Luckin Coffee Responds to Anonymous Report Containing Misleading and False Allegations
February 03 2020 - 7:10AM
Luckin Coffee Inc. (“Luckin Coffee” or the “Company”) (NASDAQ: LK),
a pioneer of a technology-driven new retail model to provide coffee
and other products of high quality, high affordability, and high
convenience to customers, today issued the following responses to
misleading and false allegations contained in an anonymous report
(the “Report”), which was made public on January 31, 2020 by a
short seller who may benefit from this meritless Report.
Luckin Coffee categorically denies all allegations in the
Report. The methodology of the Report is flawed, the evidence is
unsubstantiated, and the allegations are unsupported speculations
and malicious interpretations of events. The Report also attacks
members of Luckin Coffee’s management team, shareholders, and
business partners and its claims are either false, misleading or
entirely irrelevant. Furthermore, Luckin Coffee believes that the
Report demonstrates a fundamental misunderstanding of the Company’s
business model and operating environment. Luckin Coffee intends to
take appropriate actions to defend itself against these malicious
allegations and to protect the interests of its shareholders.
In particular, Luckin Coffee responded to the following
misleading and false allegations raised in the Report in the
following:
- The Report alleged the number of items per store per
day was inflated in 2019 3Q and
4Q. There are material
inconsistencies between the unsubstantiated data presented in the
Report and the actual data from the Company’s own
system. Every single order that customers placed
with Luckin Coffee is online and automatically recorded in its
system, and payments for orders went through third-party payment
service providers. Therefore, all the Company’s key operating data,
including the number of items per store per day, items per order
and effective selling price, are tracked in real time and can be
verified. Luckin Coffee has a robust internal control system over
data management to ensure the data integrity and consistency within
its system as well as that of its third party partners.
- The Report alleged items per order had declined from
2019 2Q to 2019 4Q and the effective selling price was inflated in
2019 3Q. The sources and authenticity of the alleged
customer order receipts in the Report are unsubstantiated and the
underlying methodology in the Report is ungrounded. Luckin Coffee’s
items per order during the period is substantially higher than the
data alleged in the Report. In addition, Luckin Coffee stands by
its reported effective selling price, which is true, accurate, and
can be verified by Luckin Coffee’s internal system.
- The Report alleged Luckin Coffee overstated advertising
expenses and may recycle overstated advertising expenses to inflate
revenue in 2019 3Q. The allegation is based on flawed
assumptions, and inaccurate and misleading analysis of the
Company’s advertising expenses. Luckin Coffee performs a detailed
review and cross check of its sales and marketing expenses with
underlying evidence and confirms the Company’s reported advertising
expenses are true and accurate.
- The Report alleged net revenues from other products
were inflated in 2019 3Q. The Report’s reference to
value-added-tax (“VAT”) in calculating net revenues from other
products represents a clear misunderstanding of the applicable VAT
rates for the Company’s non-freshly brewed products and the Report
reached an ungrounded allegation based on such flawed and
unsupported assumption. All the Company’s orders are tracked in
real time and the Company has rigorous internal controls over
revenue recognition and reconciliation. Luckin Coffee is in strict
compliance with these rigorous controls and is committed to ensure
the integrity of its financial reporting.
As a data-driven company, Luckin Coffee is committed to
providing full and accurate disclosure to investors and to
rebutting any false claims that attempt to undermine confidence in
Luckin Coffee’s business, management and results of operations.
Luckin Coffee firmly stands by its business model and is
confident in benefiting from the strong growth of China’s coffee
market in the future. Luckin Coffee’s pioneering business model has
enabled the Company to become the leading and fastest growing
player driving coffee consumption in China. Supported by its
disruptive new retail model, diversified product portfolio and
strong financial position, Luckin Coffee will continue to grow its
business, provide a superior customer proposition and deliver
sustainable value for its shareholders over the long-term.
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are made under the
“safe harbor” provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements can be identified by
terminology such as “will,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,” “estimates,” “potential,”
“continue,” “ongoing,” “targets,” “guidance” and similar
statements. The Company may also make written or oral
forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in its annual
report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or
employees to third parties. Any statements that are not historical
facts, including statements about the Company’s beliefs and
expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: the Company’s growth strategies; its
future business development, results of operations and financial
condition; its ability to understand buyer needs and provide
products and services to attract and retain buyers; its ability to
maintain and enhance the recognition and reputation of its brand;
its ability to rely on merchants and third-party logistics service
providers to provide delivery services to buyers; its ability to
maintain and improve quality control policies and measures; its
ability to establish and maintain relationships with merchants;
trends and competition in China’s e-commerce market; changes in its
revenues and certain cost or expense items; the expected growth of
China’s e-commerce market; PRC governmental policies and
regulations relating to the Company’s industry, and general
economic and business conditions globally and in China and
assumptions underlying or related to any of the foregoing. Further
information regarding these and other risks, uncertainties or
factors is included in the Company’s filings with the SEC. All
information provided in this press release and in the attachments
is as of the date of this press release, and the Company undertakes
no obligation to update any forward-looking statement, except as
required under applicable law.
About Luckin Coffee Inc.
Luckin Coffee Inc. (NASDAQ: LK) has pioneered a
technology-driven retail network to provide coffee and other
products of high quality, high affordability, and high convenience
to customers. Empowered by big data analytics, AI, and proprietary
technologies, the Company pursues its mission to be part of
everyone’s everyday life, starting with coffee. The Company was
founded in 2017 and is based in China. For more information,
please visit investor.luckincoffee.com.
Investor and Media Contacts
Investor Relations:Luckin Coffee Inc. IREmail:
ir@luckincoffee.com
Bill Zima / Fitzhugh TaylorICR, Inc.Phone: 646 880 9039
Media Relations:Luckin Coffee Inc. PREmail:
pr@luckincoffee.com
Ed Trissel / Jack KelleherJoele Frank, Wilkinson
Brimmer KatcherPhone: 212 355 4449
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