So now I will turn to our financial performance. So I will do it for the first time myself because Michel, as I said before, is not able to join us. So let’s try. On a consolidated basis, gross profit increased 29% to $235 million. Within our European-based operations, gross margin declined 90 basis points, primarily due to an unfavorable product mix as we shipped more gift sets in this quarter compared to prior year. On a year-to-date basis, gross margin declined only modestly due to the onetime expense related to inventory as we reported in the second quarter. Excluding this onetime adjustment, gross margin will have been in line with the 9-month period last year. In our U.S.-based operations, third quarter gross margin expanded approximately 190 basis points from the prior year period, driven by price increases that more than offset inflationary impacts on components that we are used for production during the quarter, coupled with ongoing favorable brand and channel mix.
Additionally, with our net sales outperformance, we are better able to absorb fixed expense such as depreciation and point-of-sale expenses than at this time last year. SG&A as a percentage of net sales declined to 40.2% from 41.9% in the quarter. On a year-to-date basis, SG&A also declined to 190 basis points to 39.8% from 41.7% in the prior year period. In our European-based operations, third quarter SG&A increased 18%, which is comparable to the increase in net sales and generally in line as a percentage of net sales from the prior year period. In our U.S.-based operations, SG&A increased 44% on a 64% increase in net sales. Promotion and advertising are integral part of the fragrance and beauty industry, and we have and we will continue to invest heavily to support new product launches, our strongest sellers and to build brand awareness.
Promotion and advertising aggregated $62.8 million and $152.6 million for the current third quarter and for the 9-month period as compared to $44.8 million and $125 million for the corresponding periods of the prior year. Promotion and advertising represented 17.1% and 15.4% of net sales for the current 3- and 9-month period, respectively, as compared to 16% and 16.1% for the corresponding periods of 2022. As a reminder, as part of our strategy, the fourth quarter is typically the heaviest period for promotion and advertising, and we continue to expect to deploy 21% of net sales annually, which allocates approximately the same level of promotion and advertising year-to-date to the fourth quarter alone. Royalty expenses are included in SG&A, which ticked down slightly from the prior year period to 7.8% of net sales for the quarter, again due to changes in brand mix.
Our operating margins aggregated 23.7% and 23.5% for the current 3- and 9-month period as compared to 23% and 22% for the corresponding period of 2022. We closed the third quarter with working capital of $514 million, including approximately $184 million in cash and cash equivalents and short-term investments, maintaining our working capital ratio of 2.41. We closed the quarter with $129 million of long-term debt associated with the Paris headquarters and Lacoste license acquisition. From a cash flow perspective, accounts receivable is up 49% from December 31, 2022, quite reasonable based on 2023 record level sales, and reflects the combination of high volume of shipments towards the end of the third quarter as well as some payment schedules extended going into the holiday season.
Additionally, strong collection activity resulted in days sales outstanding decreasing to 72 days at the close of the quarter from 80 days at this time last year. Inventory levels at September 30 increased 26% from year-end 2022 in support of our exponential sales growth. We have learned an important lesson from the supply chain issues experienced during the pandemic, and we have aimed to carry more inventory overall, source components from several suppliers and manufacture products closer to where they are sold to ensure we protect our service levels. And finally, turning to our full year 2023 guidance. As we announced in yesterday’s release, we are affirming our full year 2023 net sales guidance of $1.3 billion or growth of 20% from fiscal year 2022 despite geopolitical tension and a very high fourth quarter 2022 base.
We are also — excuse me, we are increasing earnings per diluted share guidance to $4.75 from our prior estimate of $4.55, which represents growth of 26% from the $3.78 for fiscal year 2022, thanks in great part to the operating leverage afforded by our significant growth. We expect to announce our initial guidance for full year 2024 later this month. So with that, operator, you can open the floor for questions.
Operator: [Operator Instructions]. Our first questions come from the line of Linda Bolton-Weiser with D.A. Davidson.
Linda Bolton-Weiser: I was wondering with regard to your comments on China that your POS grew, and so you could work down some retail inventory. How do you feel about your current levels of retail inventory there in China? Do you think there’s more reduction that needs to happen? Or are things in a good condition right now?
