Luckin Coffee Inc ((LKNCY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Luckin Coffee Inc’s recent earnings call painted a robust picture of the company’s performance, highlighting strong revenue growth, strategic store expansion, and a significant increase in customer base. Despite these positive developments, the company faces challenges with same-store sales growth and rising coffee bean prices, which it aims to counteract through strategic initiatives.
Significant Revenue Growth
Luckin Coffee reported a remarkable year-over-year revenue increase of 38% for 2024, reaching RMB34.5 billion. In the fourth quarter alone, revenues surged by 36% to RMB9.6 billion, underscoring the company’s strong financial performance over the year.
Store Expansion
The company aggressively expanded its footprint by adding over 6,000 new stores in 2024, bringing its total to 22,340 locations. This includes 14,540 self-operated and 7,749 partnership stores, reflecting Luckin Coffee’s solid growth strategy and market presence.
Increase in Average Monthly Transaction Customers
Luckin Coffee saw a 48% year-over-year increase in average monthly transaction customers, reaching 71.8 million. The cumulative number of transaction customers soared to over 330 million by the end of the fourth quarter, showcasing impressive customer acquisition and retention.
Improved Operating Profit and Margin
The company improved its operating profit by 17%, amounting to RMB3.5 billion for the year. Additionally, the operating margin expanded by 7.4 percentage points to 10.4% in the fourth quarter, reflecting enhanced operational efficiency.
International Expansion
Luckin Coffee made strides in international markets by entering Malaysia and expanding its presence in Singapore. This marks a significant step in the company’s global growth ambitions.
Same-Store Sales Growth Challenges
Despite overall growth, same-store sales for self-operated stores struggled, showing mostly negative trends throughout the year. However, there was improvement in the fourth quarter, culminating in a positive growth in December.
Rising Coffee Bean Prices
The company acknowledged the pressure from rising coffee bean prices, which could challenge cost structures. Luckin plans to leverage its supply chain to mitigate these effects without raising prices, maintaining its commitment to affordable quality coffee.
Guidance for Continued Growth
Looking ahead, Luckin Coffee plans to continue its rapid store expansion and enhance operational efficiency in 2025. The company aims to maintain stable pricing despite coffee bean cost pressures and increase per-store daily cup sales, capitalizing on its supply chain advantages.
In summary, Luckin Coffee’s earnings call reflected a strong performance with significant revenue growth and customer expansion. Despite challenges such as same-store sales and rising input costs, the company is poised to continue its strategic growth trajectory into 2025.
