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Luckin Coffee Analyst still confident to reach the company’s key targets

Luckin Coffee

MILAN – Luckin Coffee Inc discussed concerns surrounding the Coronavirus outbreak’s effect on its business in a conference call with analysts last week. The Chinese coffee chain founded by Qian Zhiya in Beijing in October 2017 now expects first-quarter revenue to end at nearly half the current estimate of 2.2 billion yuan ($315.3 million) to 2.3 billion yuan.

The extension of the Chinese New Year break into February following the coronavirus outbreak — and low volumes at the 500 stores that are open — are to be blamed for the expected shortfall, KeyBanc Capital Markets analyst Eric Gonazalez said in a Thursday note.

Luckin expressed confidence in customers coming back once the virus abates, the analyst said.

The coffee chain expects most employers in the virus-hit region to keep offices shut until the week of Feb. 24, he said.

The non-affected areas will likely return to normalcy within one to two months, and those areas near the epicenter of the epidemic are likely to take up three to four months, Luckin said, according to KeyBanc.

Luckin reiterated its expectations for achieving breakeven in the third quarter with the help of its unmanned retail strategy, as well as its 2021 development goals for both traditional and unmanned retail, Gonzalez said.

The company expects no changes to its 2021 outlook, according to KeyBanc.