Third quarter sales were $1.3 billion, which was a 3.9% decrease from the prior year but a 78.3% increase over the second quarter, a significant accomplishment and an encouraging sign of the health of our brand.
Our domestic wholesale business returned to growth in the quarter, rising 6.3% a result of pent-up demand and the relevance of our product.
The more than 3,770 Skechers stores e-commerce sites and availability in many of the leading retailers worldwide gave us the opportunity to fulfill demand and satisfy customers as the markets reopen.
Our joint venture business was up 14% led by an increase of 23.9% in China where our e-commerce business was particularly strong.
Our European subsidiaries were up 18.1% overall led by fantastic growth in Germany as well as in France and Central Eastern Europe.
In the quarter we also opened 24 pre-COVID planned stores including flagship locations on Rue de Rivoli, the premier shopping street in France Oxford Circus in London and Shinjuku in Tokyo.
And two stores in Colombia and another 19 domestic and international locations.
In the third quarter, our direct-to-consumer business decreased 16.9%, as consumer traffic remained challenged mostly in tourist and destination concept stores as well as continued store closures in some markets.
However, our domestic e-commerce business continued to grow significantly, even as our retail locations reopened increasing 172.1% in the quarter.
And are now connected with our e-commerce channel, allowing consumers to shop our product online and pick up in one of our more than 500 U.S. locations, either in-store or curbside.
In addition to the 24 company-owned stores, 189 new third-party Skechers stores opened around the world and 48 closed bringing our total company-owned third-party store count to 3,770 worldwide, at quarter end.
Our new 1.5 million square foot China distribution center remains on track.
And we are working diligently on the expansion of our North American distribution center, which we expect to be completed in the second half of 2021 bringing our facility to 2.6 million square feet.
We also completed the expansion of our European distribution center, bringing it to 2.1 million square feet and expect to open our first U.K.-based distribution center by the end of this year.
This quarter was a stark improvement over last quarter, as sales improved in each of our segments and total sales grew 78.3%.
Our sales were down only 3.9% year-over-year, which we view as a major accomplishment.
Sales in the quarter totaled $1.3 billion, a decrease of $53.1 million or 3.9% from the prior year quarter.
On a constant currency basis, sales decreased $65.6 million or 4.8%.
Domestic wholesale sales increased 6.3% or $18.8 million, fueled by consumer demand for multiple categories, across men's, women's and kids.
International wholesale sales decreased 0.5% in the quarter.
Our distributor business decreased 43.7% in the quarter, reflecting continuing challenges, in distributor-led markets.
But our subsidiaries were up 1.5%.
And our joint ventures grew 14%.
China sales grew 23.9% for the quarter, as demand rebounded, especially in e-commerce channels.
Direct-to-consumer sales decreased 16.9%, the result of a 15.3% decrease domestically and a 19.6% decrease internationally, reflecting both challenged consumer traffic trends and the impact of temporary store closures.
However, these results were partially offset by another robust increase in our domestic e-commerce business of 172.1%.
Gross profit was $625.1 million, down $28 million compared to the prior year on lower sales volumes.
Total operating expenses increased by $24.3 million or 4.7%, to $536.2 million in the quarter.
Selling expenses decreased by $11.6 million, or 11.9%, to $85.9 million, primarily due to lower global advertising and trade show expenditures.
General and administrative expenses increased by $35.9 million, or 8.7%, to $450.3 million, which was primarily the result of an $18.2 million one-time non-cash compensation charge related to the cancellation of restricted share grants associated with the recent legal settlement, as well as volume-driven increases in warehouse and distribution expenses for both our international and domestic businesses.
Earnings from operations was $92.1 million versus prior year earnings of $147.4 million.
Net income was $64.3 million, or $0.41 per diluted share, on 155 million diluted shares outstanding.
However, adjusting for the one-time non-cash compensation charge previously mentioned, net income was $82.6 million, or $0.53 per diluted share.
These compare to prior year net income of $103.1 million, or $0.67 per diluted share, on 154 million diluted shares outstanding.
Our effective income tax rate for the quarter decreased to 15.4% from 15.8% in the prior year.
We ended the quarter with $1.5 billion in cash, cash equivalents and investments, which was an increase of $468.2 million or 45.4% from December 31, 2019, primarily reflecting the drawdown of our senior unsecured credit facility in the first quarter.
Trade accounts receivable at quarter end were $709 million, an increase of 9.9%, or $63.6 million from December 31, 2019, and an increase of 7% or $46.6 million from December 30, 2019.
Total inventory was $1.05 billion, a decrease of 1.5% or $16.5 million from December 31, 2019, but an increase of 18.3% or $163 million from the September, 30, 2019.
Total debt, including both current and long-term portions, was $812 million compared to $121.2 million at December 31, 2019.
Capital expenditures for the third quarter were $63.6 million, of which $24.6 million related to the expansion of our domestic distribution center, $19.2 million related to new store openings and remodels worldwide, as well as a new point-of-sale system and $11.4 million related to our new corporate offices in the United States.
We now expect total capital expenditures for the remainder of the year to be between $100 million and $125 million, inclusive of the aforementioned projects.
However, we will not be providing revenue and earnings guidance this quarter, as the environment remains too unpredictable to forecast reliably.

Summary:
Our joint venture business was up 14% led by an increase of 23.9% in China where our e-commerce business was particularly strong.
Sales in the quarter totaled $1.3 billion, a decrease of $53.1 million or 3.9% from the prior year quarter.
China sales grew 23.9% for the quarter, as demand rebounded, especially in e-commerce channels.
Net income was $64.3 million, or $0.41 per diluted share, on 155 million diluted shares outstanding.
However, adjusting for the one-time non-cash compensation charge previously mentioned, net income was $82.6 million, or $0.53 per diluted share.
However, we will not be providing revenue and earnings guidance this quarter, as the environment remains too unpredictable to forecast reliably.