Chapter 766 Retail Giant

Xia Yu was in a good mood when he saw Reagan emerge.

Although Reagan did not hold any public office today, and was only the head of a charitable organization, his handsome appearance, past celebrity status, and his achievements as governor of California had all added a lot of highlights to his campaign.

If he could run for office as the governor of California, he would definitely have an advantage.

Unfortunately, California is currently a Democratic stronghold, and the incumbent governor, Jerry Brown, is a Democrat. He is currently stirring up trouble in California, hoping to break through and win the Democratic nomination.

Although Xia Yu is now based in San Francisco, California, there is nothing he can do.

California is the territory of the California consortium, which is now ranked among the top ten in the United States and happens to support the Democratic Party. In fact, California is a traditional Democratic stronghold.

Even Reagan failed to win this stronghold for the Republican Party during his ten years as Governor of California from 1964 to 1974, let alone Jerry Brown, who has been working for the Democratic Party for another six years.

Under these circumstances, if Xia Yu ran out and cheered for Reagan, he would only be asking for trouble.

Fortunately, Reagan did well on his own, quite impressive, and gained the attention of many Republican bigwigs.

Reagan's campaign took a better trajectory than it would have in history, and Xia Yu was relieved. He put the matter aside for the time being and continued to worry about his own business.

Five days later, the New York branch of Polaris Capital finally officially set sail, and Peter Lynch also flew from San Francisco to New York especially.

'Peter, how is the company doing while I was away?'

Xia Yu asked after Peter Lynch had rested a little after his arrival at the Polaris Capital office.

Peter Lynch reported, 'Boss, the company is doing quite well. The number of employees has reached 152... The acquisition plan for Abbott has been made, and I have brought it here to prepare for implementation. In addition, there has been some progress in the retail industry.'

'Boss, these are the preliminary targets selected after collecting business intelligence, and they will be handed over to the New York branch for further analysis. Regarding the acquisition plan for Abbott, what are your instructions?'

With that, Peter Lynch took the materials prepared by the company out of his briefcase and handed them to Xia Yu.

Xia Yu glanced at it and put the acquisition plan for Abbott aside, instead looking at the other material first.

Previously, in San Francisco, Xia Yu had had an in-depth conversation with Peter Lynch, and had made clear the first phase of investment direction for Polaris Capital, which was the biomedical, high-tech and retail industries.

Of course, Xia Yu's sudden ideas from time to time are a different matter, and they are completed as appropriate according to Xia Yu's instructions.

In the biopharmaceutical field, Genentech has already been invested in, Amgen has also been established, and a plan to acquire Abbott, the target, has also been made. Now it's time to get started, so it's on the right track.

In the high-tech sector, Bridgewater Associates and Tiger Management are already helping, and Xia Yu has already spoken to Peter Lynch, telling him not to worry for the time being.

As for the retail sector, Home Depot can only be described as a pleasant surprise. When Xia Yu left San Francisco, Polaris Capital had not yet set foot in the retail sector.

As he continued to flip through the materials, more and more information entered Xia Yu's mind.

At this time, there were many national giants in the US retail market, such as the current department store king Sears, the old giant Kroger, Macy's, United Department Store, Kmart, Woolworths, and Penny's. They were all first-class retail giants that occupied a large market share.

However, behind these old or new retail giants were major consortia, and they had all entered this increasingly prosperous industry.

On the contrary, the former world's number one retail giant, Wal-Mart, has not yet exploded.

However, Wal-Mart is also included in this material as a primary and important object of analysis.

Seeing Wal-Mart, Xia Yu was excited and looked at its information carefully.

Wal-Mart was founded in 1962 in Bentonville, Arkansas, and went public on the New York Stock Exchange in 1972. As of today, it only has 241 stores, far fewer than the tens of thousands of stores in later times.

At this time, Wal-Mart could only be considered a regional retail giant, with a presence only in Arkansas and nearby states in the southern United States.

From its listing in 1972 to the present day, Wal-Mart's compound annual growth rate has reached 25%. In 1979, its turnover reached 9 billion US dollars, with a net profit of only 34 million US dollars.

Despite Wal-Mart's high compound annual growth rate, the capital was not convinced, because at this time Wal-Mart was relatively small in size and not representative.

In the early stages of growth, there were countless companies that maintained rapid growth. However, once a company becomes large, it requires extremely high management skills and strategic vision. Many companies will encounter bottlenecks or be knocked down to earth.

In addition, over the past eight years, Wal-Mart's compound growth rate has gradually declined, which also confirms the speculation in the capital sector.

In 1972, just after its IPO, Wal-Mart still had a compound growth rate of 42%, but what happened afterwards? It gradually declined, even if it occasionally rose a little one year, it immediately fell the next year.

As a result, over the past eight years, Wal-Mart's market value has only doubled a little, and it has fluctuated greatly, with a large risk discount. Its current market value is only 3.3 billion US dollars.

It is hard to imagine that Wal-Mart, which will have a market value of 400 billion to 500 billion US dollars in the future, has a market value of only 300 million US dollars at this time, which is just a fraction of its future market value.

However, Xia Yu, who was familiar with the situation in the future, was not surprised. The 1970s was just a period of dormancy for Wal-Mart. It was not until the 1980s that Wal-Mart's golden period of explosive growth began, with an average annual compound growth rate of over 35%, while the average annual compound growth rate of the US retail industry at the time was only 2%.

In the decade of the 1980s, Wal-Mart completed its layout across the United States step by step, and its stock price rose 60 times!

It was nothing like the present, when it had only doubled in eight years, which was a disgrace.

But that was just as well. The moment before Wal-Mart's rise was the best time to act.

Peter Lynch and the others did not have the foresight advantage of Xia Yu, but in this situation, they were able to list Wal-Mart as a first-level priority analysis target, which shows that they had good insight.

Seeing Wal-Mart, the value of this material is enough.

Xia Yu was in a good mood and continued reading.

On the very last page, another single listed target came into view.

Seeing Xia Yu flip to this page, Peter Lynch immediately explained, 'Boss, this company is just a company that was founded a few years ago and is not listed. It was not included at first, but the people below submitted it. After I read it, I thought it was worth investing in, so I listed it separately.'

Xia Yu looked up at him and smiled and said, 'I happen to know this company. Although it is just a small company that is not listed, it has a good model and a bright future. If you didn't write it in, I would have reminded you. Well done!'