Luckin Coffee (LK) on Wednesday reported the results of the third quarter, which peaked views in the midst of the growth of the collar that management expects to make the startup larger than Starbucks (SBUX) in China by the end of the year. Luckin Coffee stock increased.
Luckin Coffee Earnings
Estimates: Wall Street expects Luckin to report a 37 percent loss per share. Revenues for the recent IPO are expected to be $ 211.46 million.
Results: Losses were reduced to SEK 32 per share on revenue of $ 215.7 million, an increase of 540% in local currency. The average monthly number of goods sold during the quarter increased by 470% to NOK 44.2 million.
The number of stores at the end of the quarter was 3680 stores, up from 2,963 at the end of the second quarter and more than tripled from a year ago. Net revenue per store jumped 79.5% to $ 62,900.
Outlook : Luckin sees Q4 revenue from products to be between 2.1 and 2.2 billion yuan.
"During the third quarter, sales of freshly brewed coffee drinks continued to sustain very strong growth, and we believe we will reach our goal of becoming the largest coffee player in China by the end of this year," said CEO Jenny Zhiya Qian.
Luckin wants to have more than 4,500 by the end. By contrast, Starbucks had 4,125 stores in China at the end of the last reported quarter.
Luckin Coffee Stock
Shares jumped 13% to 21.47 on the stock market today, beating above the 50-day average. Starbucks, which has targeted China as a key driver for future growth, increased 0.7%.
Luckin Coffee stock has a weak compound rating of 13, out of a best possible 99, and an EPS rating of only 2, indicating non-existent profit growth.
Luckin went public in May after being priced at $ 17 a share. The stock's relative strength line has fallen since August, which means it has followed the S&P 500 over that time.
The chain is trying to use mobile ordering, small stores and big data to serve customers quickly in what it has called a "100% cash without environment."
The management called China's coffee market during its August conference call "very under-penetrated" and said it had "significantly increased mass market consumption for coffee."
But Luckin is competing against smaller stores that sell tea – long the chosen drink in China – and Starbucks. And it has lost money as it grows at a rapid pace, promotes itself and tries to educate consumers about coffee consumption.
Luckin has also launched Luckin Tea and plans to establish a joint venture with Louis Dreyfus Co., which processes agricultural products, to develop a Luckin Juice business.
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