Luckin Coffee shares plummet on accounting probe

0 Comment(s)Print E-mail Xinhua, April 3, 2020
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Shares of Chinese coffee chain retailer Luckin Coffee plunged more than 75 percent on Thursday after the company formed a special committee to oversee an internal investigation into allegations of "misconduct, including fabricating certain transactions."

The special committee revealed that starting in the second quarter of 2019, the company's chief operating officer and several employees had engaged in certain misconduct, including fabricating certain transactions, Luckin Coffee said in a statement on Thursday.

The investigation, it said, is at its preliminary stage and the aggregate sales amount associated with the fabricated transactions from the second quarter of 2019 to the fourth quarter of 2019 amount to around 2.2 billion yuan (about 310 million U.S. dollars).

"Certain costs and expenses were also substantially inflated by fabricated transactions during this period," said the company, adding that it is assessing the overall financial impact of the misconduct on its financial statements.

Shares of Luckin Coffee shed 75.57 percent to close at 6.4 dollars apiece on Thursday.

Founded in 2017, the Xiamen-based company was listed on the Nasdaq last May. It had operated about 4,500 stores in more than 40 cities across China by the end of 2019.

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