Vending

Luckin Coffee lifts Q4, FY 2022 revenues on COVID recovery

Image provided by Luckin Coffee.

March 2, 2023

Luckin Coffee, a pioneer in coffee vending and a competitor to Starbucks in China which restructured in 2021 after filing for bankruptcy protection, lifted its Q4 and FY 2022 revenues as the Chinese market recovered from COVID-19 restrictions, according to a press release.

Highlights include:

• Total net revenues rose 51.9%, from RMB2.433 billion ($350 million) in Q4 2021 to RMB3.695 billion ($535.7 million) in the quarter ending Dec. 31, 2022, primarily driven by the increase in the number of products sold, the increase in stores in operation and the increase in the number of monthly transacting customers.
• Net income fell from RMB921.3 million ($133.19 million) to RMB54.5 million ($7.9 million), which included a one-off noncash gain of RMB1.146 billion ($170 million) from the reversal of provision for SEC settlement in the same quarter of 2021.
• Basic and diluted net income per ADS fell from to RMB3.44 (50 cents) and RMB3.36 (49 cents), respectively, to RMB0.16 ($0) and RMB0.16 ($0), respectively, in the comparative quarters.
• Both non-GAAP basic and diluted net income per ADS rose from RMB0.08 (1 cent) to RMB0.56 (8 cents) in the comparative quarters.
• Average monthly transacting customers rose 51.3%, from 16.2 million to 24.6 million in the comparative quarters.
• Revenues from self-operated stores rose 41.9%, from RMB1.837 billion ($270 million) to RMB2.6 billion ($378 million), in the comparative quarters.
• Same-store sales growth for self-operated stores fell from 43.6% to 9.2% in the comparative quarters.
• Full-year net revenue rose 66.9%, from RMB7.965 billion ($1.15 billion) in fiscal 2021 to RMB13.293 billion ($1.93 billion) in 2022.
• Net new store openings rose 36.4% in the comparative years, ending the period with 8,214 stores which include 5,652 self-operated stores and 2,562 partnership stores.
• Average monthly transacting customers rose 66.2%, from 13 million to 21.6 million in the comparative years.

The Chinese markets and the company's business were adversely affected by COVID-19. In particular, the company was materially and adversely impacted by COVID-19 in the fourth quarter of 2022, with weak customer demand and high numbers of daily temporary store closures, reaching a peak of around 1,500 daily temporary store closures.

However, with the recent lifting of substantially all COVID-19 restrictions in China, the number of daily temporary store closures due to COVID-19 has dropped to single digits since January 2023 and the company's operations have mostly returned to normalized levels.

Shares traded today at $29.75 against a 52-week range of $5.16 to $31.25.

"We delivered another year of strong operational and financial performance despite being materially impacted by COVID-19 in the fourth quarter of 2022," Dr. Jinyi Guo, chairman and CEO, said in the press release. "We had more than 2,100 net new store openings in 2022, bringing our total stores in China to more than 8,200 and demonstrating our ability to effectively navigate a dynamic and evolving business landscape and maintaining our leading position in the Chinese coffee market."