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China Jo-Jo Drugstores, Inc. Reports Fiscal Year 2014 First Quarter Earnings Results and Schedules Conference Call for August 19, 2013
Date:8/16/2013

spend, so a modest increase in drug sales is expected.(2)

Wholesale revenue decreased by $16,944,654 or 79.3% period over period. The drop in wholesale revenue is a reflection of our strategy to focus on profitability. Although we achieved our sales volume in the prior period quickly through competitive pricing, we incurred loss as result of low profit margin and rising overhead. Since our third fiscal quarter of fiscal 2013, we have ceased certain low margin sales and are focusing on profitability rather than sales volume.
Although this strategy may impact our ability to achieve first-tier distributor status, we believe that focusing on profitability rather than volume is critical for our overall operations going forward.(3)

Online sales increased by $702,814 or 125.2% period over period.
We have been working with business-to-consumer online vendors, including Taobao, by posting our products on their online platforms, which direct customers back to our website.
Such arrangement has exposed our online presence to a wider consumer base.
In addition, since the end of 2012, we have expended considerable efforts in identifying popular products that can drive sales.
As a result, we have seen steady growth in online sales.Gross ProfitGross profit decreased by $1,543,608 or 30.0% period over period primarily as a result of the contraction in wholesale business.
At the same time, gross margin increased from 15.7% to 23.6% from higher wholesale profit margin, offset by a lower retail profit margin.
The average gross margin for each of our three business segments are as follows:Three months endedJune 30,20132012Average gross margin for retail business 25.7%26.0%Average gross margin for wholesale business 18.6%2.5%Average gross margin for farming business N/A90.9%Retail gross margin decreased primarily due to price adjustments that we made. Some adjustments were made to comply with government price controls. Oth
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SOURCE China Jo-Jo Drugstores, Inc.
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