Chinese on-demand beverage chain Luckin Coffee (NASDAQ: LK) has started downsizing, and will lay off 50% of its staff based in the company’s headquarters in Xiamen, Fujian, 36Kr reported on Thursday, citing sources close to company management.
The layoff plan will affect about 500 employees in charge of research and development, or about half of the Xiamen office’s total headcount, said the source. Luckin also has offices in Beijing and Tianjin.
The firm, once a prominent startup and favorite of investors, has been offering salaries higher than most companies in the coastal city, according to 36kr, citing unnamed corporate sources.
The layoff is not unexpected, as the company has been struggling to stay afloat since it disclosed on April 2 fabricated sales of USD 310 million. The announcement immediately sent Luckin’s shares down by 75.57% to USD 6.4 per share and started a downward spiral for the firm.
Luckin reacted by reshuffling its management. The firm fired CEO Jenny Qian Zhiya, and COO Liu Jian, and appointed Guo Jinyi, previously director and senior vice president of Luckin, as the new acting CEO of the firm.
However, on Wednesday, Nasdaq notified Luckin of its determination to delist its securities, citing public interest concerns and the company’s past failure to publicly disclose critical information. Luckin requested a hearing to remain listed, which could be scheduled in the next 30 to 45 days.
Luckin’s shared dived 35.8% to a record low of USD 2.82 on Thursday, the first day for the company’s shares to resume trading following a suspension starting on April 7.
36Kr is KrASIA’s parent company