Chinese milk tea chain Chagee reported a significant profit increase in the second quarter, as network expansion continued to fuel sales growth.

The US-listed company posted a net income of RMB464.8 million (US$68.5 million) in the quarter ended June 30, compared to RMB77.2 million in the year-ago period. Net income margin also soared from 2.3 per cent last year to 13.6 per cent.

Operating income jumped 387.6 per cent to RMB524.7 million, supported by a 10 per cent reduction in operating expenses.

Net revenues for the quarter increased 2.5 per cent to RMB3.4 billion (US$503.3 million), powered by an 8.5 per cent increase in the number of stores. The chain had 7639 teahouses at the end of the quarter.

Gross merchandise value (GMV) surged 114.3 per cent across eight international markets, but fell 9 per cent in Greater China.

The company’s debut in South Korea has provided strong results so far. The three Seoul-based teahouses sold more than 16,000 cups in their first three days, following more than 46,000 app downloads before opening. 

Same-store sales remained in decline, but management noted that the decrease had eased in July. Based on trends to date, they expect same-store sales to turn positive in August. 

Total registered loyalty program members reached 257 million as of the end of June, with repurchase among active members held above 43 per cent.