Net earnings were $123 million, and include provisional one-time charges of $394 million related to the U.S. Tax Cuts and Jobs Act (TCJA) that was signed into law in December 2017. On a diluted earnings per share basis, including the one-time charges and restructuring and other charges, the company earned $.33. In the prior-year second quarter, the company reported net earnings of $428 million and diluted earnings per share of $1.15. Adjusting for the restructuring and other charges and the impact of the TCJA provisional charges, diluted net earnings per common share for the three months ended Dec. 31, 2017 increased 25% to $1.52, and in constant currency rose 23%.
“In our second quarter we continued our strong momentum and generated stellar results. In constant currency, our sales grew 14%, led by exceptional strength in travel retail, global online and Asia, along with strong double-digit growth in several markets in Europe, including Italy and Benelux,” said Fabrizio Freda, president and CEO. “We delivered double-digit sales gains across most product categories and many brands, including Estée Lauder, luxury brands and most mid-sized brands. In the holiday season, our brands achieved outstanding results from their e-commerce businesses, and customizable gift options were significant contributors. These elements, along with our accelerating cost saving efforts and our progress executing our Leading Beauty Forward initiatives, resulted in an impressive adjusted 23% earnings per share growth in constant currency.
According to Freda, ELC’s strong results, “combined with future benefits we expect from the passage of the new Tax Cuts and Jobs Act, further enhance our ability to strategically invest in faster-growing areas of prestige beauty to attract new consumers. Our strategy is sound and effective, and we have the brands, resources and talent to continue above-industry growth in our second half and full fiscal year.”
In skin care, net sales increased sharply, with exceptional double-digit gains from Estée Lauder, La Mer, Origins and Glamglow, and strong growth from Clinique. The Estée Lauder brand grew globally, particularly in China and travel retail, due largely to the continued success of the recently launched Advanced Night Repair Eye Concentrate Matrix and gains in other Advanced Night Repair products. La Mer was driven by the success of new products in its Genaissance collection, the launch of The Moisturizing Matte Lotion, gains from existing products, and targeted expanded consumer reach. Origins generated sales growth in every region, particularly Asia, as well as in travel retail due to the continued success of several product lines in the facial mask and moisturizer sub-categories. Sales gains from Glamglow reflected additional product assortments and targeted expanded consumer reach. Clinique’s sales gains reflected increases in the brand’s Moisture Surge product line.
These increases were partially offset by lower skin care sales from Aveda, which faced an unfavorable comparison to the prior-year period due to the launch of the brand’s Tulasara line of products, ELC said.
Strong sales growth in makeup was primarily driven by incremental sales from the company’s fiscal 2017 second quarter acquisitions of Too Faced and Becca, exceptionally strong double-digit increases from Tom Ford, and strong double-digit gains from Estée Lauder. Higher makeup sales were also generated from M•A•C. Sales from Tom Ford were driven primarily by strength in the eyeshadow and lip color sub-categories. At Estée Lauder, higher sales were fueled by the Double Wear foundation and Pure Color lip product lines. The higher sales from M•A•C were due to strong growth in the Asia/Pacific region, particularly China and Hong Kong, and in travel retail, as well as success in the specialty-multi channel in the United States.
These increases were partially offset by lower makeup sales in the United States, reflecting slow foot traffic in some US brick-and-mortar stores.
Fragrance net sales increased, primarily due to strong double-digit gains from our luxury brands and Estée Lauder, noted ELC. Jo Malone delivered outstanding double-digit growth in travel retail and generated sales increases in every region, with double-digit growth in Europe and Asia/Pacific, reflecting strong growth from existing fragrances, targeted expanded consumer reach and the recent launch of the English Oak fragrances.
Increased sales from Tom Ford reflect, in part, the continued success of the Private Blend line of fragrances, including new product launches and growth from existing fragrances. Le Labo, By Kilian and Editions de Parfums Frédéric Malle each benefitted from growth in existing products and new launches and targeted expanded consumer reach.
Hair care sales rose reflecting gains from Aveda and Bumble and bumble. Aveda grew, driven by solid performance in the online channel, while growth from Bumble and bumble was driven by the launch of the brand in Ulta Beauty. Partially offsetting the sales growth was softness in the salon channel, which impacted both brands, and lower sales in freestanding stores for Aveda.