Caixin Global reports that Luckin Coffee Inc. removed Chief Executive Officer Jenny Qian Zhiya and Chief Operating Officer Liu Jian amid an ongoing probe of a massive accounting scandal. Qian and Liu also resigned their board positions, according to a filing on May 12 by Nasdaq-listed Luckin.
Six others involved in the scandal were either suspended or placed on leave, the company said. Guo Jinyi, a board member and senior vice president, was named acting CEO, Stuff relates.
The Chinese coffee chain disclosed in late April that nearly half the revenue it reported for the last three quarters of 2019, or CNY2.2 billion ($310 million), was fake. The company blamed COO Liu for the misconduct and said it initiated an investigation of Liu and other employees.
The company’s shares have been suspended for more than a month, following an 80% plunge in their value on news of the scandal. China’s securities and market regulators opened a probe into Luckin. The company delayed filing its annual results, saying it was unable to prepare the financial report amid the coronavirus pandemic.
About Luckin Coffee
Based in China, Luckin Coffee Inc. (NASDAQ: LK) has pioneered a technology-driven retail network to provide coffee and other products of high quality, high affordability, and high convenience to customers. Empowered by big data analytics, AI, and proprietary technologies, the Company pursues its mission to be part of everyone’s everyday life, starting with coffee.
As reported in the Troubled Company Reporter-Asia Pacific on April 7, 2020, China Daily said that Luckin Coffee Inc, the so-called rival to Starbucks in China, has exposed itself to the risks of delisting and even bankruptcy due to severe fabrication of sales data, experts said.
China Daily related that the Nasdaq-listed Chinese coffee chain saw its share price crash more than 75 percent to $6.40 on April 2 after the company disclosed that its earnings results were substantially inflated. It dropped nearly 15 percent more in the first two hours of trading on April 3.
Liu Jian, chief operating officer and a director of the company, and several employees reporting to him, had engaged in misconduct, including fabricating transactions, a company statement said on April 2.
The aggregate sales associated with fabricated transactions amount to around CNY2.2 billion (US$310 million) during the April to December period last year, according to Luckin’s preliminary internal investigation, the statement said.