The article discusses the rise in Chilean retail earnings due to an influx of Argentine tourists, spurred by favorable market conditions under President Javier Milei. Retails firms experienced substantial growth, aided by tourists’ improved purchasing power, contributing to higher sales and stock values. The ongoing improvement in Argentina’s economy suggests further benefits for Chilean businesses.
Chilean retailers and airlines are experiencing a significant boost in revenue thanks to an influx of Argentine tourists, influenced by Argentine President Javier Milei’s policies. The measures taken by his administration have kept the peso’s value relatively stable, prompting many Argentinians to shop across the Chilean border for various goods, from home appliances to clothing.
Prominent companies such as Falabella SA, Cencosud SA, and Latam Airlines Group SA reported enhanced sales figures for the fourth quarter as over two million Argentinians visited Chile in 2023, representing a 73% increase from the previous year and the highest number since 2018. In January alone, more than 500,000 crossed the border, marking a remarkable 152% jump from last year.
According to Marisol Fernández, Cencosud’s Chief Sustainability Officer, “Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina.” Falabella experienced a notable 21% increase in same-store sales during the fourth quarter due to increased purchases by tourists, while Cencosud’s Chilean operations reported a revenue increase of 5.4% and Latam Airlines’ revenue grew by 4.4%.
The corresponding rise in retail stocks reflects these sales increases; Falabella’s share price surged by 58% over the past year, alongside a 50% rise for Cencosud and a 30% increase for Latam Airlines. The positive sentiment is expected to continue despite seasonal changes, as Francisco Irarrázaval, CEO of Falabella’s retail unit, suggested that Argentina’s summer will sustain tourist numbers in 2025.
While the Argentine peso has depreciated over 20% over the last year against the dollar, the Milei administration’s adjustments have made overseas spending more accessible by easing credit card restrictions. These factors are expected to further benefit retailers as Argentina begins to recover from its recession. Roberto Alvo, CEO of Latam Airlines stated, “Argentines love to travel.”
Citi analysts have expressed optimism, indicating that an economic rebound in Argentina could lead to increased consumer spending, benefitting Chilean companies with operations there. They suggested that improving consumer sentiment and potential relief from capital controls could foster growth for businesses like Cencosud and Falabella.
In conclusion, the surge in Argentine tourism driven by favorable currency conditions under President Milei’s administration has significantly bolstered Chilean retail and airline revenues. Notable increases in sales for major retailers and airlines indicate a positive trend that is expected to continue. Moreover, as Argentina’s economy improves, the prospects for Chilean companies operating in the region appear promising, further enhancing potential growth and investment opportunities.
Original Source: www.batimes.com.ar
