Luckin Coffee H1 Revenue Reached RMB 3.18 Billion; Company-Operated Store Profit Was RMB 417 Million

This is an English adaptation of a FoodBud historical article originally published on October 21, 2021.

Luckin Coffee reported unaudited results for the six months ended June 30, 2021, showing a sharp recovery in revenue and store-level performance.

Total revenue for the period was RMB 3.1825 billion (US$492.9 million), up 106.0% from RMB 1.5445 billion in the same period of 2020. Revenue from product sales was RMB 2.7413 billion (US$424.6 million), up 89.3% from RMB 1.4482 billion.

Store Mix and Same-Store Sales

Partnership-store revenue reached RMB 441.2 million (US$68.3 million), up 357.8% from RMB 96.4 million a year earlier.

Same-store sales at company-operated stores rose 82.7%, compared with a 20.3% decline in the same period of 2020.

By June 30, 2021, Luckin had 5,259 stores:

• 4,018 company-operated stores, down 5.8% from 4,267 at the end of H1 2020
• 1,241 partnership stores, up 50.6% from 824 at the end of H1 2020

Average monthly transacting customers in H1 2021 were 10.5 million, up 35.1% from 7.8 million in H1 2020.

Losses Narrowed

Total operating loss was RMB 411.5 million (US$63.7 million), narrowing 74.8% year on year. Non-GAAP operating loss was RMB 284.1 million (US$44.0 million), narrowing 82.5%.

Net loss was RMB 211.4 million (US$32.7 million), down 86.4% year on year. Non-GAAP net loss was RMB 84.0 million (US$13.0 million), compared with a net loss of RMB 1.5389 billion in the same period of 2020.

Basic and diluted net loss per ADS was RMB 0.80 (US$0.16), compared with RMB 6.16 a year earlier. On a non-GAAP basis, basic and diluted net loss per ADS was RMB 0.32 (US$0.08), compared with RMB 6.08.

Company-Operated Store Profitability

Store-level operating profit for company-operated stores was RMB 417.3 million (US$64.6 million) in H1 2021. Store-level operating margin reached 16.3%, compared with a loss margin of 39.2% a year earlier.

Net cash generated from operating activities was RMB 129.6 million (US$20.1 million). As of June 30, 2021, cash, cash equivalents and short-term investments totaled RMB 5.083 billion (US$787.3 million), compared with RMB 5.056 billion as of December 31, 2020. The increase was mainly attributed to improved operating cash flow.

Luckin chairman and CEO Guo Jinyi said the financial report was an important milestone. He said the company’s H1 performance was supported by higher average revenue per company-operated store, stronger brand awareness, higher customer retention and order frequency, new product launches, higher net selling prices, expansion of partnership stores in many second-tier Chinese cities, and a technology-driven operating model with a favorable cost structure.

2020 Revenue and Restructuring Updates

Luckin had previously reported several restructuring and disclosure milestones.

On September 21, 2021, the company said it had issued three announcements covering progress in restructuring and capital-market disclosures. These included:

• Signing a US$187.5 million term sheet with plaintiff representatives in a U.S. class action settlement
• Formally submitting a debt restructuring plan for convertible-bond creditors to the Cayman court
• Filing its 2020 annual report with the U.S. Securities and Exchange Commission, including audited financial statements

Luckin’s 2020 net revenue was RMB 4.033 billion, up 33.3% year on year. As of December 31, 2020, cumulative transacting customers exceeded 64.9 million, compared with 40.6 million a year earlier.

On September 7, 2021, the company released the third report from its joint provisional liquidators to the Grand Court of the Cayman Islands, stating that its overall restructuring plan was progressing in an orderly manner and had completed several interim targets.

Luckin also said that under current management it continued to meet disclosure obligations. It had released audited 2019 financial statements and said it would publish the 2020 annual report as soon as possible.

On June 30, 2021, Luckin supplemented its audited 2019 annual report, describing it as another milestone in its recovery after the events of 2020. In that report, 2019 net revenue was RMB 3.0249 billion, up 259.8% from RMB 840.7 million in 2018. Operating loss was RMB 3.212 billion, compared with RMB 1.598 billion in 2018, an increase of 101%.

As of June 30, 2021, Luckin said it had more than 75.0 million cumulative consuming users. Its newly launched coconut series sold more than 10.0 million cups in June 2021, setting a new product sales record for the company.

As of July 31, 2021, Luckin’s unrestricted cash and cash equivalents stood at US$775.8 million.

Note: Forward-looking disclosure timelines, restructuring items and capital-markets figures above are historical as of 2021.