Embattled Chinese beverage chain Luckin Coffee issued an apology letter to its employees on Tuesday evening for the upheaval following its stunning fraud admission in early April.
Why it matters: Luckin had remained relatively silent about its moves following the April 2 disclosure of fraud to the US Securities and Exchange Commission. The apology and appointment of new leadership on the same day mark a distinct change in leadership style.
- The company on Tuesday fired CEO Qian Zhiya and COO Liu Jian from their positions.
Details: “We would like to express our sincere apologies for all the troubles the incident has brought upon your family,” the company said in a letter addressed to its employees on Tuesday, according to Chinese media reports.
- The company said that it is grateful to its employees for their hard work in maintaining normal operations of stores, supply chain, and product innovation during a difficult time.
- The board has appointed Guo Jinyi as acting CEO of the company to oversee the firm’s daily operations as the fraud investigation continues.
- Like his processor Qian Zhiya, Guo was also formerly an executive with Car Inc., the car rental firm backed by Luckin chairman Lu Zhengyao.
- Wu Gang and Cao Wenbao were named as new Luckin board members.
- The Starbucks challenger also pledged in the letter to restructure the company and rebuild its values under its new leadership.
Context: Luckin disclosed in early April that its COO had fabricated around $310 million in sales in 2019, triggering a plunge in share price of around 80%.
- US regulators, as well as China’s top market regulators, have launched probes into Luckin Coffee.