For fiscal year 2021, sales rose 11% as we pivoted our energy resources to the growth engines of skin care, fragrance, Asia Pacific, travel retail in Asia Pacific, and global online.
Our sales exceeded $16 billion for the first time ever, up 9% from fiscal year 2019 on a reported basis, fueled by skin care and fragrance.
Adjusted operating margin expanded to 18.9%, which is 140 basis points above fiscal year 2019 as we invested in today's strongest growth engines, managed cost with discipline, and funded long-term growth opportunities.
Adjusted diluted earnings per share rose 21% relative to two years ago.
We achieved net-zero carbon emissions and 100% renewable electricity globally for our own operations.
We also set science-based emissions reduction target, addressing Scope 1 and 2 for our direct operation and certain elements of Scope 3 for our value chain, signaling our new level of ambition for climate actions.
We launched ingredient glossaries for seven additional brands, such that 11 brands now offer this insightful content.
We transformed our traditional inclusion, diversity, and equity week into a blockbuster virtual experience, with 35 events involving thousands of participants from 25 countries.
Our new partnership with Howard University focused on its alumina-hosted 12 engaging events and launched an accelerator program to help increase the pipeline for black talent with career, coaching, professional training, and self-empowering networking.
Innovation represented over 30% of sales, exceeding our expectations.
The brand successfully met consumer needs through the launch of Moisture Surge 100 Hour with its unique hydration benefits and target solution for hard-to-solve skin care problem like Even Better Clinical Interrupter.
The Asia Pacific region was another dynamic growth engine in fiscal year 2021 as annual sales growth accelerated from 18% to 22% led by Mainland China where sales rose strong double digits.
We entered more cities, reaching 145, expanded our presence in specialty-multi, opened the freestanding doors, and increased our advertising spending.
Our brands delivered excellent results for the key events of Tmall's 11/11 Global Shopping Festival and 6/18 Mid-year Shopping Festival as engaging live streaming generated product discovery for many new consumers.
For the recent 6/18 among Tmall beauty flagship stores, the Estee Lauder brand ranked No.
1 in total beauty, while La Mer ranked first in luxury beauty and Jo Malone London led the fragrance category.
Estee Lauder launched on TikTok with the Night Done Right hashtag, driving nearly 12 billion views and the creation of almost 2 million videos.
Clinique zit happens campaigns on TikTok became a viral sensation, highlighting the brand acne solution and spurring the creation of nearly 700,000 videos on the app.
Aveda, which is now 100% vegan, and Bumble and bumble enter fiscal year 2022 with momentum, owing to desirable innovation and rich consumer engagement from strong online performance globally over the past year.
This year, we are celebrating our 75th anniversary as a company and beginning our next 75 years incredibly inspired by the opportunities of tomorrow as the leading global house of prestige beauty with the most talented employees to whom I extend my deepest gratitude.
We delivered exceptional net sales growth of 56% in our fourth quarter as we anniversary pandemic-related store closures in the prior-year period.
The inclusion of six weeks of sales from DECIEM added approximately 3 points to growth in the quarter.
Our performance also exceeded the prepandemic levels of the fiscal 2019 fourth quarter by 9% driven by significant sales increases in Mainland China, the skin care and fragrance categories, global online and travel retail in Asia.
Net sales in the Americas region rose 86% against the prior-year period with almost no brick-and-mortar retail open.
Sales in the region remain below fiscal '19 levels for the quarter, reflecting in part the loss of over 900 retail locations that represented nearly $170 million in annual sales.
Net sales in our Europe, the Middle East, and Africa region increased 65%, with all markets contributing to growth as COVID restrictions eased throughout the quarter.
Net sales in the Asia Pacific region rose 30%.
Sales of our products online continued to rise strong double digits in the region driven by the successful 6/18 Shopping Festival Campaign in China and including the continued strength of social e-commerce.
Sales in the region were 50% above 2019 levels, largely reflecting China's rapid emergence from the pandemic last year.
Fragrance led growth with net sales rising 150% versus prior year.
Net sales in makeup jumped 70% against the prior year that reflected the greatest beauty category impact of COVID-19, particularly in Western markets where makeup is the largest category.
Hair care net sales grew 52% as salons and stores reopened.
Skin care sales growth also benefited from the addition of DECIEM in the quarter by approximately 4 percentage points.
Our gross margin improved 650 basis points compared to the fourth quarter last year.
Operating expenses rose 36% driven by the planned increase in advertising and selling costs to support the reopening of retail and the recovery.
We delivered operating income of $385 million for the quarter, compared to a $228 million operating loss in the prior-year quarter.
Diluted earnings per share of $0.78 included $0.02 of favorable currency translation and $0.02 dilution from the acquisition of DECIEM.
The sequential acceleration of our business throughout the year culminated in net sales growth of 11%.
Sales of our products through all online channels continue to thrive as they rose 34% for the year and represented 28% of sales.
Despite the continued curtailment of international travel, our business in the travel retail channel grew, ending fiscal 2021 at 29% of sales.
Operating expenses declined 300 basis points to 57.5% of sales.
Our full-year operating margin was 18.9%, representing a 420-basis-point improvement over last year and 140 basis points above fiscal 2019.
