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China Jo-Jo Drugstores Announces Fiscal 2014 Second Quarter Financial Results
Date:11/14/2013

ofit 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 $1,447,602 or 102.1% 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 Profit

Gross profit decreased by $2,017,402 or 23.5% period over period primarily as a result of the contraction in wholesale business.
Gross margin increased period over period from 14.4% to 20.3% as a result of higher wholesale profit margin, offset by a lower retail profit margin.
The average gross margins for our three business segments are as follows:Six months endedSeptember 30,20132012Average gross margin for retail business 24.3%26.3%Average gross margin for wholesale business 12.4%3.0%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. Others were made to stay competitive with local community hospitals that are able to sell at or near cost as their pharmacies are indirectly subsidized through the government. We also adjusted prices to match or better other competitors' prices. Accordingly, overall retail gross profit margin decreased. 

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SOURCE China Jo-Jo Drugstores, Inc.
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