Luckin Coffee Inc. Announces Second Quarter 2022 Financial Results

By: Alexis Rubinstein, Managing Editor - Coffee Network

Mon, 08 Aug 2022, 14:22

Alexis Rubinstein

Managing Editor

CoffeeNetwork (New York) - Luckin Coffee Inc. (OTC: LKNCY) today announced its unaudited financial results for the three months ended June 30, 2022.

SECOND QUARTER 2022 HIGHLIGHTS

Total net revenues in the second quarter were RMB3,298.7 million (US$493.2 million), representing an increase of 72.4% from RMB1,913.7 million in the same quarter of 2021.

Net new store openings in the second quarter was 615, resulting in a quarter-over-quarter store unit growth of 9.3% from the number of stores at the end of the first quarter of 2022, ending the second quarter with 7,195 stores which include 4,968 self-operated stores and 2,227 partnership stores.

Average monthly transacting customers in the second quarter were 20.7 million, representing an increase of 68.6% from 12.3 million in the same quarter of 2021.

Revenues from self-operated stores in the second quarter were RMB2,331.1 million (US$348.6 million), representing an increase of 52.4% from RMB1,529.3 million in the same quarter of 2021.

Same-store sales growth for self-operated stores in the second quarter was 41.2%, compared to 71.8% in the same quarter of 2021.

Store level operating profit – self-operated stores in the second quarter was RMB712.2 million (US$106.5 million) with store level operating profit margin of 30.6%, compared to RMB353.2 million with store level operating profit margin of 23.1% in the same quarter of 2021.

Revenues from partnership stores in the second quarter were RMB777.5 million (US$116.3 million), representing an increase of 178.4% from RMB279.3 million in the same quarter of 2021.

GAAP operating income in the second quarter was RMB241.6 million (US$36.1 million), representing a GAAP operating income margin of 7.3%, compared to a GAAP operating loss of RMB47.5 million in the same quarter of 2021. Non-GAAP operating income in the second quarter, which adjusts for share-based compensation expenses, was RMB342.6 million (US$51.2 million), representing a non-GAAP operating income margin of 10.4%, compared to RMB23.5 million, or a non-GAAP operating income margin of 1.2% in the same quarter of 2021, which represents a significant improvement of operating results.

COMPANY STATEMENT

“We are proud to announce that Luckin Coffee delivered another quarter of outstanding financial and operational results despite continued pandemic-related headwinds,” said Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee. “We reported net revenues growth of over 70% compared to the same quarter last year, same-store sales growth for self-operated stores of over 40% and our partnership store revenues continued to increase as a percentage of total revenues. Furthermore, we successfully launched 34 new products during the second quarter and sold over 24 million cups of our “Coconut Cloud Latte” from its launch in April 2022 through the end of the second quarter.

Dr. Guo continued, “During the second quarter, we had 615 net new store openings and entered 11 new lower-tier cities through our partnership stores and three new lower-tier cities through our self-operated stores. We remain focused on achieving further market penetration through a combination of our self-operated stores and retail partnership models, which allow us to meet increasing customer demand in an agile and flexible manner. Our growing scale and operating leverage continues to drive improved returns, with a store level operating profit margin for self-operated stores of over 30% and a reported operating profit margin of over 7%.”

Dr. Guo concluded, “I am also pleased to announce that, after the successful completion of the restructuring of our financial indebtedness in the first quarter, we have made substantial progress on resolving outstanding U.S. securities litigations. We received final court approval for the federal class settlement and we also made substantial progress in resolving remaining opt-out litigations. This marks another important milestone for Luckin Coffee in resolving all of its historical issues. While we continue to foresee adverse effects of the pandemic on our business in the near-term, the Board and management team remain confident in our ability to capture growth opportunities in the China market and drive long-term value and sustainable growth for our shareholders.”

IMPACT OF COVID-19

The global economy, the Chinese markets and the Company’s business have been and continue to be adversely affected by the COVID-19 pandemic. As cases of the Omicron variant emerged in China and spread to several major cities at the end of 2021, many provinces and municipalities activated the highest response to this public health crisis.

Following the impact on daily store closures in the first quarter of 2022, the Company experienced around 900 daily store closures on average in April and May 2022. With the gradual lifting of COVID-19 pandemic related restrictions, the Company experienced around 152 daily store closures on average in June 2022 and around 96 daily store closures on average in July 2022. While the negative impact of the COVID-19 pandemic on the Company has lessened in the second quarter of 2022, the COVID-19 situation remains highly unpredictable.

The Company anticipates that its operations will continue to be negatively affected by pandemic-related market pressures for the foreseeable future. The extent of these impacts is difficult to predict given the uncertainties relating to the spread of the pandemic and its impacts on the local and national economies.

Alexis Rubinstein

Coffee

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