Luckin Coffee (LK) posted third-quarter results late Wednesday that will render the company bigger than Starbucks (SBUX) in China by the end of the year in the midst of the breakneck development predicted by management.
A quick view of Luckin Coffee Earnings Estimates: the company expects Wall Street to report a loss of 37 percent per share. Revenue is expected to be $211.46 million for its recent initial public offering.
Lucking Coffee's losses on revenue of $215.7 million decreased to 32 cents per share, up 540 percent in local currency. Its average monthly total items sold in the quarter rose to 44.2 million by 470 percent.
At the end of the quarter, the number of stores reached 3,680, up from 2,963 at the start of Q2 and more than doubled from a year earlier. Net income per store jumped to $62,900 by 79.5 percent.
For its outlook, Luckin Coffee sees consumer sales in the fourth quarter varying from 2.1 billion to 2.2 billion yuan. Luckin fell short of estimates in the last three months, surprising investors with a two-cent EPS retreat in addition to earnings that missed predictions by over $4 million.
"In the third quarter, sales of freshly brewed coffee drinks continued to grow quite strongly, and we expect that by the end of this year we will achieve our goal of becoming China's largest coffee name," said chief executive officer Jenny Zhiya Qian.
By the end of 2019, Luckin wants to have over 4,500 stores. In comparison, as of the conclusion of its most recently reported profits, Starbucks had 4,125 stores in China.
On the stock market yesterday, stocks popped up 13 percent to end at 21.46, gapping well to their median of 50 days. Starbucks, which positioned China as a major driver of future growth, grew by 0.7 percent.
Luckin Coffee stock has a low composite score of 13, out of a best-possible 99, and an earnings per share score of only 2, suggesting non-existent profit growth.
The chain is trying to use mobile ordering, small stores, and big data to serve customers quickly in what it has called a "100 percent cashier-less environment."
Management, during its August conference call, called China's coffee market "highly underpenetrated" and said it had "significantly increased mass market consumption of coffee."
And as it grows at a torrid pace, it has lost spent huge money in massive promotions and is trying to educate consumers about coffee.
Luckin has introduced Luckin Tea with plans to set up a joint venture to establish a Luckin Juice company with Louis Dreyfus Co. manufacturing agricultural goods.
