David E. Bergman
Chief Financial Officer at Under Armour
Thanks, Patrik. With three quarters of the year behind us, our strong third quarter results demonstrate our ability to execute quickly to meet the needs of our consumers and customers all while driving toward record revenue and earnings in 2021. So let's dive right into our results. Compared to the prior year revenue was up 8% to $1.5 billion. Versus our previous outlook this overdrive was primarily due to higher demand across our full-price wholesale and Factory House businesses in North America. Patrik covered our regional performance earlier. So now let's click down into our channel results on a global basis.
Third quarter wholesale revenue was up 10% driven by higher-than-expected demand in our full-price business, particularly in North American wholesale, which was tempered by a reduction in sales to the off-price channel as we continue to work to elevate our brand positioning. Our direct-to-consumer business increased 12%, led by 21% growth in our owned and operated retail stores, partially offset by a 4% decline in e-commerce, which faced a difficult comparison to last year's third quarter. But I would also note that when compared to the third quarter of 2019 our e-commerce business was up over 50%. And licensing revenue was up 24% driven by improving strength within our North American Partner businesses.
By product type, apparel revenue was up 14% with strength across all categories, particularly in train and golf. Footwear was up 10% driven primarily by strength in running and our accessories business was down 13% due to lower sales of our sports masks compared to last year's third quarter. Relative to gross margin, our third quarter improved 310 basis points over last year, landing at 51%. This expansion was driven by 400 basis points of pricing improvements due primarily to lower promotional activity within our DTC channel along with lower promotions and markdowns within our wholesale business.
And 120 basis points of benefit due to channel mix primarily related to lower mix of off-price sales versus last year's third quarter. Partially offsetting these improvements was about 100 basis points of negative impact related to the absence of MyFitnessPal and 90 basis points of negative impact from higher freight and logistics costs due to COVID-related supply chain pressures. Versus our previous expectation, our higher than expected Q3 gross margin improvement was primarily due to lower-than-planned promotional activity within our DTC business and more favorable pricing related to sales to our off-price partners.
SG&A expenses were up 8% to $599 million due to increased marketing investments, incentive compensation and non-salaried workforce wages. Relative to our 2020 restructuring plan, we recorded $17 million of charges in the third quarter. In this morning's press release, we noted that we have reduced our planned expectations by $25 million. So, we now expect to recognize total planned charges ranging from $525 million to $575 million. Thus far we've realized $500 million of pre-tax restructuring and related charges. As a reminder, all remaining charges are related to initiatives outlined in 2020. Meaning nothing new has been added in 2021.
We expect to recognize any remaining charges related to this plan by the first calendar quarter of 2022. Moving on, our third quarter operating income was $172 million. Excluding restructuring and impairment charges adjusted operating income was $189 million. After tax, we realized a net income of $113 million or $0.24 of diluted earnings per share during the quarter. Excluding restructuring charges, loss on extinguishment of $169 million in principal amount of senior convertible notes and the non-cash amortization of debt discount on our senior convertible notes, our adjusted net income was $145 million or $0.31 of adjusted diluted earnings per share.
In this respect, we are excited to report that the $0.71 of adjusted diluted earnings per share that we've realized year-to-date has surpassed our highest previous full year split-adjusted earnings, thus solid traction and excellent progress. Inventory was down 21% to $838 million, driven by improvements in our operating model and inbound shipping delays due to COVID-related supply chain pressures. Our cash and cash equivalents were $1.3 billion at the end of the quarter and we had no borrowings under our $1.1 billion revolving credit facility. With respect to debt during the third quarter, we entered into exchange agreements with certain convertible bondholders for $169 million in principal amount of our outstanding convertible notes and terminated certain related capped call transactions.
We utilized net $168 million in cash, issued 7.7 million shares of our Class C stock and recorded a related loss of approximately $24 million, which is captured in other income and expenses. Following this transaction and our actions in the second quarter $81 million of convertible notes remain outstanding. Now, moving on to the balance of the year, as we noted earlier in this call, the current global retail environment remains varied with some markets realizing a steadier return to growth like in the Americas, albeit with continued weak traffic trends somewhat mixed environments across different regions in EMEA and conservative assumptions about APAC as it navigates ongoing phases of closures, reopenings and restrictions.
