Luckin Coffee slams anonymous report on alleged fraud
The China-based coffee chain said it is taking “appropriate” actions on the matter.
Luckin Coffee has responded to the anonymous report written by a “short seller” who cried fraud.
The China-based coffee chain denied all allegations in the report, which recently made rounds in social media, saying that it contained “unsupported speculations and malicious interpretations of events,” as well as its methodology was “flawed” and the evidence were “unsubstantiated.”
“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,” the company said in a statement.
The company denied that it had inflated the number of items per store each day “by at least 69%” in their 2019 Q3 and Q4 reports, backed by 11,260 hours of store traffic video, as its key operating data are “tracked in real time” and “can be verified.”
Luckin said its item per order were “substantially higher” than what the report alleged as having declined from 1.38 in Q2 2019 to 1.14 in Q4 2019.
Meanwhile, the company stands by its reported effective selling price, which they say “is true, accurate, and can be verified” by their internal system, as the report claimed it has inflated its net selling price per item by at least RMB 1.23 or 12.3% “to artificially sustain the business model.”
Moreover, the coffee chain also denied it has overstated its advertising expenses “to inflate revenue and store-level profit” and it has inflated its net revenue from other products in Q3 2019.
Luckin Coffee said it is taking “appropriate” actions on the matter.
