What’s new: Luckin Coffee Inc. disclosed sharply higher sales and a narrower loss in its first earnings report since the disgraced Chinese startup paid $180 million to settle fraud charges in the U.S. last month. Luckin also passed Starbucks in the number of Chinese outlets.
The Starbucks China challenger said Thursday its revenue in the fourth quarter increased 80.7% year-on-year to 2.4 billion yuan ($381.7 million) while the operating loss narrowed to 120.8 million yuan from 488.9 million yuan in the same period in 2020.
Luckin’s non-GAAP net income fell to 27.3 million yuan in the fourth quarter from 186.8 million yuan a year earlier, which included 639 million yuan of Covid-related tax benefit.
In fiscal year 2021, total revenue nearly doubled to 8 billion yuan and the operating loss reduced to 539.1 million yuan from 2.6 billion in 2020.
The company said its revenue growth was primarily driven by higher average selling prices and a bigger store footprint across China. Luckin Coffee opened 1,221 new stores last year, a 25.4% increase from a year earlier, bringing its total number of outlets to more than 6,000 and topping Starbucks’ 5,358 locations in China.
The background: Luckin has been trying to put the 2.2 billion yuan financial fraud scandal revealed in 2020 in its rearview mirror as it prepares to seek a U.S. relisting.
Luckin was kicked off the Nasdaq in June 2020. A year later, the company acknowledged overstating its 2019 annual revenue by $328 million. The scandal added impetus to American authorities’ long-running campaign to get Chinese companies to open their books to U.S. scrutiny.
After being delisted from the Nasdaq and paying $180 million to settle fraud charges in the U.S., the company reshuffled its management team, eased off on its previously breakneck expansion and increasingly relied on franchises to raise profitability.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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