Katherine Homuth, CEO of Sheertex walks through the company’s new factory in Pointe Claire, Que. on Feb. 8.Evan Buhler/The Globe and Mail
Katherine Homuth wants to dominate the pantyhose business with an unbreakable product whose raw material is also suitable for swimwear and waterproof membranes. Her Montreal-based SRTX sold $47-million of its Sheertex and Watertex-branded products last year and made headlines in People and Cosmopolitan magazines as Taylor Swift’s leggings-maker of choice.
But Ms. Homuth, SRTX’s chief executive, knows that to build a Canadian textile giant, the company must drive down the cost to make its products – which use the same material found in bulletproof vests – price-competitive with Big Nylon.
Two years ago, her marginal cost to make Sheertex tights, which sell online for US$35 to US$55 a pair, was US$15 a pair. By last December, the cost was down to US$10. “If we could be within US$2.50 to US$5, we’d be very happy,” she said in an interview. She aims to do that next year.
That may sound like a stretch, but SRTX is now in a position to achieve that. Last month, it opened a fully vertically integrated 300,000-square-foot global headquarters in an old steel-cable facility along Highway 40 in Pointe Claire, Que. That is more than 2½ times larger than its old home at a refurbished former Gildan Activewear Inc. GIL-T plant elsewhere on Montreal Island that was already Canada’s largest hosiery plant, which it will vacate in the coming years.
At the new site, SRTX can for the first time extrude its own raw material, Ultrahigh-Molecular-Weight Polyethylene (UHMWPE). The company will turn the polymer into spools of fine thread from which it will make leggings and swimwear, and it will also make waterproof membranes for gloves, jackets, backpacks and other products.
“It’s the first time in our history where you don’t have to squint hard to see all of the other markets we’ve opened up for ourselves,” Ms. Homuth said.
Financing for SRTX’s new home came from a US$40-million loan from Export Development Canada (EDC) and backing of investors, including retail giant H&M Group, Canadian fashion icons Joe Mimran and Chip Wilson, and clean technology investors ArcTern Ventures and G2 Venture Partners.
“Sheertex is joining innovation and sustainability to change the apparel industry” and bring manufacturing to Canada said Guillermo Freire, EDC’s senior vice-president of midmarket. “We believe it has the capability to become a global champion.”
SRTX has been on a wild ride since Ms. Homuth decided in 2017, after the sale of a prior venture, that she wanted to make pantyhose that didn’t run. She found what she felt was the ideal material in UHMWPE, but her first prototypes were thick, undyeable, not stretchy and broke knitting machines. She was briefly kicked out of the Creative Destruction Lab accelerator program because mentors there didn’t grasp the opportunity she was pursuing.
She tried manufacturing near Lake Muskoka before realizing she’d have to move to Montreal to tap into the city’s garment industry knowhow. Just as momentum was building, the COVID-19 pandemic briefly shut down operations and stalled pantyhose demand globally.
Ms. Homuth checks a yarn spinning machine at the company’s new factory on Feb. 8.Evan Buhler/The Globe and Mail
But SRTX secured a deal on the Gildan plant, gained a following selling direct-to-consumer over social media and recruited seasoned executives, including chief operating officer Gordon Hensley and chief financial officer Timothy Leyne. Ms. Homuth’s husband Zak Homuth, a computer engineer who is now president, played a pivotal role, creating software to connect SRTX’s machines, collect data and detect inefficiencies.
Before opening the new plant, SRTX depended on suppliers that included DSM NV and Honeywell International Inc. to provide spools of UHMWPE yarn. But it wasn’t custom-made for SRTX’s purposes and wasn’t dyeable, meaning the colour has to be set during extrusion, which SRTX can now do itself.
At the new plant, SRTX receives pallets of polyethylene powder, which it mixes with mineral oil to produce a slurry that it processes into a goop and eventually stretches into fine fibre wound onto spools.
SRTX is on a fast ramp-up to make all of its raw materials by midyear – or 4,000 kilograms a month – and within two years, to make enough for 20 million pairs of leggings annually. Making its own raw material should drive down SRTX’s raw material waste to under 1 per cent from 4.4 per cent last December, Ms. Homuth said.
The company will sell the first run of tights made from its own UHMWPE as “prototights” within weeks to get customer feedback “and ensure everything going out the door is as we want it to be,” she said. Each product will feature full traceability, so customers can track “see the real story behind every pair, every single person that touched it, where every single fibre came from.”
SRTX is also shifting to primarily sell through wholesale channels. Its products are now available at H&M banners, Swedish Stockings, Costco, Simons and the QVC shopping channel. The shift slowed the company’s sales growth two years ago, but revenues have expanded by 30-plus per cent annually since then.
Having already raised about US$200-million in outside capital, SRTX is also likely to pursue more financing, though Ms. Homuth is coy about her plans.
“The exciting thing is that once you vertically integrate, you can start innovating on those materials and start attacking product categories,” SRTX director Michael Helander said.
One opportunity could come from displacing waterproof material brands such as Gore-Tex that use so-called “forever chemicals” made from perfluoroalkyl and polyfluoroalkyl substances, or PFAS, which don’t break down in nature. Several jurisdictions, including Europe, the United States and New Zealand are looking to ban or reduce use of PFAS, which are also found in Teflon and Scotchgard products. Sheertex doesn’t have the same issue with its material.
Ms. Homuth also hopes to build “full circularity” into her products, which already last longer than conventional nylons, so SRTX can reclaim and reuse the materials. “We’re years away” from that, she said. “But it’s something the team is thinking a lot about.”