The Israeli apparel retailer Castro and Kim Kardashian West are in negotiations to part ways halfway through a two-year contract after the social media and reality TV megastar’s role as spokeswoman for Castro’s Carolina Lemke’s eyewear failed to live up to expectations.
With Israeli super-model and former Carolina Lemke shareholder Bar Refaeli serving as a go-between, Kardashian had signed a two-year contract with Carolina Lemke to lead its second-quarter 2019 launch in the United States.
Responding to media reports, publicly traded Castro told the Tel Aviv Stock Exchange on Sunday: “The company’s Carolina Lemke Limited subsidiary and Ms. Kim Kardashian West are together exploring the option of adjusting the contract terms with Kim Kardashian West and the company she controls, including the matter of the period Kim Kardashian West provides her services.”
Under the deal announced in September 2018, Kardshian was paid $6 million and given an option to take a 10% stake in Carolina Lemke USA in exchange for promoting an eyeglass collection she personally designed. Castro, a leading Israeli fashion chain, said it would spend 100 million shekels ($28.8 million) on the American launch, including a dedicated website.
But the U.S. launch encountered serious problems as it turned out American consumers were unenthusiastic about the eyewear collection the company was marketing. As a result, in the middle of the year, Carolina Lemke was forced to bring back some 300,000 pairs of glasses to Israel.
In Israel, meanwhile, the Kardashian line wasn’t selling well and the company moved an estimated 10,000 Kardashian pairs from Israel to the U.S. market.
Part of the problem in Israel was that Kardashian had been due to visit Israel last March to promote her collection, but she canceled due to rockets attacks from Gaza. Castro is thought to have suffered several million shekels in losses as a result.
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At the time, Yossi Gabison – a Castro shareholder and executive who pushed the Kardashian deal – discounted the impact of that event.
“Kardashian eyeglasses haven’t sold well in Israel, but that isn’t a big deal,” he said. “Her eyeglasses would have sold to people at the launch event, but she didn’t come. Nothing special resulted, but about 10,000 pairs of the 1.5 million Carolina Lemke glasses sold in Israel every year were sent to America.”
Meanwhile, Kardashian’s giant online following – 140 million followers on her Instagram page – failed to bring many of her American fans to the Carolina Lemke page.
The U.S. launch of the Carolina Lemke line was important to the Castro group, which is struggling to generate growth in its core Israeli apparel business.
Like other Israeli fashion retailers it has been losing customers to overseas websites. But unlike many others, it had not been prepared for the online onslaught, never having developed a significant online business of its own or expanded to related retailing segments like home fashions or footwear.