- Luckin Coffee (OTCMKTS:LKNCY) is up today after announcing strong first-quarter financial results
- Luckin reported nearly 90% year-over-year net revenue growth
- The company has managed to thrive despite China’s Covid-19 lockdowns
Chinese coffee company Luckin Coffee (OTCMKTS:LKNCY) is one of the rare bright spots in the market on strong Q1 performance. Luckin Coffee stock is up slightly today after the company announced impressive first-quarter financial results for the quarter ended March 31.
This morning, the Xiamen-based company reported total net revenue of $379.3 million in its fiscal Q1, representing 89.5% year-over-year (YOY) growth. Luckin also announced 556 net new store openings, a 9% increase from its total stores in Q4 2021. The company now operates 6,580 throughout China. Additionally, Luckin reported 16 million average monthly transacting customers in its Q1, an 83% YOY jump.
Chief Executive of Luckin, Dr. Jinyi Guo, commented on the company’s strong growth initiatives.
“We introduced 34 new freshly brewed products during the quarter which contributed materially to our results and that success continued in April when our new ‘Coconut Cloud Latte’ sold over 4.95 million cups in the first week after its launch. We further expanded and had 556 net new store openings to meet the growing demand for our products through a mix of self-operated and partnership stores.”
The earnings beat came as a surprise to investors given the state of the Chinese economy lately amid country-wide Covid-19 lockdowns. China has largely been a source of uncertainty for the markets lately. But Luckin’s performance should come as a positive sign.
Luckin Coffee Stock Climbs on Strong Earnings Beat
Since the country’s economy shut down in the face of the omicron Covid-19 variant, global supply shortages have weighed down industries nearly across the the board. Luckin’s strong performance comes as a welcome breath of fresh air amid a generally tumultuous earnings season.
Luckin is a relatively new name but one with a remarkably bumpy history. Since its founding in 2017, the company has seen a slew of controversies. In April 2020, the company admitted to lying about its quarterly sales by over $300 million. Soon after, the Nasdaq Composite removed the company from its exchange. Then, the police in China raided its headquarters on fraud investigations. Its share price saw a corresponding plummet, shedding 90% of its stock value in the heat of the accusations. Many assumed this would spell the death of the coffee startup.
Not so, however. Luckin recently overtook Starbucks (NASDAQ:SBUX) as China’s largest coffee chain, as it approached profitability for the first time in its infamous history.
Concluding Luckin’s earnings statement, Dr. Guo said,
“While we expect pandemic-related market pressures to continue having an adverse impact on our business in the near-term, our board of directors and management team are confident in our ability to both meet and drive demand through continued investment in our core initiatives. With our strong financial position, premier brand recognition and operating efficiency and leverage, we believe we are well positioned to capture the significant growth opportunities in the China coffee market while delivering sustainable long-term value for our shareholders.”
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.