The former Atomic Kitten – who is best-known for her slogan “That’s why mums go to Iceland” – is coming to the end of a six-figure contract with Iceland in March.
It is understood that advertising bosses advised against keeping her after she was mired in controversy and the ads were panned. Katona, 27, has been criticised as a role model for smoking and drinking while pregnant.
Katona, who used to be married to former Westlife singer Brian McFadden, has fronted Iceland’s sponsorship of hit TV series I’m a Celebrity Get me Out of Here.
Iceland marketing director Nick Canning told the Daily Mirror: “It is clear we have been hiring different staff including Jason Donovan and Coleen Nolan over Christmas. I am not sure what contract we will be able to offer.”
Following the newspaper report, Iceland said in a statement that Katona is still under contract to the retailer and that it is "in negotiotiations with Kerry for next year's contract".