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Growth in high-margin online sales and actions we've taken to pass on higher freight costs also give us confidence in our ability to improve our gross margin in the fourth quarter.
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We expect our sales to result for the full 2021 year in the range of 366 million to 369 million. This sequential decline is consistent with normal seasonality. Now, as a result, we're currently targeting net sales to be in the range of 93 million to 96 million in 2021 fourth quarter, up about 30.4% at the midpoint of the range compared with the same period last year.
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Our positive business momentum is continuing into the fourth quarter, with the secular tailwind we've seen this year in consumer spending for services and adoption of environmentally friendly products helping to drive demand and support for our business. As a result, we expect our gross margin to improve sequentially in the fourth quarter. To respond to the current inflationary pressures and product shortages and to protect our margins, we instituted multiple price increases in September, and again, in November without any push back. We will likely see a benefit for the fourth quarter based on the current inventory being sold that carries a lower landed costs. The landed costs vary from month to month, especially due to the extreme cost fluctuation of ocean freight this year. Subsequently, as the company saw its higher cost inventory resulting from increased landed costs capitalized from the second quarter, it negatively affected gross margin. These increased fees were capitalized into inventory in the prior quarter, resulting in a higher inventory cost in the third quarter. In addition, gross margin was affected by increased landed costs, which include freight and duty and custom brokers fee, of approximately 1.8 million versus a benefit in the same quarter last year and in preceding 2021 second quarter. Despite this sequential improvement, we expect this raise to remain at the current high level compared with last year. Ocean freight rates again rose in the third quarter relative to the last year, although they have begun to ease and stabilize reasonably. Gross margin in the fiscal 2021 third quarter declined year over year, primarily due to the increasing freight costs, which every company is experiencing. We are managing the labor environment through increased recruiting effort, the use of temporary labor, and targeted overtime, and shifted distributions to other facility in our supply chain. Our sales were somewhat constrained by inventory shortages, resulting from tight labor conditions and port delays in the third quarter.
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Sales through national and distributor channels have also increased at a double-digit pace. Online sales rose 64% year over year in the third quarter as we continue to shift our sales mix toward these high-margin channels. Sales in our distributor, online, and national channels were particularly strong.Įxcluding the personal protective equipment products that we sold in the third quarter last year during the height of COVID-19 pandemic, our rate compared to sales growth for the third quarter was 43%. For the third quarter, net sales were in line with the guidance range that we have increased just last month, growing at a pace of 35% year over year. Market trend remains favorable, particularly for the environmentally friendly product and solution that Karat Packaging provides. Our business continued to grow at a robust pace.Įarlier today, we reported a solid third quarter net sales growth that reflects exceptionally strong demand for our products and continued expansion in our customer base.
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We're pleased to be here with all of you today.