Luckin Coffee Could Stumble When IPO Lockup Expires

In the 18 months since launching, Luckin Coffee has gone from one trial outlet in Beijing to 2,963 retail stores across 28 cities in China as of June 30. It has sold over 90 million cups of coffee to more than 16.8 million customers. Their customer repurchase rate is over 54%. In its efforts to surpass Starbucks as the top coffee drink retailer, Luckin Coffee expects to have 4,500 outlets throughout China by the end of 2019. Currently, Starbucks has approximately 3,600 stores, which took them 20 years to open.

Company information was sourced from the firm's S-1/A and company website.

Financial Highlights

Luckin Coffee Inc. reported second-quarter financial highlights for the period ending June 30, 2019:

  • Total net revenues were RMB870.0 million (US$126.7 million), for an increase of 698.4% versus the same quarter last year.
  • Cumulative number of transacting customers grew to 22.8 million, up from only 2.9 million the same period last year.
  • Luckin Coffee added 5.9 million new customers for the second quarter of 2019.
  • Average monthly items sold increased by 589.7% for the second quarter of 2019 versus the same period last year.
  • The total number of retail outlets was 2,963 for an increase of 374.8%
  • Luckin Coffee trimmed its store operating loss to RMB55.8 million (US$8.1 million), versus a loss of RMB81.7 million for the same period last year.

Financial results were sourced from the company's website.

Management

CEO and Director Jenny Zhiya Qian has served in her position since November 2017. She previously served in senior positions at UCAR. She holds a bachelor’s degree from Wuhan Institute of Textile Science. She holds an MBA from Peking University.

COO Jian Liu has served the company since May 2018. He previously held senior positions at UCAR. He earned a bachelor’s degree from the Central University of Finance and Economics.

Management info was sourced from the company's website.

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Disclosure: I am/we are short LK.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any ...

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