Luckin Coffee released its audited 2019 financial statements on the evening of June 30, detailing the fraud committed by the company more than two years ago and admitted to in April 2020.
The report shows Luckin Coffee’s fraudulent transactions began as early as April 2019, while it inflated operating income by RMB 2.12 billion (USD 327.7 million) for the entirety of 2019. Luckin Coffee’s revenue inflation increased throughout the year, totaling RMB 250 million (USD 38.6 million) in Q2 2019, RMB 700 million (USD 108.2 million) in Q3, and RMB 1.17 billion (USD 172.6 million) in Q4.
While the company’s number of monthly transacting users increased sharply in 2019, largely due to a deluge of subsidies for free coffee, the number of cups of coffee consumed per user fell from around three in 2018 to 2.59 in 2019. Luckin Coffee recorded a net loss of RMB 3.16 billion (USD 488.4 million) in 2019, an increase of 95% year-on-year.
After the financial misrepresentation came to light and the US Securities and Exchange Commission levied hefty fines against the company, Luckin Coffee has attempted to revive its business by restructuring debt and raising USD 250 million in April. The company said on Wednesday that it currently operates more than 5,200 stores throughout China.
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KrASIA Connection features translated and adapted content published by 36Kr. This article was originally written by Yang Yafei for 36Kr.