We ended the quarter with 69 stores and approximately 1.73 million of gross square footage, as compared to 63 stores and approximately 1.58 million of gross square footage at the end of third quarter of 2013. Our comparable store sales for the quarter declined by 3.5%, which included a 1.8% increase in comparable store average ticket. We were pleased that our TCS gross margin remained consistent and stable at 58.9%. Elfa segment gross margin declined 150 basis points, primarily due to a shift in sales mix. As a result, on a consolidated basis, gross margin declined 40 basis points as the decline in elfa gross margin was partially offset by a larger portion of consolidated net sales coming from the higher gross margin Container Store segment.
As a percentage of sales, consolidated SG&A increased 200 basis points to 49.2% in the third quarter of fiscal 2014 primarily due to deleverage of fixed cost associated with lower comparable store sales at The Container Store. Additionally, we incurred approximately 30 basis points of incremental cost associated with implementation of our strategic initiatives at The Container Store as well as 30 basis points of incremental public company costs as we incurred a full quarter this year as compared to last year due to our IPO occurring late in the third quarter of 2013. As previously discussed, during the third quarter of 2014, we recorded a $3.3 million non-taxable gain on the sale of one of our elfa subsidiaries whose principal asset was a building. We also recorded a taxable gain of $560,000 on the sale of an additional building at elfa during the third quarter for a combined gain of $3.8 million.
Our net interest expense in the third quarter of 2014 was $4.3 million compared to $5.8 million in the third quarter of fiscal 2013, with the year-over-year decline due to lower interest rates achieved through refinancing our term loan facility at The Container Store in November 2013 as well as repayments on debt obligation. Due to the non-taxable gain on the sale of the elfa subsidiary, our effective tax rate for the quarter was 34.2% [distorted audio] the negative 39.9% rate from third quarter of last year, which was a direct result of the IPO related stock-based compensation expense recorded at that time, which was deferred for tax purposes until the options are exercised.
Net income for the quarter was $6.2 million or $0.13 per diluted share compared to a net loss of $9.5 million or $1.39 per diluted share in the third quarter of last year. Last year’s net loss per diluted share reflects $15.6 million in preferred distributions. As a reminder, we exchanged our issued and outstanding preferred stock for common stock in connection with the IPO in late fiscal 2013.
On an adjusted basis, excluding the tax affected gain on the sale of asset just mentioned and detailed in the reconciliation table in our press release, net income per diluted share for the third quarter of 2014 was $0.07 compared to adjusted net income per diluted share of $0.11 in the third quarter of 2013. We were pleased to deliver this earnings performance despite sluggish comparable store sales performance. We were able to manage our cost well at both The Container Store and elfa.
Turning to our balance sheet, we ended the quarter with $14 million in cash on our balance sheet, $364 million in outstanding borrowings, and combined availability on revolving credit facilities with cash on hand of $74 million. We ended the quarter with well-managed inventory of $104 million, down 1.2% as compared to $105 million at the end of last year’s third quarter despite a store count increase of almost 10%. Inventory at The Container Store retail business remained consistent year-over-year. In Swedish Krona, elfa’s inventory also remained consistent year-over-year. However, due to the depreciation of the Swedish Krona against the U.S. dollar, elfa’s inventory declined in U.S. dollars.
Taking this into consideration, our consolidated inventory is approximately the same as it was in the prior year as we have reacted to sales trends efficiently. It is important to note that we have not seen any impact worthy of discussion with the delays at the U.S. ports and have managed through this with virtually no impact to our business to date.