Troubled Chinese coffee chain seeks to close the chapter on financial irregularities after restating financial results
“Today’s disclosure represents an important milestone for Luckin Coffee,” said the company's CEO Dr. Jinyi Guo | Photo credit: via Shutterstock
Luckin Coffee has restated its financial results for the second, third and fourth quarters of 2019 following an internal investigation into fabricated sales revealed in April 2020
. In a press release, Luckin said fabricated transactions began April 2019 and had inflated the coffee chain’s net revenue for the year by RMB2.12bn, ($328m).
“Today’s disclosure represents an important milestone for Luckin Coffee as we execute on our plan to return to normalised financial reporting. We have worked diligently to remediate the accounting issues that have delayed our financial filings and led to the review and correction of our historical financial information,” said Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee.
“Today, we have a new leadership team and a viable plan that is driving growth for Luckin Coffee and long-term value creation for our shareholders. Across the company, our team remains focused on delivering improved financial and operational performance while delivering outstanding products and services for our customers,” he added.
Luckin Coffee will be hoping to turn a corner on the financial irregularities, which resulted in high-profile sackings at the coffee chain, including its CEO Jenny Zhiya Qian, and COO, Jian Liu, who were implicated in the scandal. In June 2020, the Xiamen-headquartered company delisted from the Nasdaq.
In February 2021, Luckin Coffee filed for bankruptcy
in order to restructure its financial obligations. The following April, it secured $250m
from investors to facilitate a company restructure and settle a $180m penalty agreed with the US Securities and Exchange Commission (SEC).
However, indicating Luckin’s fortunes could be on the rise, the coffee chain’s stock rose 25% on the announcement of the restated results.