Katherine Homuth, CEO of Sheertex, poses for a portrait at the company’s new factory in Pointe Claire, Que. in February, 2024.Evan Buhler/The Globe and Mail
The founder of Sheertex Inc. told staff this week that she is stepping down as chief executive of the innovative but financially challenged Montreal textile manufacturing startup, known as SRTX.
“As part of a funding round that SRTX is working to close, Katherine has decided to resign when the round closes,” chief financial officer Tim Leyne said in a text message to The Globe and Mail. “She remains CEO until then.”
U.S. tech publication The Information first reported Wednesday about Ms. Homuth’s departure.
SRTX has been fighting for its life for months, attempting to raise fresh financing needed to fund its near-term working capital requirements and stretch its available cash. It has also faced the uncertainty of potential tariffs and added duties on shipments to the U.S., which threatened to exacerbate its already tenuous financial situation. Last month, the company temporarily laid off about 40 per cent of its nearly 350 employees and full-time equivalent contractors for up to six months.
Mr. Leyne said the company had reached terms on a new round of funding “that will secure the businesses growth plans” but declined to elaborate as it has not yet closed.
Ms. Homuth has been on an unlikely and constantly challenging mission to replace run-prone nylon tights with a rip-resistant alternative made from ultrahigh-molecular-weight polyethylene (UHMWPE). SRTX is also looking to use the product to make waterproof fabric to replace Gore-Tex and others that use “forever chemicals” that don’t break down in nature, to make future products from recycled tights, and to champion a reshoring of manufacturing to Canada.
During its eight-year life, SRTX has uprooted from its original home in Ontario’s Muskoka region; convinced skeptical industry observers that it could create a viable, sturdier alternative to nylons; survived the COVID-19 pandemic; and raised US$200-million in equity and convertible debt from investors, including Swedish retail giant H&M, Lululemon founder Chip Wilson and clean-technology venture funds. Its products are stocked by H&M, Costco, Walmart, Holt Renfrew, Macy’s and Kim Kardashian’s SKIMS banner.
SRTX also built a vertically integrated operation in Montreal that makes its own thread, part of an effort to drive down its production costs per pair to under US$10 from about US$100 in 2018. With the operation now producing all of its UHMWPE thread, Ms. Homuth hoped to bring down the cost per pair to US$5 and achieve operating profitability this year. She has said SRTX expected to triple sales in 2025 to six million units, but a shift to wholesale channels from direct-to-consumer sales meant revenue last year dipped by one third, to US$30-million.
After raising US$50-million last fall anchored by US$25-million from the Quebec government, Ms. Homuth revealed on social media in December that SRTX was struggling to raise a further US$23-million needed to fund working capital until it is paid in the second half of 2025 for four million pairs ordered by large retailers.
Ms. Homuth took an unconventional approach, candidly sharing her frustration and angst on social media about how difficult it was to finance her business. She even crowdsourced improvements to her investor pitch deck to help her break through with investors.
“Let’s be brutally honest: this journey has been harder than anyone expected,” she wrote in one recent LinkedIn post. “We’ve missed timelines. We’ve burned through cash. We’ve had to make brutal choices between growth and survival. But that’s exactly what makes what we’ve built so valuable.”
Ms. Homuth told The Globe last month that her public disclosures won empathy from many individuals. But behind closed doors, she said, the reaction from financiers “was much more negative” as she was criticized for talking openly about her challenges. She has gone silent across social-media channels since February.
In the Globe interview, Ms. Homuth said if SRTX could raise additional it would be profitable by the end of the year, but if not, it wouldn’t make it to 2026 “in its current shape or form.”