Seventy-seven former Laura Ashley workers are to be employed at a new production facility in Powys.
Social enterprise Fashion-Enter Ltd (FEL) will be based at the Royal Welsh Warehouse, known locally as the Pryce Jones Building, in Newtown.
It follows a £300,000 investment from the Welsh Government.
Laura Ashley’s Texplan warehouse and call centre in the town closed after the furniture and fashion chain went into administration in March.
FEL will be producing 10,000 garments a week for online fashion retailer ASOS, increasing to 20,000 a week within a month.
It will also provide personal protective equipment (PPE) for clothing brand Private White VC.
The company said it plans to recruit a further 30 stitchers and establish a textile academy in the town “over the coming months”.