thank Patrik [Lundström] for his contribution to the development of Renewcell, he has been instrumental in taking the company from the development stage to listing, factory construction and production.”
Magnus Håkansson takes the reins at Renewcell after three years with Media Mrkt Sweden, part of a multinational chain of consumer electronics stores. The onetime McKinsey associate spent time at AlixPartners, earned an MBA from MIT Sloan School of Management and wields experience in the pulp industry.
A fresh face isn’t the only new development at Renewcell. Last month, analyst Tiffany Hua with Boston’s Lux Research explained how Renewcell’s new partnership with Spinnova, a fellow Nordic innovator, could double the Circulose maker’s production capacity in the coming years.
“Renewcell’s Circulose pulp with high cellulosic content and low contamination levels is ideal for Spinnova’s microfibrillated fiber spinning process,” she said.
Inditex, meanwhile, is no stranger to Circulose. Zara produced an undyed women’s fashion capsule made with the cellulosic fiber last year, illustrating that “circularity in this industry is possible,” German Garcia Ibañez, head of sustainable product and supply chain for Inditex, said at the time.
Inditex’s new Circulose commitment is with viscose powerhouse Tangshan Sanyou, one of several Chinese fiber producers plugged into Renewcell’s network. Under the terms of their deal, Tangshan Sanyou will produce for Inditex’s suppliers a fiber that blends Circulose with a forest-friendly cellulosic.
This week Inditex also announced yet another deal with a materials innovator, agreeing to purchase 70 million euros ($74 million) worth of Cycora-branded regenerated polyester from Ambercycle. Inditex said these deals advance its commitment to source only “low impact” textiles by the end of the decade.
Friday’s stock surge comes as a welcome relief to Renewecell investors who have seen shares in the company plummet from an earlier high of $111.20 to as low as $6.06 following the recent sales warning.
