Israeli fashion firm Castro Model Ltd. (TASE: CAST) has ended its loss-making partnership with German retailer Heinrich Heine GmbH, which the companies founded in 2003. Castro owned 49% of the joint retail venture, Castro Germany, and Heine owned 51%.
Heine will pay Castro €3.2 million for its 51% stake in Castro Germany and will receive in return its share of the owners' loan in the venture.
Castro will fully own and operate Castro Germany beginning in 2009. The chain currently has nine stores. Under the original plan, the chain was due to have 40 stores within five years, i.e. by November.
After assuming full ownership of Castro Germany, Castro will consolidate Castro Germany's results in its financial reports. Castro currently reports its share in Castro Germany's losses. Castro Germany lost €5 million in 2007 and €2.3 million in the first half of 2008, 12.3% less than in the first half of last year.
Last March, Castro managing director Gabriel Roter told "Globes", "We haven’t achieved our expansion plan in Germany, and we're examining the situation."
Published by Globes [online], Israel business news - www.globes-online.com - on October 16, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008