Our fourth quarter sales were $1.32 billion, a half of 1% decrease from the prior year which was a fourth quarter record and notably a sequential improvement from the third quarter of nearly 2%, illustrating the continuing recovery of our business.
Our strong year-over-year sales in the fourth quarter was the result of a 1.2% increase in our domestic wholesale business and a 1.1% increase in our international business, which was led by nearly 30% sales increase in China, as well as growth in Europe and Latin America.
In our domestic wholesale business, our fourth quarter sales growth of 1.2% came primarily from our athletic casuals, walking and work footwear, as well as high single-digit improvement in our men's business.
The domestic business decreased 2.8% due to a 7.6% decline in our direct-to-consumer sales, which was negatively impacted by reduced traffic in our brick-and-mortar stores, a result of the stay at home guidelines, and an overall decline in foot traffic and tourism.
The decrease in our domestic direct-to-consumer business was partially offset by a 142.7% increase in our domestic e-commerce channel, which continues to perform extremely well.
Our international direct-to-consumer business decreased 4.4% which was due to a decline in traffic with stay at home guidelines, reduced hours and temporary closures primarily in Europe, Canada and Latin America.
In total, Skechers direct-to-consumer segment decreased 6.4% as the pandemic spread again in numerous markets temporary store closures and reduced hours continued.
In the United States, consumer traffic at our stores was approximately 35% lower and operating hours were reduced by approximately 20%.
For our international company-owned stores we effectively lost 17% of the days available to days available to sell during the quarter.
At quarter end nearly 10% of our company-owned stores were closed due to health guidelines.
To note, while our direct-to-consumer business decreased in the fourth quarter, we did experience sequential quarterly sales improvement of 9.5%.
In the fourth quarter, we opened 19 company-owned Skechers stores, 12 of which were international locations, including a flagship store in Munich.
We closed 6 locations in the fourth quarter and another 18 have closed to date in the first quarter.
By the end of the first quarter, another 5 to 7 company owned stores are expected to close.
An addition of 108 third party Skechers stores opened in the fourth quarter, bringing our total store count at quarter end to 3891.
The stores that opened were across 22 countries with China opening the most locations including our first dedicated golf store at the same Mission Hills Golf Resort in Shenzhen.
Our international sales improved 1.1% over the same period last year and sequentially 4.5% higher than the third quarter.
Our international wholesale business improved 2.5% from the fourth quarter last year.
This was the result of increases in our joint venture business with 19.4% led by an increase of 29.7% in China and an increase in our subsidiaries of 12.7%.
As expected, our distributor business was down 57.9% due to ongoing store closures in several markets, including our largest distributor, which covers the Middle East.
The automation of our new 1.5 million square foot China distribution center remains on track for full implementation by midyear and we continue working on the expansion of our North American distribution center which will bring our facility to 2.6 million square feet in 2022.
Sales in the quarter totaled $1.32 billion, a decrease of $6 million or half of a 0.05% below the prior year.
On a constant currency basis, sales decreased $33.5 million or 2.5%.
Domestic wholesale sales increased 1.2% or 3.5 million, fueled by broad strength across customer types and encouraging consumer sell-through in multiple categories.
International wholesale sales increased 2.5% in the quarter.
Our subsidiaries were up 12.7%, led by Latin America and Europe, which grew 29.9%, and 22.9% respectively.
Our joint ventures were up 19.4% in the quarter.
China sales grew 29.7%, driven by strong e-commerce channel performance, particularly around Singles' Day and December's 12/12 event.
These increases were offset by our distributor business, which as expected, decreased 57.9% or $72.6 million in the quarter, reflecting acute challenges in several distributor managed markets.
Direct-to-consumer sales decreased 6.4%, the result of a 7.6% decrease domestically and a 4.4% decrease internationally, reflecting both challenged consumer traffic trend and the impact of temporary store closures in operating our restrictions.
However, these results were partially offset by another strong increase in our domestic e-commerce business of 142.7%.
Gross profit was $648.4 million up $10.7 million compared to prior year.
Gross Margin increased over 100 basis points versus the prior year, primarily driven by a favorable mix of international and online sales and an increase in domestic wholesale average selling price, where higher full price sell through of several of our innovative platforms like Arch Fit and Max Cushioning drove average selling prices higher.
Total operating expenses increased by $47.4 million or 8.6% to $595.7 million in the quarter.
Selling expenses increased by $9.2 million or 10.4% to $97.9 million, primarily due to an increase in domestic demand creation through digital advertising channels.
General and Administrative expenses increased by $38.1 million or 8.3% to $497.8 million, which was primarily the result of volume driven expenses in warehouse and distribution for both our international and domestic e-commerce businesses.
Earnings from operations was $57.7 million versus prior earnings of $94.1 million.
Net earnings were $53.3 million or $0.34 per diluted share on 155.4 million diluted shares outstanding.
Net income included a one-time, discrete tax benefit of $15.9 million.
Excluding the effects of this one-time tax benefit adjusted diluted earnings per share were $0.24.
These compared to prior year net income of $59.5 million or $0.39 per diluted share on 154.6 million diluted shares outstanding.
Our effective income tax rate for the quarter was a negative 14%.
We ended the quarter with $1.37 billion in cash and cash equivalents, which was an increase of $545.9 million or 66.2% from December 31, 2019.
The inventories, primarily reflects the company's outstanding borrowings of $452.5 million on a senior unsecured credit facility.
However, even net of those borrowings and nearly $310 million in capital expenditures, cash and cash equivalents grew by over $90 million.
Trade accounts receivable at quarter end were $619.8 million, a decrease of 4% or $25.5 million from the prior year end.
Total inventory was $1.02 billion, a decrease of 5% or $53.1 million from December 31, 2019.
Total debt including both current and long-term portions were $735 million at December 31, 2020 compared to $121 million at December 31, 2019.
Capital expenditures for the fourth quarter were $96.7 million, of which $48.9 million related to the expansion of our joint venture owned domestic distribution center, $13.9 million related to investments in retail technologies and stores, $11.4 million related to our new distribution center in China, and $7 million related to our new corporate offices in California.
In 2021, we expect total capital expenditures to be between $275 and $325 million.
However, due to the continued uncertainty in the retail marketplace, we will not be providing guidance this quarter, as the environment remains too unpredictable to forecast reliably.
Now as we continue to face challenges due to the ongoing health crisis, our fourth quarter sales increased only a 0.5% to 1% from the prior year record.

Summary:
Our strong year-over-year sales in the fourth quarter was the result of a 1.2% increase in our domestic wholesale business and a 1.1% increase in our international business, which was led by nearly 30% sales increase in China, as well as growth in Europe and Latin America.
In our domestic wholesale business, our fourth quarter sales growth of 1.2% came primarily from our athletic casuals, walking and work footwear, as well as high single-digit improvement in our men's business.
This was the result of increases in our joint venture business with 19.4% led by an increase of 29.7% in China and an increase in our subsidiaries of 12.7%.
Sales in the quarter totaled $1.32 billion, a decrease of $6 million or half of a 0.05% below the prior year.
Domestic wholesale sales increased 1.2% or 3.5 million, fueled by broad strength across customer types and encouraging consumer sell-through in multiple categories.
China sales grew 29.7%, driven by strong e-commerce channel performance, particularly around Singles' Day and December's 12/12 event.
Net earnings were $53.3 million or $0.34 per diluted share on 155.4 million diluted shares outstanding.
However, due to the continued uncertainty in the retail marketplace, we will not be providing guidance this quarter, as the environment remains too unpredictable to forecast reliably.