Chilean retailers and airlines are seeing increased earnings due to a surge in Argentine tourists, fueled by an overvalued peso and economic policies from President Javier Milei. Companies like Falabella, Cencosud, and Latam Airlines reported significant sales growth, led by a dramatic rise in cross-border shopping. This trend is expected to continue as Argentina’s economy improves.
Chilean retailers and airlines have experienced a notable increase in earnings, attributed to a surge in Argentine tourists, thanks to the economic policies of Argentine President Javier Milei. An overvalued peso has enticed many Argentines to travel to Chile for various purchases, leading to a significant increase in fourth-quarter sales for companies like Falabella SA, Cencosud SA, and Latam Airlines Group SA.
The Milei administration has succeeded in limiting the peso’s decline in both formal and informal markets, subsequently enhancing the purchasing power of Argentines abroad. Consequently, over two million Argentines visited Chile last year, representing a 73% increase since 2022, and the highest figure recorded since 2018. Notably, January alone saw over 500,000 Argentine visitors, a striking rise of 152% from the previous year.
As highlighted by Cencosud’s chief sustainability officer Marisol Fernández, “Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina.” The fourth quarter witnessed Falabella’s same-store sales soaring by 21% due to the influx of tourist purchases. Additionally, Cencosud reported a 5.4% revenue increase, while Latam Airlines experienced a 4.4% revenue growth.
The positive sales metrics are reflected in stock performance; Falabella’s shares surged by 58% over the past year, Cencosud’s rose by 50%, and Latam Airlines climbed 30%. Retailer Ripley, which is set to release earnings soon, may also report favorable trends in revenue.
The Argentine peso has depreciated nearly 20% against the dollar over the past year, significantly lagging behind a staggering 84% rise in consumer prices. The Milei administration has eased restrictions on spending abroad by relaxing credit card limits in foreign currencies, further facilitating cross-border shopping.
Looking ahead, the first quarter remains buoyed by Argentine tourists. “We are observing a 2025 where we see a greater impact from Argentines, mainly because we’re in the summer season,” noted Francisco Irarrázaval, CEO of Falabella’s retail unit. This trend may persist as Argentina’s economy gradually emerges from a recession, thereby enhancing local purchasing power.
As emphasized by Latam Airlines CEO Roberto Alvo, “Argentines love to travel.” Furthermore, companies like Cencosud, Falabella, and Embotelladora Andina, which operate within Argentina, are expected to benefit from the anticipated economic revival.
Citi analysts, including Carolina Zelaya, posited that “The improved consumer sentiment and the perspectives of an economic rebound for 2025, together with the possible lifting of capital control, would be a source of upside for Chilean companies with significant operations in Argentina,” indicating a positive outlook for continued collaboration between the two nations.
In summary, the economic policies enacted by President Javier Milei have led to an influx of Argentine tourists into Chile, significantly benefiting retail and airline sectors. Notable companies such as Falabella, Cencosud, and Latam Airlines have witnessed impressive revenue growth, which is projected to continue into the near future, supported by favorable economic trends in Argentina. Furthermore, the substantial increase in traffic and spending power reflects an evolving relationship between the two countries that could yield sustained economic benefits.
Original Source: www.batimes.com.ar
