Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Luckin Coffee Inc (LKNCY, Financial) achieved a record single-quarter revenue surpassing RMB 10 billion, marking a 41.4% year-over-year increase.
- The company reported an operating profit of RMB 1.56 billion with an operating margin of 15.3%, indicating strong financial performance.
- Luckin Coffee Inc (LKNCY) expanded its store network significantly, adding 1,382 new stores in the third quarter, bringing the total to 21,298 stores in mainland China.
- The company launched 28 new fresh food beverages and several light food products, expanding its product offerings and catering to diverse consumer needs.
- Luckin Coffee Inc (LKNCY) is committed to sustainable development, enhancing its supply chain, and increasing procurement efforts in premium coffee bean regions worldwide.
Negative Points
- Same-store sales growth for self-operated stores was negative 13.1%, reflecting challenges in maintaining growth momentum.
- The company's international operations, particularly in Singapore, have not yet achieved profitability, indicating challenges in overseas market expansion.
- Despite strong revenue growth, the average selling price of products decreased, which could impact future profitability.
- Operating expenses increased by 38.2% year-over-year, driven by business expansion efforts, which may pressure margins.
- Luckin Coffee Inc (LKNCY) faces significant challenges in the international market, requiring patience, time, and continuous investment to succeed.
Q & A Highlights
Q: Can you explain the fluctuations in same-store growth (SSG) and your expectations moving forward?
A: (Jing An, CFO) The fluctuations in SSG are due to strategic positioning amid rapid growth in China's coffee market and increased competition. Our fast-paced store expansion and promotions have impacted SSG. Despite a negative 13.1% SSG this quarter, we anticipate improvement as we stabilize our expansion pace and reduce price gaps. We will continue to monitor SSG as a key performance metric and refine our strategies accordingly.
Q: What is Luckin Coffee's strategy for international expansion, particularly in the U.S. and other markets?
A: (Carol Liu, Investor Relations Manager) Our vision is to become a world-class coffee brand. While focusing on the domestic market due to its potential, we are exploring international markets like Singapore, where we've gained valuable insights despite initial losses. We are evaluating opportunities in the U.S. with a careful and disciplined approach. We aim to expand overseas with innovative organizational models and flexible strategies.
Q: How does Luckin Coffee plan to enhance its brand and market position internationally?
A: (Carol Liu, Investor Relations Manager) We are committed to increasing investment in store networks, supply chain enhancements, and brand establishment overseas. Our goal is to refine our cost structure and customer experience to win local consumer favor. Despite challenges, we remain patient and confident in our international strategy.
Q: What are Luckin Coffee's plans regarding the U.S. capital markets and potential uplisting?
A: (Carol Liu, Investor Relations Manager) We continue to monitor the U.S. capital markets but have no definitive timetable for uplisting on the main board. Our primary focus is on executing our business strategy, increasing market share, and delivering high-quality products and services to create sustainable long-term value for shareholders.
Q: How is Luckin Coffee addressing the challenges in the Singapore market?
A: (Carol Liu, Investor Relations Manager) Although our Singapore operations have not yet achieved profitability, they have provided invaluable experience. We are committed to ongoing investment in store network expansion and supply chain improvements to enhance our competitiveness and customer experience in the region.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
