Red Star Capital Bureau reported on May 1 that Luckin Coffee (OTC.LKNCY) released a quarterly report on the evening of April 30. In the first three months of this year, Luckin Coffee achieved more revenue by opening more stores, but it lost a net loss.
According to the first quarterly report, Luckin Coffee's revenue was 6.278 billion yuan, a year-on-year increase of 41.5%, and the net loss was 71.42 million yuan, compared with a net profit of 564 million yuan in the same period last year.
During this period, Luckin Coffee's 9.9 yuan activity gradually shrank, causing concern. Red Star Capital Bureau reported in February this year that only 8 designated drinks were available for Luckin's 9.9 yuan a week drink. (For details, please click on the article "Luckin "9.9 yuan a week" activity "shrinks", only 8 designated drinks are left)
Red Star Capital Bureau noticed that at present, there are only 5 products left in the weekly 9.9 section of the Luckin Mini Program, canceling options such as raw coconut latte, velvet latte, and strong American, and adding orange C iced tea and grapefruit C iced tea without coffee.
There are only 5 drinks left in Luckin's weekly 9.9 area Source: Luckin Mini Program
In addition to narrowing the range of options, many users on social media said that Luckin's 9.9 yuan coupon is not available in some stores. The Red Star Capital Bureau opened the Luckin applet and found that in Chengdu, Sichuan, there are indeed some stores that cannot use the 9.9 yuan store celebration coupon.
Luckin's 9.9 yuan store celebration coupon is not available in some stores Source: Luckin Mini Program
The increase in revenue in the first quarter but the change from profit to loss was due to the increase in stores but the decline in single-store revenue, as well as the increase in costs.
According to the quarterly report, Luckin added 2,342 stores during the period, bringing the total number of stores to 18,590. However, same-store sales at self-operated stores declined, down 20.3% during the period, compared to a 29.6% increase in the same period last year.
Total operating expenses increased by 68.8% year-on-year due to business expansion, including the opening of new stores and strategic investments in brands and promotional activities. At the same time, operating expenses as a percentage of net revenue increased to 101% in the first quarter of 2024 from 84.7% in the same period in 2023, due to a decrease in the average selling price of the company's products, resulting in an increase in store rental costs, labor costs and material costs as a percentage of net revenue.
In this regard, Guo Jinyi, chairman and CEO of Luckin Coffee, said at the performance meeting that the decline in profits in the first quarter was not only affected by objective factors, but also the result of active adjustment. He explained that in the face of fierce competition in China's coffee industry, market share was taken as the core goal of development, and the pace of store opening was adjusted.
Guo Jinyi also said that he will continue to focus on business growth and market share, and there is no clear timetable for returning to the main board of the US stock market.
Red Star News reporter Cheng Luyang
Edited by Yu Dongmei
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