NEW YORK — Elizabeth Arden is apparently hoping a new face will reverse its ailing financial fortunes.

The struggling cosmetics company reportedly has hired actress Catherine Zeta-Jones, aka Mrs. Michael Douglas, to succeed Amber Valletta, whose contract expired last year, as the face of the brand. The campaign is said to have been shot in Toronto by photographer Torkil Gudnason.

Industry executives speculate that Zeta-Jones is being paid $1 million to $2 million a year. An Arden spokeswoman declined to comment on the reports Friday.

Reports began circulating after a financial statement was issued Thursday by the company, which had acquired the Arden and Elizabeth Taylor beauty business from Unilever PLC in January 2001. The Miami-based firm was then known as FFI Fragrances and paid about for $240 million in cash and stock for the two brands. FFI took the Elizabeth Arden banner as its corporate name in January 2001 and began a reorganization, which is resulting in the elimination of 100 positions, about 10 percent of the U.S. work force, for the upcoming fiscal year.

E. Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden, said last week that: “Despite the difficult economic and retail environment, we managed a relatively smooth integration of the Arden business, completing our management team and successfully executing an array of complex transition tasks. We have increased our market share with most of our large customers in our mass and mid-tier distribution channels and our White Diamonds brand maintained its top-10 rankings in all channels of distribution in the U.S. Our open-sell program with U.S. mass retailers has been very successful, and we expect to expand this program during fiscal 2003.”

As reported, for fiscal 2003, which began Friday, the company has said that it plans to expand sales and margins while reducing costs, including several new product rollouts and increasing spending for advertising and marketing. In particular, Arden said it plans to introduce a new Elizabeth Arden and Elizabeth Taylor fragrances and expand the Ceramides skin care line globally. The company said that it also will launch an Arden color line in international markets. Reports were circulating that there also will be a Taylor color line, thought to be lip and nail products, launched into the mid-market in the U.S. Arden said a fourth-quarter loss is expected to be $1 million to $4 million on an earnings before income taxes depreciation and amortization basis, excluding $2 million in restructuring costs. Arden added that the sell-through of Christmas gift sets was lower than anticipated, and that sales to department stores have been weak, representing both the difficult economic climate and the absence of a major new product introduction. Stock prices dropped 28 percent Thursday after the announcement, to close at $10.06 in Nasdaq trading Thursday. On Friday, Elizabeth Arden stock moved down 31 cents, or 3.1 percent, to close at $9.75 in Nasdaq trading.

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The statement added: “As a result of our expected operating performance in the fourth quarter, we anticipate that we will not be in compliance with certain maintenance covenants contained in our asset-based credit facility. We have already commenced the process to obtain a waiver of covenant noncompliance for the fourth quarter and the amendment of certain covenant levels in our credit facility for fiscal 2003 to better reflect the changed economic circumstances in which we are operating. Based on indications from our lead banks, we expect that we will be able to obtain such waiver and amendment.”

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