Luckin Coffee has ousted its chairman and named a new chief executive, as the company tries to draw a line under an accounting scandal that has rocked its business.
The embattled Chinese coffee chain named Jinyi Guo chairman and CEO, after shareholders voted to remove co-founder and former chairman Charles Zhengyao Lu, Luckin said in a regulatory filing on Monday.
Luckin went public last year and surged due to what appeared to be strong sales growth. But then the company — which was once hailed as China’s homegrown rival to Starbucks (SBUX) — admitted in April that a good portion of its 2019 revenues were fabricated. Its shares collapsed following the revelations.
Luckin stock is down nearly 93% for the year, and the Nasdaq has decided to delist the company.
Guo has been the acting CEO since May, after Luckin fired chief executive Jenny Zhiya Qian and chief operating officer Jian Liu — the executive whom the company said was the architect of the fraud. Earlier this month, the company said it fired 12 other employees who, at the direction of Qian and Liu, participated in or had knowledge of the fabricated transactions.
Before being tapped for the top job, Guo was Luckin’s senior vice president in charge of product and supply chain. He also previously worked as assistant to the chairman for UCAR, a company founded by Lu.
Lu has come under pressure, as the scandal sparked a crackdown on Chinese companies listed in the United States. The businessman apologized earlier this year, saying he was in “deep pain and remorse” over the situation.
“I can’t sleep at night,” he said in a statement in May, which was widely reported by multiple Chinese media outlets, including The Paper and China Business Network — both owned by state-controlled corporations. He also insisted that he “didn’t play tricks” in order to cheat investors.
It’s not clear what’s next for Luckin now it will no longer have access to the stock market to raise new capital. As of late last year the company had 3,680 stores.
– Paul R. La Monica contributed to this report