Luckin Coffee, Inc. Q1 FY2026 earnings call

Dr. Guo Jingyi mentioned that in the first quarter, the company remained focused on high-quality scale growth, delivered solid results. They leveraged end-to-end digital capabilities to expand store network, grow customer base, increase consumption, and strengthen supply chain. The company launched a $300 million one-year stock return plan. In store network expansion, the total store count reached 33,596 by the first quarter, with 2,531 new stores added in China, including 21,713 self-operated stores and 11,706 joint-subsidized stores. Internationally, 17 new stores were added, bringing total overseas store count to 177. In products, 26 limited-edition drinks and over a dozen green foods were launched in the first quarter, with ongoing innovation to improve user activity, consumption frequency, etc. On the customer front, new trading customers exceeded 21 million, and total trading customers increased 25% to over 93 million. In sustainable supply chain, the Qingdao Innovation Production Center commenced operations, enhancing supply chain flexibility and reliability, and they increased domestic purchasing of Yunnan coffee beans.

In the first quarter, total net revenues increased by 35% to approximately RMB 12 billion. Revenues from productive sales were RMB 14.1 billion, up 35.8% year-over-year. Net revenues from fractionable drinks were RMB 8.3 billion, about 69% of total net revenues. Revenues from self-operated stores increased 33% to RMB 8.6 billion, with same-store sales largely stable. Revenues from partnership stores rose 45% to about RMB 3 billion, accounting for 25% of total net revenues. Store-level operating profit was RMB 1.2 billion, up 6% year-over-year, with self-operated store-level operating margin 13.6%. Cost of materials was RMB 4.9 billion, up 36% year-over-year, accounting for around 40% of total net revenues. Store rental and other operating costs were RMB 3.1 billion, up 31% year-over-year, accounting for 25.5% of total net revenues. Delivery expenses were RMB 1.3 billion, up 9% year-over-year, accounting for around 11% of total net revenues. Sales and marketing expenses were RMB 732 million, up 48% year-over-year, accounting for 6.1% of total net revenues. General and administrative expenses were RMB 800 million, up 25% year-over-year, accounting for around 7% of total net revenues. GAAP operating profit was RMB 760 million, with an operating margin of around 6%, while non-GAAP operating profit was RMB 898 million. Net profit was RMB 506 million, with a net margin of 4.2%, and non-GAAP net profit was RMB 686 million with a net margin of 5.7%.

Management expects scale advantages and operating capabilities to become increasingly evident, supporting improvements in sales performance, efficiency, and profitability over time. They will continue to drive innovation across product development, brand engagement, and customer experience to further unlock consumption potential and support sustained business growth. The company will maintain a relatively fast store expansion pace while focusing on dynamic balance among expansion pace, store quality, operating efficiency, and same-store performance based on long-term demand judgment of Chinese coffee consumption.

Q: On growth and quality, regarding the expansion pace in the rest of the year and balancing scale, market share, and average store performance.

A: They remain focused on high-quality scale growth, maintaining dynamic balance across expansion pace, store quality, operating efficiency, and same-store performance. Store expansion is a strategic investment based on long-term China coffee consumption demand, and they will push store network construction at a competitive speed while ensuring single-store model health. Same-store sales of self-operated stores were broadly stable in the first quarter, and they believe in long-term healthy same-store performance despite short-term possible fluctuations due to comparison with last year's delivery subsidies, and will manage through product innovation, etc.

Q: On the share repurchase plan, key considerations and future shareholder return methods.

A: The launch of the $300 million share repurchase plan reflects confidence in long-term potential of China coffee market and company's growth prospects. In the future, regarding shareholder returns, they have an open attitude, but currently due to historical reasons, there are no conditions for immediate cash dividends, but will comprehensively assess based on business performance, cash flow, and long-term development needs in the future, including possible share repurchases or other return methods while maintaining balance between business growth and shareholder returns.