The increase in Argentine tourists has propelled growth in Chilean retail and airline earnings, with companies like Falabella and Cencosud reporting significant sales boosts. The stabilization of the Argentine peso under President Milei’s administration has enhanced shopping power abroad, leading to a noted rise in cross-border purchases. Analysts predict continued benefit for these companies as Argentina’s economy improves.
The recent surge in Argentine tourists has significantly impacted Chilean retailers and airlines, leading to an increase in fourth-quarter earnings. An overvalued Argentine peso has incentivized many shoppers to cross the border into Chile, where they are purchasing a wide range of products, including home appliances and clothing. Major companies such as Falabella SA, Cencosud SA, and Latam Airlines Group SA have reported increased sales due to this trend.
Under President Javier Milei’s administration, measures have been taken to stabilize the peso, which has effectively boosted the purchasing power of Argentines abroad. This has led to more than 2 million Argentine tourists visiting Chile last year, marking a 73% increase from 2023, the highest volume since 2018. Notably, January saw over 500,000 Argentine visitors, a 152% rise from the previous year.
Marisol Fernández, Cencosud’s chief sustainability officer, stated, “Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina,” highlighting the significant economic impact that Argentine shoppers have on local businesses. Falabella experienced a 21% jump in same-store sales during the fourth quarter, attributed to tourists, while Cencosud and Latam Airlines reported revenue increases of 5.4% and 4.4% respectively.
The surge in sales has positively influenced the stock market; for example, Falabella’s shares surged by 58% in the past year. Additionally, Cencosud and Latam Airlines saw their stock values rise by 50% and 30%. Retailer Ripley is expected to report similar revenue trends, underscoring the widespread benefits to the retail sector.
Over the last 12 months, the Argentine peso has depreciated approximately 20% against the dollar, but consumer prices have jumped by 84%. The Milei administration has alleviated some credit card restrictions, allowing for increased spending abroad. As the summer season approaches, more Argentine tourists are anticipated, with expectations set for continued economic improvement.
Francisco Irarrázaval, the CEO of Falabella’s retail unit, noted, “We expect that to remain in the short term,” emphasizing the potential for ongoing economic benefits. As the seasonal peak wanes, local companies may continue to see positive results, especially as the Argentine economy begins to recover from recession.
Latam Airlines’s CEO, Roberto Alvo, observed, “Argentines love to travel,” affirming the trend of increasing Argentine tourism. Furthermore, firms like Cencosud and Falabella boast operations in Argentina that are set to gain from recovering economic conditions.
According to Citi analysts, including Carolina Zelaya, the anticipated economic rebound in Argentina, along with improved consumer sentiment, could “…be a source of upside for Chilean companies with significant operations in Argentina,” should capital controls be lifted, allowing for dividend transfers abroad.
In conclusion, the rise in Argentine tourism is significantly benefiting Chilean retailers and airlines, resulting in impressive fourth-quarter earnings. The favorable exchange rate for Argentines, combined with relaxed credit card regulations, has encouraged increased spending in Chile. Major retailers are experiencing sales growth, and this trend is expected to continue as Argentina’s economic outlook improves. Companies with operations in Argentina stand to gain further if the economy rebounds, highlighting interlinked economic prospects between the two nations.
Original Source: www.batimes.com.ar
