Luckin Coffee has reported its first quarterly profit as customers return to stores and the company puts its embarrassing financial scandal behind it.
The Chinese challenger to Starbucks reported net revenue of US$379.3 million for the quarter to March 31 after adding 556 stores, up by 89.5 per cent on year. The company now has 6580 stores in its network – 4675 of them self-operated and 1905 partnership stores.
Same-store sales in company-operated outlets grew by 41.6 per cent, although that was a significantly lower rate than the 94.5 per cent growth of the comparable quarter last year.
The company says its 16 million customers during the quarter, up 83 per cent on the same quarter last year.
A $2.5 million quarterly GAAP operating profit was a sharp contrast to the $54.6 million loss a year earlier. Non-GAAP operating income was $14.5 million, compared with a loss of $46.1 million.
Luckin Coffee chairman and CEO Dr Jinyi Guo described the maiden quarterly profit as “an important milestone” that validates the company’s strategic plan and “relentless focus on execution”.
“While we expect pandemic-related market pressures to continue having an adverse impact on our business in the near term, our board and management team are confident in our ability to both meet and drive demand through continued investment in our core initiatives.
“With our strong financial position, premier brand recognition and operating efficiency and leverage, we believe we are well-positioned to capture the significant growth opportunities in the China coffee market while delivering sustainable long-term value for our shareholders,” Guo concluded.
Last month, Luckin Coffee said it had emerged from US bankruptcy proceedings, two years after an accounting fraud derailed the coffee chain’s business.
The five-year-old business almost collapsed in 2020 after it was discovered about US$337.31 million in 2019 sales was fabricated. Since then, a raft of senior management changes and a restructure of its financial indebtedness in the US had positioned it for sustainable growth and profitability.
