The adjusted income tax rate in the quarter was 24.8%, compared to last year’s rate of 29.3% with the rate change primarily driven by lower non-deductible executive compensation, partially offset by the effect of employment related tax credits and audit settlements. The effective income tax rate comparison was also significantly impacted by the increased loss before income taxes in Q3. Total ending inventory cost was up 5.3% last year at $1.345 billion in line with our guidance and driven by higher average unit cost of on-hand inventory. This represents a significant sequential improvement versus earlier quarters in the year and we are pleased with the strong progress we have made on inventory normalization. During the third quarter, we opened 20 new stores and closed three stores.
We ended Q3 with 1,457 stores and total selling square footage of $33.4 million. Capital expenditures for the quarter were $38 million, compared to $46 million last year and depreciation expense in the quarter was $37 million, up $1 million to the same period last year. We ended the third quarter with $62 million of cash and cash equivalents and $460 million of long-term debt. At the end of Q3 2021, we had $71 million of cash and cash equivalents and no long-term debt. We did not execute any share repurchase during Q3 that have $159 million available remaining under our December 2021 authorization. On September 21st, we completed the refinancing and replacement of our existing $600 million senior unsecured credit facility with a new $900 million five-year revolving asset based loan facility.
In addition, we expect to further strengthen our balance sheet through asset monetization. This includes the outright sale of approximately 25-owned stores we expect to complete by the end of the year or early 2023. In addition, we are continuing to evaluate sale leaseback proposals on our remaining owned stores and other owned assets. On November 29th, our Board of Directors declared a quarterly cash dividend for the third quarter of fiscal 2022 of $0.30 per common share. This dividend is payable on December 28th 2022 to shareholders of record as of the close of business on December 14th, 2022. Turning to the fourth quarter outlook, we expect the sales environment to remain challenging. We therefore now expect comps to remain in the down low double-digit range.
Net new stores will add about 170 basis points of growth versus 2021. With regard to gross margin, we expect the rate in the fourth quarter will improve sequentially versus Q3, but remain in the mid-30s range, which is inclusive of a drag from additional markdowns related to accelerated store closures and efforts to clean up slow moving inventory. Sequential gross margin rate improvement will be driven by the factors we laid out on our last call, including easing of inbound freight costs, other cost of goods reductions, more targeted and efficient pricing and promotions, and an expected shrink benefit as we lap the cumulative shrink accrual adjustment we recorded in the fourth quarter of last year. We expect SG&A dollars to be roughly flat versus 2021, due primarily to increased accelerated depreciation from fourth quarter store closures, higher occupancy costs from new stores, higher outbound transportation costs and costs related to two incremental forward distribution centers.
These will be offset by cost savings, including lower store payroll and general office costs. We now expect to deliver over $100 million in SG&A reductions this year versus our original plan, of which approximately $70 million is structural. This will be partially offset by outbound transportation expense, including the impact of higher fuel rates. As a reminder, the $70 million structural savings will come from store payroll, supplies and other goods not for resale and headquarters costs. The balance of expense reductions is driven by expense flex on lower sales and lower bonus accruals. We expect to continue to drive savings in 2023 and beyond as you heard Bruce discuss. With regard to CapEx, we now expect approximately $170 million versus $160 million previously, with the increase due to higher than expected new store opening costs and some projects being pulled forward from 2023.
We continue to expect over 50 store openings in 2022 with a similar or slightly higher level of closures. The latter included outright sale of approximately 25-owned stores, I referenced earlier. Overall, we have seen outperformance in rural and small town markets. As Bruce mentioned, these stores face less direct competition and have lower cost structures. Therefore, they generate more cash and profitability than urban stores. As we evaluate store openings and closings, we are focused on optimizing the fleet towards these small town and rural markets. We expect full-year depreciation of around $156 million, including approximately $43 million in Q4. We expect a share count of approximately $29 million for Q4. We continue to expect Q4 inventory to be flat to down, compared with the prior year.
As Bruce mentioned, this increases our ability to go after bargains and closeouts in the future as we will have more open to buy. Last, all of our account during Q4 excludes the expected gain on sale of our owned store properties, as well as any potential further impairment charges. Beyond this year, we remain confident that operationally enhance our ability to drive significant long-term growth and value creation. I will now turn the call back over to Bruce.
Bruce Thorn: Thank you, Jonathan. I’d like to end the call by again thanking our associates for their focus on delivering for our customers. There are a lot of things to look forward to as we transform our business. And I’m looking forward to sharing with you all the progress we’re making. I’ll now turn the call back over to the moderator, so that we can begin to address your questions. Thank you.
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Operator: Thank you. We’ll now be conducting your question-and-answer session. Our first question today is coming from Greg Badishkanian with Wolfe Research. Please proceed with your question.
Spencer Hanus: Good morning. This is Spencer Hanus on for Greg. Can you just unpack what is leading to the slowdown in 4Q comps? And does the guide embed in improvement as we move throughout the quarter? And as we think about modeling the fourth quarter and think about the cadence of shopping, is it going to be more normalized this year and we could potentially see a pickup as we get closer to the holiday? Or how are you thinking about all those dynamics?
Bruce Thorn: is still present. They are pinched high inflationary rates and a pullback or a delay in discretionary high ticket items like our furniture is still front and center. We have moved through some of the seasonal product, which is good, but keep in mind that our home categories are the categories that truly resonate with our customers over the long-term. And they are — they bring more sales, higher basket, and because of that, when these customers are pinched during this time it is a drag on our overall comps. So — and you see that in our Q3 results. Our food and consumables performed pretty much like other companies in terms of what customers are buying in those non-discretionary items. But the discretionary items are lagging a bit and that’s going to continue into the fourth quarter.
The good news is the work that we’re making in increasing our bargains, our opening price points in those categories, the end caps and making sure we’ve got more bargains in treashers is going to play out nicely and should be a good trade down opportunity as we go into 2023, but it is a lag into Q4 at this time. Jonathan?
Jonathan Ramsden: Yes. I would just add Spencer, I think the focus in the last couple of quarters has been on inventory normalization, we’ve driven some comps. We’ve taken a margin rate hit to get that. We’re now pivoting more to driving margin higher and kind of getting back to the inventory we want to have. So we think we’re well set up coming into spring to be in a better position for all the reasons Bruce discussed, but that’s somewhat the dynamic that’s been playing out over the last couple of quarters.
Spencer Hanus: Got it. That’s helpful. And then just to follow-up on your last point on inventory, do you expect the destocking to be complete by the end of 4Q? Or should we expect that to continue into the spring and 2023? And then on the structural savings of $70 million is all that going to be realized in 4Q? And do you think you can still pull out more costs as we look forward here?
Jonathan Ramsden: Yes, so Spencer, the $70 million is a full-year number. That — we call that out, I think, on the prior call. So a decent amount of that has already been achieved in the first three quarters. Some of it is coming through in Q4. Going back to your question about inventory, yes, we expect to end the year very clean on inventory, as well as dealing with the seasonal overhang that we’ve had for the past couple of quarters, we’ve been dealing with other slow moving inventory, including in some areas in furniture where given the change in the environment, there’s been some obviously slower terms there. So we feel good about where we’re going to end Q4. We think that’s sets us up very well coming into 2023, both in general, but also in terms of capacity to go after closeouts.
