Profitability
Wrenfield Apparel is a US direct-to-consumer apparel brand facing a new Textile Stewardship Act that charges a per-garment fee from FY2027, with a 40% "eco-modulation" discount for brands that run certified take-back and hit a recycled-fiber threshold.
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Wrenfield Apparel ("Wrenfield") is a direct-to-consumer apparel brand selling women's workwear and weekend staples online and through eleven of its own stores. In FY2025 it sold 1.72M garments and generated $212.4M of revenue, an average selling price of $123.50 per garment, at a 58.2% gross margin. EBITDA was $20.2M, a 9.5% margin. Like most DTC apparel brands, Wrenfield has a returns problem: 26.4% of garments sold come back, roughly 454,080 units a year. Today those returns are handled cheaply and blindly: 72% are liquidated to jobbers at an average of $4.80 per unit, 9% are donated, and 19% go to landfill at a disposal cost of $0.62 per unit. The whole returns stream recovers about $1.52M a year, roughly $3.34 per returned garment on a $123.50 item.
Two forces are now converging on the CEO, Maya Osei. First, a multi-state Textile Stewardship Act takes effect in FY2027: every garment sold carries an producer-responsibility fee, and brands that can prove circularity earn a 40% discount on that fee (the mechanics are in Exhibit 4). Second, Wrenfield's board approved a sustainability commitment last year with an internal carbon price of $85 per tonne of CO2e avoided: any sustainability lever whose operating cost per tonne exceeds $85 must be justified on other grounds. The board applies the $85 test to operating economics; one-off investments in circular infrastructure are assessed on payback against the cash they demonstrably avoid or recover.
Two internal proposals are on the table. The first, from the marketing team, is "Wrenfield Renewed": a take-back and resale program. Customers can return any Wrenfield garment in store or by mail for a $15.00 credit (redeemed on 64% of issues); returned and traded-in garments would be sorted at the brand's third-party logistics hub and routed to like-new resale, in-house repair, or fiber recycling, following the disposition plan in Exhibit 2. Renewed needs a $2.3M one-off investment (sorting-line retrofit, POS and API integration) and $1.9M a year of fixed program cost (partner fees, program team, marketing). The second proposal, from operations, is to shift 40% of the line to a recycled-fiber blend, which raises cost of goods by $2.60 per garment on those units and cuts the production footprint of each garment from 8.1 to 5.2 kg CO2e.
The leadership team is split. The COO warns that resale "eats our own full-price sales" and wants hard numbers on cannibalization; company research puts it at 15% of resale units replacing a full-price purchase. The CFO notes that the fee is unavoidable either way and wants to know what, exactly, the eco-modulation discount buys. The Chief Sustainability Officer points out that the operations proposal (40% recycled share) is double the threshold the regulation actually requires. Maya has hired you to recommend how Wrenfield should respond to the Act, at what cost, and in what order.
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