Chilean retailers benefit from increased Argentine tourist spending as measures by President Milei bolster purchasing power. Companies like Falabella and Cencosud report significant sales growth, with expectations for continued revenue increases. Analysts predict that recovery in Argentina’s economy will further boost these businesses, enhancing their prospects.
The recent surge in Argentine tourists has positively impacted Chilean retail earnings, largely thanks to measures implemented by Argentine President Javier Milei. The overvalued Argentine peso has prompted many Argentines to venture across the border into Chile for shopping, significantly boosting sales for retailers.
Key players such as Falabella SA, Cencosud SA, and Latam Airlines Group SA have experienced notable increases in their revenue driven by this influx of tourist shoppers. The administration’s efforts to stabilize the peso in both official and unofficial markets have enhanced purchasing power, attracting over 2 million Argentines to Chile in the previous year, marking a 73% increase since 2023, which is the highest figure since 2018.
During the company’s recent earnings call, Cencosud’s chief sustainability officer, Marisol Fernández, noted, “Thirty percent of total revenue is coming from tourism in the shopping centres that border Argentina.” Falabella reported a remarkable 21% increase in same-store sales for their retail unit in the fourth quarter, while Cencosud saw a 5.4% revenue increase, and Latam Airlines experienced a growth of 4.4%.
The profitability of these companies has been reflected in their stock prices, with Falabella’s shares rising by 58% over the past year, Cencosud’s increasing by 50%, and Latam’s by 30%. Retailers such as Ripley are also expected to report similar revenue growth trends.
The Argentine peso has depreciated over 20% amid a backdrop of soaring consumer prices, which have risen by 84% during the same period. Furthermore, President Milei’s administration has relaxed certain restrictions on credit card spending in foreign currencies, facilitating Argentine tourists further.
As summer unfolds in the region, the trend may continue, with optimistic projections for increased Argentine visitor spending. Falabella’s retail unit CEO, Francisco Irarrázaval, expressed, “We expect that to remain in the short term.” As local tourist traffic remains robust, companies may continue reaping the benefits even as summer concludes and visitors return from holiday.
Additionally, the economic revival in Argentina could enhance the financial capabilities of locals, potentially increasing further tourism to Chile. Highlighting this ongoing trend, Latam Airlines’ CEO, Roberto Alvo stated, “Argentines love to travel.”
Moreover, Chilean companies like Cencosud and Falabella, which operate in Argentina, stand to gain from the anticipated strengthening of the Argentine economy. Analysts from Citi have noted that improved consumer sentiment in Argentina alongside the potential for lifted capital controls could provide significant opportunities for these Chilean entities.
The increase in Argentine tourists has significantly bolstered Chilean retail earnings, with major companies benefiting from a more favorable purchasing power. As the Argentine economy shows signs of recovery, retail and airline sectors are poised for continued growth, with expectations for enhanced consumer spending. The trend indicates a promising future for Chilean businesses, driven by cross-border shopping and leisure travel.
Original Source: www.batimes.com.ar
