Photo/Lan Suying (NBD)

On March 2nd, Luckin Coffee announced its financial results for the three months ended December 31, 2022 and fiscal year 2022. 

According to the financial report, Luckin Coffee's net revenue in the fourth quarter of last year was approximately 3.695 billion yuan, showing an increase of 51.9% year on year. Net profit for the quarter was 54.5 million yuan, representing a decrease of 94% year on year.

In response to the drop in net profit in the fourth quarter of 2022, Luckin Coffee pointed out that it had reached a settlement with the U.S. Securities and Exchange Commission (SEC) on the previous fraud allegations and paid a fine of about 1.1465 billion yuan. It should also be noted that Luckin Coffee's operating expenses in the fourth quarter of last year increased by 800 million yuan to about 3.382 billion yuan, showing an increase of 32% year on year.

"The consumption industry has encountered many difficulties in the past year, and the epidemic has brought a lot of uncertainty," Guo Jinyi, chairman and CEO of Luckin Coffee, said at a telephone conference after the release of the financial report. Affected by the epidemic, nearly 1,500 stores of Luckin Coffee were temporarily closed in the fourth quarter. However, Luckin Coffee still opened 368 new stores in the three months. 

In the past year, Luckin Coffee continued its rapid expansion, reporting a net increase of 2,190 stores. As of the end of the fourth quarter of 2022, Luckin Coffee had 8,214 stores, including 5,652 self-operated stores and 2,562 joint-operated stores.

In 2022, Luckin Coffee achieved net revenue of about 13.293 billion yuan, showing an increase of 66.9% year on year. This is the first time that the coffee chain's annual revenue has exceeded 10 billion yuan. Net profit for the full year was about 488 million yuan, representing a decrease of about 15% year on year; and operating profit was about 1.156 billion yuan under US GAAP. 

Guo Jinyi said that the company is currently in a period of rapid growth, and the Chinese coffee market shows great potential. "We are confident that the first '10,000 store goal' of Luckin Coffee will be achieved in 2023," Guo Jinyi said. The resumption of the recruitment of franchised partners is an important means to achieve the goal.

At the end of December 2022, Luckin Coffee launched recruitment in 9 provinces and 41 cities. By the end of January this year, Luckin Coffee extended the regions of franchised partner recruitment to 15 provinces and 80 cities. Luckin Coffee's Chief Financial Officer An Jing revealed that nearly 500 stores were opened in January after the reopening of the franchised partner recruitment program.