Just last June, Shiseido moved the headquarters and product development for 5S from Tokyo to New York. The move was part of an effort to focus more on the U.S. market, but unfortunately it came at the wrong time.

Shiseido launched 5S - its lower-priced answer for the 18 to 30 set - with a Soho store in 1998. It had planned to launch its first fragrance, called Metasense, last month.

The Japanese firm isn't all about downsizing though, and is preparing to launch a new brand, Stephane Marais, in early March in France. The collection is being formulated with the makeup artist of the same name and will have its own shop on the Rue du Faubourg Saint-Honore.

Earlier this week, Shiseido reported a net loss for the six months to September of $12.3 million. The news could have been worse though, its forecast had been more than $41 million. The company also changed its forecast for full-year net losses as it deals with charges resulting from the recall of skin and hair care products that contained cow by-products. The first case of mad cow disease was discovered in Japan in September.

Shiseido is also dealing with a $227 million loss as a result of the costs incurred by changes to Japan's pharmaceutical law requiring clear labeling of ingredients in makeup products.