I'm pleased to report that we had a very good third quarter where we exceeded our top line expectations and delivered a very strong bottom line, reporting adjusted earnings per share of $0.58 versus $0.22 last year.
In the quarter, we more than doubled our adjusted operating profit and achieved an adjusted operating margin of 9.7%, which represents a 600 basis points expansion versus last year.
It's worth noting that we delivered strong earnings on an 8% decrease in revenues for the period.
This proved to be a great strategy and represented a revenue increase in the period for Europe of about $50 million.
Total Q3 revenues for Europe increased 16% and operating profit exceeded $51 million delivering a margin expansion of 900 basis points for the period.
We managed our balance sheet well and ended the period with cash and equivalents of $365 million and inventories 24% below last year's levels.
Let me just confirm today that we still believe that the opportunities we had identified to expand operating margins by 500 basis points are still intact.
Elevating the customers' perception of our brand starts with our product; product in our business has always been and continues to be king; offering a consistent line of product across all markets is a very ambitious goal when you have a global presence that reaches nearly 100 countries.
apparel resulted in a style reduction of 38% and this is after expanding the offering with multiple colors per stall, for e-commerce that represented a 7% increase of product choices online.
As an example for next summer in Europe, we planned an SKU reduction in stores of about 35% and then SKU expansion online of 9%.
We also made significant progress with our Customer 360 project.
We plan to complete the full implementation of the Customer 360 solution by the end of next year.
started 40 years ago, the company has always adapted its business very effectively to the challenges presented by the market, the environment and new customer preferences.
So today is my one-year anniversary at Guess?
Third quarter revenues were $569 million, down 8% in US dollars and 10% in constant currency.
The biggest driver in our improvement versus last quarter was wholesale in Europe, which was up 39% in constant currency versus last year.
In retail store comps in the US and Canada were down 23% in constant currency in line with Q2 as momentum in the US was offset by softening in Canada, due to traffic declines as a result of the pandemic.
Store comps were down 18% in Europe in constant currency, we have strong momentum was tempered in the last week of the quarter by shutdowns, due to the second wave of the pandemic.
Store comps were down 17% in Asia in constant currency, driven by strengthening in China and Korea.
Our e-commerce business in North America and Europe was up 19% for the quarter, an improvement from up 9% in Q2, driven by momentum in Europe.
Our Americas wholesale business was down 34% in constant currency, still under pressure from the deceleration in demand, but improving each quarter.
Licensing revenues also improved versus Q2, down 12% in Q3.
Gross margin for the quarter was 42.1%, 480 basis points higher than prior year.
Our product margin increased by 200 basis points this quarter, primarily as a result of higher IMU, as well as lower promotions.
Occupancy rate decreased 280 basis points as a result of business mix and rent relief.
This quarter we booked roughly $8 million in rent credits for fully negotiated rent relief deals, mostly in Europe.
Adjusted SG&A for the quarter was $184 million, compared to $206 million in the prior year, a decrease of $22 million.
Adjusted operating profit for the third quarter was $55 million, a 140% more than the operating profit in Q3 last year of $23 million.
Our third quarter adjusted tax rate was 16%, down from 24% last year, driven by the mix of statutory earnings.
Inventories were $393 million, down 24% in US dollars and 25% in constant currency versus last year.
We ended the third quarter with $365 million in cash versus $110 million in the prior year, and we had an incremental $260 million in borrowing capacity.
Capital expenditures for the first nine months of the year were $12 million, significantly lower than what we spent in the same period of the prior year.
Free cash flow for the first nine months of the year was an inflow of $83 million, an increase of $162 million versus an outflow of $79 million last year.
In addition, last year's outflow included the non-recurring payment of the $46 million European Commission fine.
We expect fourth quarter revenues to be down in the low to mid-20s to prior year.
Well, at the height of the closures in November, we had over 200 stores closed, more than half of these have reopened and we expect further openings in the coming days.
Given the expected level of revenue, the seasonality of our business, as well as the mix, we expect SG&A as a percent of sales to delever by approximately 400 basis points versus the prior year.

Summary:
I'm pleased to report that we had a very good third quarter where we exceeded our top line expectations and delivered a very strong bottom line, reporting adjusted earnings per share of $0.58 versus $0.22 last year.
So today is my one-year anniversary at Guess?
Store comps were down 18% in Europe in constant currency, we have strong momentum was tempered in the last week of the quarter by shutdowns, due to the second wave of the pandemic.
Capital expenditures for the first nine months of the year were $12 million, significantly lower than what we spent in the same period of the prior year.
We expect fourth quarter revenues to be down in the low to mid-20s to prior year.