This year also includes 50 basis points of dilution from the inclusion of Dr. Jart+ and DECIEM.
Our effective tax rate for the year was 18.7%, a decrease of 450 basis points over the prior year, primarily driven by the geographic mix of earnings, which included a favorable one-time adjustment for fiscal years 2019 and 2020 related to recently issued GILTI tax regulations.
Net earnings rose 57% to $2.4 billion and diluted earnings per share increased 57% to $6.45.
Earnings per share includes $0.11 accretion from currency translation and $0.08 dilution from the acquisition of Dr. Jart+ and DECIEM.
In fiscal 2021, we recorded $148 million after tax or $0.40 per share of impairment charges related to our Smashbox and GLAMGLOW brand, as well as certain freestanding retail stores.
Restructuring and other charges related primarily to the post-COVID business acceleration program were $176 million after tax or $0.48 per share.
These charges were more than offset by the one-time gain on our minority interest in DECIEM of $847 million after tax or $2.30 per share.
We have closed nearly 500 doors or counters, including about 50 freestanding stores under the program in fiscal 2021.
We also closed approximately 100 additional freestanding stores outside of the program and upon lease expiration, primarily in North America and in Europe.
These actions are expected to continue into fiscal 2022.
For the total program, we continue to expect to take charges of between $400 million and $500 million through fiscal 2022 and generate savings of $300 million to $400 million before tax by fiscal 2023, a portion of which will be reinvested.
Cash generated from operations rose 59% to $3.6 billion, primarily reflecting the higher net earnings.
We utilized $637 million for capital improvement, supporting increased capacity and other supply chain improvements, further e-commerce development, and information technology.
We repaid $750 million of debt outstanding from our revolving credit facility, issued $600 million of new long-term debt, and retired $450 million of debt.
We used $1.1 billion net of cash acquired to increase our ownership interest in DECIEM, and we returned $1.5 billion in cash to stockholders during the year via increased dividends and the reinstatement of share repurchase activity in the second half of the fiscal year.
Nevertheless, given the strength of our programs, we are cautiously optimistic, and therefore, providing a range of sales and earnings per share expectations for the fiscal year, caveated with the following underlying assumptions: progressive recovery in the makeup category as full vaccination rates increase and mask-wearing abates in Western markets during the first half of the fiscal year; beginning of the resumption of international travel in the second half of the fiscal year; the addition of new retail accounts for some of our brands should provide broader access to new consumers, notably through Sephora at Kohl's and Ulta at Target in North America and the addition of JD.com in China online; the inclusion of incremental sales from DECIEM, benefiting sales growth for the fiscal year, primarily in the Americas and EMEA regions and in the skin care category; pricing is expected to add approximately 3 points of growth, helping to offset inflation risk in freight, media, labor and commodities; increased advertising support as markets reopen and further investment behind select capabilities, including data analytics, innovation, technology and sustainability initiatives while maintaining good cost discipline elsewhere.
Approximately $200 million of the cost we cut during the pandemic are expected to be reinstated.
Our full-year effective tax rate is expected to return to a more normalized level of approximately 23% from 18.7% in fiscal 2021.
Net interest and investment expense is expected to be around $150 million.
This charge is expected to be less than $5 million in fiscal 2022.
Net cash flows from operating activities are forecast between $3.2 billion and $3.4 billion.
Capital expenditures are planned at approximately 5% of projected sales as we develop additional manufacturing and distribution capacity, notably for the building of our new facility in Japan.
For the full fiscal year, organic net sales are forecasted to grow 9% to 12%.
Based on August 13 spot rates of 1.17 for the euro, 1.381 for the pound, 1,164 for the Korean Won, and 6.479 for the Chinese yuan, we expect currency translation to add 1 point to reported sales growth for the full fiscal year.
As I mentioned earlier, this range excludes approximately 3 points from acquisitions, divestitures, and brand closures, primarily the inclusion of DECIEM.
Diluted earnings per share is expected to range between $7.23 and $7.38 before restructuring and other charges.
This includes approximately $0.19 of accretion from currency translation.
In constant currency, we expect earnings per share to rise by 9% to 12%.
This also includes approximately $0.03 accretion from DECIEM.
At this time, we expect organic sales for our first quarter to rise 11% to 13%.
The incremental sales from acquisitions, divestitures, and brand closures are expected to add about 3 points to reported growth, and currency is expected to be accretive by approximately 3 points.
We expect first-quarter earnings per share of $1.55 to $1.65.
Currency is expected to be accretive to earnings per share by $0.05, and DECIEM is forecast to have no impact.

Summary:
Diluted earnings per share of $0.78 included $0.02 of favorable currency translation and $0.02 dilution from the acquisition of DECIEM.
These actions are expected to continue into fiscal 2022.
For the full fiscal year, organic net sales are forecasted to grow 9% to 12%.
Diluted earnings per share is expected to range between $7.23 and $7.38 before restructuring and other charges.
In constant currency, we expect earnings per share to rise by 9% to 12%.
At this time, we expect organic sales for our first quarter to rise 11% to 13%.
We expect first-quarter earnings per share of $1.55 to $1.65.