This more than offset the gross margin expansion, leading to an operating margin contraction of 560 basis points, which underlines the urgency we have in reducing fixed costs. Diluted earnings per share of $0.57 reflects the lower volume and operating margin along with higher interest expense, all of which was partially offset by a lower tax rate in the quarter. Despite the difficult operating performance, we made progress on our number one financial priority to reduce debt and leverage. In Q3, we delivered an approximate $640 million reduction in net debt relative to last year. This better than planned result was largely attributable to lower working capital and strong execution by our teams to maximize free cash flow. As a result, we achieved a larger than anticipated reduction in inventories, sequentially down over $330 million relative to Q2 and down over $440 million or 17% at the end of the quarter, relevant to the prior year.
Our ability to meet near-term inventory objectives reflects the agility in the supply chain, a return to more effective sales and operations planning, and improved collaboration across the business. Liquidity at the end of the quarter stood at $2.8 billion and net debt was $5.2 billion, down from $5.9 billion in the prior year. In the third quarter, the company initiated an in-depth strategic review of all brand assets within the portfolio to ensure we are focused on our greatest long-term value creating opportunities. We’ll provide further updates when appropriate. Now, moving on to Reinvent, where I want to expand on Bracken’s update, first we made progress in executing our cost savings program as we worked towards our gross target of $300 million.
The actions we’ve taken on Reinvent around streamlining the organization and optimizing our call structure have begun to bear fruit. In fiscal Q3, we booked approximately $50 million in charges, of which about $20 million were non-cash. These charges are included in our reported results, but excluded from adjusted operating earnings and earnings per share that I just reviewed. The turnaround work remains in progress at Vans. During the quarter we took actions to reset the wholesale channel to ensure the brand’s market positioning and product assortments are aligned with the brand direction. The impact on revenue in the quarter was approximately $50 million. As part of our priority to reduce debt and leverage, we continued to work hard to right size our inventories.
We expect a further reduction in inventories in Q4 across the broader portfolio. In addition to the cash generated from lower inventories and the previous reduction in the dividend, we have also continued an effort we began last year to monetize noncore physical assets across several areas. Notably, this work now includes the closure of the corporate aviation program. We’ve begun the marketing process and expect to dispose of these assets over the next few quarters. To the extent the strategic review process results in the divestment of any brands, this would also support this objective. In summary, we’re encouraged by the progress we’re making on Reinvent. We have a lot more to accomplish, the impact of which will be increasingly visible in the coming quarters.
Finally, let me bring you back to the near-term with some thoughts on the year to go period. Our outlook on free cash flow for fiscal 2024 is unchanged and we expect to deliver about $600 million for the year. This is supported by the work we continue to do to reduce inventories, which we now expect to be down at least 10% at year end. Reflecting the additional progress we’ve made and compared to previous guidance of down mid-to-high single digits. We anticipate liquidity to be approximately $2.3 billion at year end and we continue to expect the second half gross margin for fiscal 2024 to be up relative to last year. While we’re not providing any additional guidance today on fiscal 2024 or fiscal 2025, we expect impacts from the following areas for the next several quarters.
Vans turnaround actions as we take the steps necessary to reposition and reset the brand. Continued caution from wholesalers in our key markets, translating to softer future order books globally, but with the greatest impact in the Americas. The North Face wholesale channel, particularly in the U.S., will remain challenged and finally a choppier Americas and European macro environment. With respect to Reinvent and the actions underway, we expect actual gross savings within fiscal 2024 to be at least $60 million, the majority of which is within SG&A and we continue to be on track to deliver the $300 million in annualized gross savings, with the vast majority of the savings in place on a forward run rate basis by the middle of next fiscal year.
But keep in mind, in fiscal 2025, while we will benefit from the incremental impact from reinvent actions year-over-year, we will face headwinds from an expected increase in incentive compensation and a more normalized amount of inflation. Looking at all this from a cash perspective, we continue to anticipate the cash costs associated with Reinvent actions to be largely offset by net proceeds from the sale of noncore physical assets that I referenced earlier in my comments. This will play out over the next several quarters. Finally, in closing, while our financial results in Q3 were challenged, I am pleased that we were able to expand gross margin, reduce inventories and generate strong cash flow. And importantly, we are reiterating our fiscal 2024 cash flow guidance despite the continued challenged earnings results.
The actions we are implementing as part of Reinvent are substantial. We have moved from planning to execution across many initiatives, including our cost savings program, restructuring actions and operational improvements. In addition, we’ve initiated a strategic review of the portfolio designed to ensure the brands within VF are aligned to both our strategic and financial objectives. While the impacts are not visible in our financial results yet, I’m confident these actions reset the business and enable us to stabilize and then grow revenue, improve profitability and reduce debt and leverage, positioning VF to deliver shareholder value creation. With that, we will now take your questions.