Factoring in the current supply chain challenges emanating from Southeast Asia and logistics challenges being experienced worldwide, we're staying appropriately cautious in the near term. However, it is important to note that today's revised outlook assumes no additional shutdowns of manufacturing partners or further retail sector disruptions as we close out 2021. Now, turning to our updated 2021 outlook, let's start with revenue, which we now expect to be up approximately 25% for the full year. This reflects a high 20s percentage rate increase in North America and a mid 30s increase in our International business.
From a channel perspective, wholesale is expected to be up at a mid 30s rate and our DTC business, up at a mid 20s rate with e-commerce up at a low-single-digit rate for the full year against 2020. Concerning our top line expectation for the fourth quarter, the same significant headwinds from our last call remain in play in addition to the developing COVID-related supply chain issues currently facing the sector. Turning to gross margin, on a GAAP basis, we expect the full year rate to be up approximately 130 basis points against our 2020 adjusted gross margin of 48.6% with benefits from pricing and changes in foreign currency being partially offset by higher expected freight expenses and the sale of MyFitnessPal, which carried a high gross margin rate.
The gross margin improvement relative to our previous outlook is primarily due to pricing benefits, partially offset by increased freight expenses related to supply chain challenges, which we continue to monitor. Versus 2020, we now expect that full year SG&A will be up 6% to 7%. As laid out previously, specific 2021, we have taken advantage of our improved results and proactively made incremental investments particularly in marketing to build even deeper connections with our consumers. We also expect higher incentive compensation, which is up against 2020 when we had significant reductions against target levels as well as higher non-salaried wages.
With that, we now expect operating income to reach approximately $425 million this year or $475 million on an adjusted basis. Translated to rate, we expect to deliver an operating margin of just under 8% or an adjusted operating margin of approximately 8.5% in 2021. All of this takes us to an expected diluted earnings per share of approximately $0.55 or adjusted diluted earnings per share of approximately $0.74 in 2021 with an average weighted diluted share count of approximately 468 million shares. And finally, from a balance sheet perspective, we expect to end the year with inventory relatively flat against 2020's year end.
And we expect to close the year with approximately $1.5 billion in cash and cash equivalents. Looking forward, a reminder that we are changing our fiscal reporting year in 2022. Mechanically, the first calendar quarter will serve as a transition period until we begin our new fiscal year 2023 on April 1. Accordingly, we are not providing color for next year on today's call. That said there are supply chain pressures that are challenging the industry in the near term. And while we believe the impacts to our P&L in 2021 are expected to be relatively minimal, we are taking precautions to navigate some of the volatility and anticipated business disruptions in the first half of 2022 including the work we began in the second quarter of 2021 to adjust orders and shipping with our factory partners and logistics suppliers.
Working with wholesale customers to narrow and edit our Spring-Summer 2022 order book and assessing various mitigation offsets for inflationary pressures including elevated logistics cost and higher wages. Given the situation is still fluid, it is difficult to estimate the full extent of potential effects on our business at this point. However, on what we know -- based on what we know today, we are forecasting material impacts to the first half of 2022. And therefore with respect to the first calendar quarter we expect revenue to be up at a low single digit rate. Concerning a longer-term view, as of this week, nearly all factories that Under Armour does business with including those in Vietnam are open. It's a definitely encouraging news.
Of course, full capacity will take some time to ramp back up and this is only one part of the equation. Over the next several quarters, we expect longer than usual transit times as backlogs and congestion find balance. So this may create some variability in our results. That said, the proactive strategies we're employing, greater operational agility and overall demand for the Under Armour brand give us confidence in our ability to navigate effectively through the coming environment.
With that, I'd like to close today's call by returning to Patrik's opening thought and the balance we are committed to striking between driving sustainable long-term growth while delivering near-term value to our shareholders. All global companies operate in a constantly changing environment and over the past few years through our transformation and the pandemic, Under Armour has demonstrated its ability to effectively manage our business under a range of conditions. Lastly, as we look to close out the strongest top and bottom line performance in our history, the work we've done to re-architect our strategy, operations and financial discipline sets us up well to leverage this balance and thus create improved value for our shareholders over the long term.
With that, we'll turn it back to the operator for your questions. Operator?