Swedish textile recycler Renewcell announced the abrupt departure of its CEO Monday, after a weaker-than-expected sales update last week sent its share price plummeting.

The company, which counts H&M Group amongst its backers and claims to have built the world’s first commercial scale chemical textile recycling facility, has been ramping up production with a view to reach break-even on a cash flow basis by the end of the year. But lagging sales mean that’s now unlikely, the company said Thursday, prompting a sell off that has knocked nearly 80 percent off its share price.

H&M said it strongly believes in Renewcell’s potential to drive industry-wide change. The fashion group is already selling clothes made from its recycled material and has committed to a multi-year sourcing agreement.

Still, Renewcell’s struggles point to the evolving challenges facing material innovators trying to penetrate fashion’s complex, opaque and price-driven supply chains. For years, new technologies have struggled to go from pilot to commercial scale. But as new materials finally hit the market, a fresh problem is emerging: low demand from producers.

Though Renewcell said last week that it still has strong interest from brands, uptake from fibre manufacturers who could spin its recycled cellulose pulp into yarns like viscose is lagging. Tackling this performance challenge requires new leadership, the company said Monday.

Patrik Lundström, who has served as the company’s chief executive since 2019, will be replaced on an interim basis by former MediaMarkt Sweden CEO Magnus Håkansson, Renewcell said, adding that it’s begun the search for a permanent replacement.

Editor's Note: This article was revised on Oct. 16 2023, to include comment from H&M.