(Yicai Global) Nov. 23 -- Luckin Coffee, which only emerged from bankruptcy proceedings in April, made money in the third quarter, when a year ago it scored heavy losses, as business at the Chinese coffeehouse chain continues to improve despite the setbacks caused by a recent string of Covid-19 outbreaks.

Luckin Coffee raked in net profit of USD74.3 million in the three months ended Sept. 30, according to its latest financial report released yesterday. This is a huge improvement on the losses of USD3.6 million it made in the same period last year. The turnaround can largely be attributed to better sales, an increased number of outlets and more customers, it added.

Net revenue soared 65.7 percent over the period to USD547.5 million, the report said. Revenue from product sales jumped 54.9 percent to USD421.1 million, while that generated by its self-operated outlets surged 53.9 percent to USD388.2 million, the report said. Revenue from stores jointly operated with a partner more than doubled to USD126.4 million.

However, the coffeehouse chain will continue to be negatively affected by pandemic-related pressures for the foreseeable future, the Xiamen, southeastern Fujian province-based company said. How much so is hard to predict given the uncertain nature of the pandemic and its impact on the economy. No performance expectations were given for this quarter.

Luckin Coffee opened 651 new stores in the third quarter, bringing the total to 7,846, of which 68.5 percent are self-operated, it said. This boosted the average number of customers per month by 70.5 percent to 25.1 million. But with the expansion operating costs also increased, jumping 40 percent to USD465.2 million, it said.

However, thanks to economies of scale and tech upgrades, expenses dropped to 85 percent of revenue in the third quarter from 100.3 percent the same time last year, the report said.

Luckin Coffee was discharged from Chapter 15 insolvency code in April after fully resolving its legal issues. The firm was fined USD180 million in December 2020 by US authorities for faking sales.

The coffeehouse chain was brought low by a short seller’s report in January 2020 that accused it of fraud. It afterwards confessed to inflating its 2019 revenue by as much as CNY2.1 billion (USD293.6 million) and its costs and expenses by CNY1.3 billion. It was expelled from the Nasdaq in June that year, ending a 400-day listing.

Editor: Kim Taylor