Author: Pan Xian (original)
In the first quarter of the alleged "shrinkage" of the 9.9 activity, Luckin Coffee achieved a rise in revenue by opening more stores, but the company's profits and other indicators still fell.
Today, China's largest coffee chain released its results for the first three months of the year. During the period, the total net income reached 6,278.1 million yuan, a year-on-year increase of 41.5%, and the number of net new stores opened in the first quarter was 2,342, and the total number of stores reached 18,590 as of March 31.
"In the face of the volatile market environment during the quarter, we adjusted and established a stable and sustainable expansion strategy in a timely manner to make the company's fundamentals more stable and balanced. At the just-concluded results meeting, Guo Jinyi, chairman and CEO of Luckin Coffee, said this at the conference call held tonight.
He stressed that in the future, Luckin will continue to steadily advance in accordance with the established strategy, continue to expand its market share while giving back to customers, and hope to "provide everyone with delicious and inexpensive coffee with better products and preferential prices".
He also revealed that there is no clear timetable for the company's return to the main board listing.
Below, we will take a look at this report card of Luckin and the latest judgment of the top management on the coffee track.
Revenues are still running wild
In the first quarter of this year, Luckin continued to run wild in revenue growth. Last year, the local coffee giant just overtook Starbucks' revenue in China.
In the first quarter, Luckin's total net income was 6,278.1 million yuan, an increase of 41.5% over the same period last year. Among them, the revenue of self-operated stores was 4,579.6 million yuan, a year-on-year increase of 45.8%, and the revenue of associated stores was 1,508.0 million yuan, a year-on-year increase of 32.8%.
During the period, Luckin Net opened 2,342 new stores, including 2 new stores in Singapore; The total number of stores increased by 14.4% quarter-on-quarter to 18,590 at the end of the quarter, of which 12,199 were self-operated stores and 6,391 were associated stores.
In terms of the average number of monthly trading customers, the first quarter was 59.91 million, a significant increase of 103.2% year-on-year.
Guo Jinyi said today that in the face of the market environment where opportunities and challenges coexist, Luckin Coffee still relies on its "advanced business model and the scale advantage of emerging product innovation enterprises" to achieve rapid revenue growth and a new high in the number of stores.
He also pointed out that Luckin continued to lead the market in the first quarter, expanding its relative advantage with competing brands. As competition in China's coffee market intensifies, Luckin will continue to focus on customer needs and accelerate its expansion into the lower-tier market through a joint venture model while increasing the number of stores in high-tier cities.
According to observations, he said, the emergence of the "holiday consumption" form highlighted by the purchasing power of the sinking market during the Spring Festival proves that there is a broad space for the development of China's coffee market.
In terms of products, Luckin Coffee launched 22 new products in the first quarter. Among them, the sales volume of Xiaobai pear latte exceeded 7.24 million cups in the first week. In April this year, three years after the launch of the raw coconut latte, the sales of single products exceeded 700 million cups, and the annual sales of Orange C American style also exceeded 100 million cups.
"In the future, we will continue to innovate our products and continue to provide customers with a high-quality and more rewarding consumer experience. Guo Jinyi said.
He also mentioned a number of milestone investments in the first quarter, including the commissioning of Luckin's first fresh fruit processing plant in Baoshan, Yunnan Province in March, and the official opening of the Jiangsu roasting base in Kunshan, Suzhou, on April 20, describing the latter as "deeply integrating the vertical coffee supply chain with intelligent advantages".
In addition, although Ding Xiongjun, one of the key figures in the cooperation of Sauce Latte, recently left Moutai as chairman of Moutai, Guo Jinyi reiterated today that as a leading brand in China's coffee and liquor field, Luckin Coffee and Kweichow Moutai continue to promote the further development of long-term strategic cooperation with high quality.
According to reports, the number of users has exceeded 25 million since the launch of the sauce latte, and he said that the product is "deeply loved by the younger generation of consumers".
Some indicators declined
However, it should be noted that some indicators of Luckin Coffee also declined in the first quarter.
For example, the same-store sales growth rate of self-operated stores was -20.3% in the first quarter and 29.6% in the same period of 2023, and the store-level operating profit of self-operated stores was 320.8 million yuan and the store-level operating margin was 7.0%, compared to 791.6 million yuan in the same period of 2023 and 25.2% at the store level.
GAAP operating loss was $65.1 million in the first quarter, compared to $678.4 million in the year-ago quarter, with a GAAP operating margin of 15.3%. Non-GAAP operating profit adjusted for share-based compensation expense was $5.0 million in the first quarter, with a non-GAAP operating margin of 0.1% compared to $730.5 million for the same period in 2023, and a non-GAAP operating margin of 16.5%.
In this regard, Luckin explained that the decline in some indicators is mainly due to the company's adjustment of the average selling price of products, the continuous fluctuation of the market environment and competitive situation, and the negative impact of seasonal factors.
"The decline in profits in the first quarter is not only affected by objective factors, but also the result of active adjustment. Today, in response to a question, Guo Jinyi gave more details.
In his view, the first quarter of 2024 will be affected by the winter cold wave and large temperature fluctuations, which will affect the travel of customers. At the same time, China's coffee industry is in a period of strategic opportunities for rapid growth, and the competition in the industry is becoming increasingly fierce.
He emphasized that in the face of opportunities and competition, Luckin took market share as the core goal of the company's development, adjusted the pace of store opening, and further opened the distance with competitors by rapidly expanding stores.
"At present, the overall cup volume has improved as the temperature rises, but the business still faces many challenges in the second quarter. Guo Jinyi said that in the environment of intensified competition, Luckin Coffee will adhere to a steady and sustainable store opening strategy, adhere to the store opening standards, and ensure the quality of the store.
However, he did not update his expectations for the number of stores to be opened today. Previously, he had said that the number of Luckin Coffee stores is expected to exceed 20,000 in 2024.
Guo Jinyi also said that he will continue to pay attention to the U.S. capital market, but the current priority is to implement the company's business strategy and focus on development, "there is no clear timetable for returning to the main board."
In conclusion, he pointed out that in the face of fierce competition in the industry, Luckin will continue to accelerate the layout of the store network, increase investment in the supply chain layout, continue to strengthen the digital advantage, optimize costs, improve efficiency, further expand and consolidate the leading edge, stabilize the market leading position, and achieve high-speed, healthy and sustainable performance growth.
"In the future, Luckin will continue to focus on business growth and market share. Again, he stressed.