Zara Owner Inditex to Buy Recycled Polyester from US Start-up

FILE PHOTO: Barbie-themed merchandise is seen during the Barbie pop-up in Zara's Soho store in New York City, US July 20, 2023. REUTERS/Arriana McLymore/File Photo
FILE PHOTO: Barbie-themed merchandise is seen during the Barbie pop-up in Zara's Soho store in New York City, US July 20, 2023. REUTERS/Arriana McLymore/File Photo
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Zara Owner Inditex to Buy Recycled Polyester from US Start-up

FILE PHOTO: Barbie-themed merchandise is seen during the Barbie pop-up in Zara's Soho store in New York City, US July 20, 2023. REUTERS/Arriana McLymore/File Photo
FILE PHOTO: Barbie-themed merchandise is seen during the Barbie pop-up in Zara's Soho store in New York City, US July 20, 2023. REUTERS/Arriana McLymore/File Photo

Zara owner Inditex , the world's biggest clothing retailer, has agreed to buy recycled polyester from US start-up Ambercycle, according to a document seen by Reuters.

As fast-fashion retailers face pressure to reduce waste and use recycled fabrics, Inditex will invest 70 million euros ($74.19 million) in buying Ambercycle's recycled polyester made from textile waste. Polyester, a product of the petroleum industry, is widely used in sportswear as the fabric is quick-drying and durable.

Under the deal, Inditex will buy a "significant" portion of Ambercycle's production of recycled polyester, which it sells under the brand cycora, over three years, according to the document.

Inditex confirmed that it reached a deal with Ambercycle but did not provide details. The clothing retailer aims to have 25% of its fibers from "next-generation" materials by 2030.

The Inditex investment will help Los Angeles-based Ambercycle fund its first commercial-scale textile recycling factory. Production of cycora at the plant is expected to begin around 2025, and the material will be used in Inditex products over the following three years.

Zara Athleticz, a sub-brand of sportswear for men, will launch a capsule collection this week of "technical pieces" containing up to 50% cycora, according to the document.

Some apparel brands seeking to reduce their reliance on virgin polyester have switched to recycled polyester derived from plastic bottles, but that practice has come under criticism as it has created more demand for used plastic bottles, pushing up prices.

Textile-to-textile polyester recycling is in its infancy, though, and will take time to reach the scale required by global fashion brands.

The Ambercycle deal marks the latest in a series of investments made by Inditex into textile recycling start-ups.

Last year Inditex signed a 100 million euro ($104 million) three-year deal to buy 30% of the recycled fiber produced by Finland's Infinited Fiber Company, and invested in Circ, another US firm focused on textile-to-textile recycling.

In Spain, Inditex has joined forces with rivals including H&M and Mango in an association to manage clothing waste, as the industry prepares for EU legislation requiring member states to separately collect textile waste from January 2025.



ASOS Warns of $200 Million Hit from Atlanta Distribution Center Closure

A keyboard and a shopping cart are seen in front of a displayed ASOS logo in this illustration picture taken October 13, 2020. (Reuters)
A keyboard and a shopping cart are seen in front of a displayed ASOS logo in this illustration picture taken October 13, 2020. (Reuters)
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ASOS Warns of $200 Million Hit from Atlanta Distribution Center Closure

A keyboard and a shopping cart are seen in front of a displayed ASOS logo in this illustration picture taken October 13, 2020. (Reuters)
A keyboard and a shopping cart are seen in front of a displayed ASOS logo in this illustration picture taken October 13, 2020. (Reuters)

Britain's ASOS Plc flagged a one-time impairment charge exceeding $200 million in fiscal 2025 due to the "mothballing" of its Atlanta distribution center on Wednesday, as the online fashion retailer navigates a tough business environment.

Over the last couple of years, ASOS has been working to transform its business after losing popularity among its target audience of young customers and dealing with an inventory surplus.

This effort by the retailer, however, has coincided with the growing prominence of budget-friendly fast-fashion brands such as Shein and the Chinese online retailer Temu.

The decision to phase out the Atlanta facility comes after ASOS completes a multi-year warehouse automation project.

US customers will be served from the retailer's automated UK fulfillment center from the second half of 2025 and through a smaller local site, ASOS said.

Due to the shift, the retailer expects to take a one-time hit of about 190 million pounds ($231.91 million) on its reported profit in fiscal 2025, and then save between 10 million pounds and 20 million pounds annually in core earnings from financial year 2026.

ASOS intends to market the Atlanta site - seven employees will be offered new roles if possible, and many third-party logistics workers will be given opportunities at nearby locations, the company said.

The firm, which opened a local US office in 2024, said it will continue to grow and build its local presence.