Luckin Coffee, previously mired in a financial fraud scandal, maintained growth in the first three quarters of 2020, but at a slower rate, according to the company's joint liquidators' first report filed with the Grand Court of the Cayman Islands.
Luckin Coffee's results were also hit by Covid-19 in the first quarter of 2020, but net income and revenue from its own stores continued to grow from April to November, the latest unaudited financial information in the report shows.
For the first three quarters of 2020, Luckin Coffee's single-quarter revenues were RMB565 million, RMB980 million and RMB1.145 billion, up 18.1%, 49.9% and 35.8%, respectively, a significant slowdown from previous growth rates.
Luckin Coffee expects revenue in fiscal 2020 to be between RMB 3.8 billion and RMB 4.2 billion.
The report attributed the growth to an increase in the number of trading customers, as well as higher effective selling prices and a new product mix.
Following the revelation of the Luckin Coffee counterfeiting case, Luckin Coffee has voluntarily reduced its discounting efforts. In terms of operations, 60% of Luckin Coffee's stores are profitable. Earlier Luckin Coffee had launched an unmanned retail program and currently has 150 unmanned retail devices in operation, a business line that is still in the red.
The report shows that the parties worked together on a new draft business plan on July 23, 2020, which was further revised on October 8.
Under the new plan, Luckin Coffee's strategic focus has shifted from rapid expansion to targeted expansion, as well as improved profitability and cash flow.
Under the plan, Luckin Coffee has closed a portion of its underperforming stores and added new stores.
As of November 30, 2020, the number of Luckin Coffee stores decreased from 4,507 to 3,898, which includes 894 associate stores.
In the first three quarters, Luckin Coffee closed 65, 378 and 448 stores, and opened 69, 134 and 133 new stores.
And according to the business plan, by 2023, Luckin Coffee hopes to have 4,800 to 6,900 owned stores.
In terms of funding, Luckin Coffee had unrestricted cash, cash equivalents and short-term investments of RMB 5.175 billion ($742.7 million) as of Nov. 30, 2020, with about RMB 5 billion of that cash in China.