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By Han Wei / Aug 15, 2019 04:05 AM / Business & Tech

Photo: VCG

Photo: VCG

China’s coffee-chain upstart Luckin Coffee Inc. posted a wider quarterly loss in its first earnings report since its initial public offering in May, reflecting surging costs of business expansion.

Luckin said Wednesday its net loss for the quarter ended June 30 reached 681.3 million yuan ($99.2 million), compared with a loss of 333 million yuan in the same period a year ago. Total revenue for the period rose 648.2% year-on-year to 909.1 million yuan, according to unaudited results published by Luckin.

Luckin’s Nasdaq-traded shares plunged 14.5% Wednesday morning to $20.99. The stock has gained about 44% from its IPO price.

Luckin opened 593 new stores in the second quarter, expanding the total to 2,963. The company said earlier it plans to open 4,500 stores in China by the end of 2019 — far more than Starbucks’ current total of more than 3,600 China stores.

The fast expansion has pushed up Luckin’s operating expenses to 1.6 billion yuan for the second quarter, an increase of 243.9% on yearly basis. Store-level operating loss dropped to 55.8 million yuan from 81.7 million yuan a year ago, according to the financial report.

Qian Zhiya, chief executive officer of Luckin, said the company is on track to reach store-level break-even during the third quarter of 2019, citing narrowing store operating losses, increased bargaining power, operating efficiency from technology, and higher store throughput.

Related: China’s Starbucks Challenger Eyes Middle Eastern Foray

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